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Business News

Tesco loses more market share


The challenge faced by Tesco to revive its UK business was underlined today as research figures showed the supermarket giant continues to lose market share.

The country's biggest grocer saw its market share slip to 30.7% in the 12 weeks to April 15, compared to 30.9% a year earlier, market researcher Kantar Worldpanel said.

The group saw its market share slip below the 30% mark for the first time in its history in the period to January, but it has since returned above that level after Kantar updated methods used in its calculations.

Tesco boss Philip Clarke unveiled plans to pump £1 billion into the UK business with extra staff, revamped stores and more special offers following months of falling sales.

The chain is losing its market share to low-cost grocers such as Aldi, Lidl and Iceland, while number two rival Asda was boosted by its recent acquisition of Netto.

The overall grocery market grew by 5% in value in the period, the highest level of growth since January 2010, but this was driven by higher food prices. Kantar said grocery inflation stood at 5.5%, unchanged from the previous two reports.

Asda saw its market share grow from 17% to 17.6%, but this was flattered by its purchase of 147 Netto stores.

Third-place Sainsbury's held its share at 16.6%, Morrisons dipped from 12.1% to 11.9%, while high-end grocer Waitrose grew its share from 4.3% to 4.5%.

The discount retailers fared well, with Aldi growing 2.2% to 2.7%, Lidl rising 2.6% to 2.8% and Iceland lifting its share from 1.9% to 2%.

Edward Garner, Kantar Worldpanel director, said the growth at Waitrose and the budget grocers suggested shoppers were polarising their spending.

He said: "Waitrose sees no slowdown in its growth as some households refuse to let economic pressures affect their food purchasing.

"This may also be a result of cutbacks on eating out which have meant that some shoppers are willing to spend more money on bringing the dining out experience into the home.

"The continued growth of premium own-labels, particularly Tesco Finest and Sainsbury's Taste the Difference, is further evidence of this behaviour."

Tesco revealed its UK strategy last week following a recent profits warning - its first in 20 years - and a sharp slump in its share price.

Tesco admitted that its £500 million Big Price Drop launched last year failed to impress customers but will revamp the initiative to focus more on giving customers special offers and money-off coupons.

However, strong growth in areas such as Asia helped overall group profits rise to £3.9 billion.