Morrisons slips into last place as Tesco manages to slows its sales decline

Tesco's sales fell 2.7 per cent in 12 weeks to 7 December

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The troubled supermarket chain Tesco is starting to show early signs of a recovery, as the last set of retail data before the crucial Christmas period shows it has arrested the sharp fall in its sales.

Morrisons is now the worst-performing supermarket of the Big Four, behind Sainsbury’s and Asda, while Aldi and Lidl are still rising, according to Kantar Worldpanel.

Analysts said the price war which has seen the established retailers race to match or beat the discounters’ prices, had seen a spate of promotions over the past month.

Tesco’s sales fell 2.7 per cent in the 12 weeks to 7 December, its best result since June and a vast improvement on its 4.5 per cent fall two months earlier.

New chief executive Dave Lewis has started price cuts on key lines, rearranging products within stores and improving the fresh fruit and vegetable offering.

Morrisons saw a 3.2 per cent drop in sales over the period, leaving it in a precarious position as it heads into a make-or-break Christmas for Dalton Philips, its under-pressure chief executive. A surprise profit warning after last Christmas means the company should see an improvement this  year or risk questions over Philips’ future.

Fraser McKevitt, the head of retail and consumer insight at Kantar Worldpanel, said: “Britain’s supermarket price war is ramping up ahead of the all-important Christmas period. Retailers are selling more items on promotion, leading to like-for-like prices falling by 0.7 per cent compared with this time last year.

“Cheaper groceries are an early Christmas present for shoppers, saving them £182m in the past 12 weeks alone, but this puts pressure on the supermarkets.”

Aldi and Lidl saw the most impressive growth over the period, rising 22.3 per cent and 18.3 per cent, respectively. That left all of the Big Four nursing falls in sales, with Sainsbury’s off 1.8 per cent. Asda, down 1 per cent, was the best performing major supermarket.

Less affected by the discounters, Waitrose won over thousands of shoppers looking to trade up this Christmas, with sales up 6 per cent, extending an unbroken run going back to February 2009.

However, figures from its parent company, John Lewis Partnership, yesterday revealed that sales at John Lewis department stores last week fell 5.6 per cent.