Supermarkets show signs of lower spending

BRITAIN'S SUPERMARKETS

could be seeing the first effects of a slowdown in general consumer spending, according to analysts.

Official figures released yesterday for overall retail sales showed a rise of 2.9 per cent over a year ago, but the Office for National Statistics said the underlying trend continued to point to a further slide in growth.

Supermarkets' share prices slid yesterday, with the investment bank, BT Alex.Brown, cutting its recommendation on the sector from "neutral" to "underweight". Dealers said the move came on the back of a steady erosion of real like-for-like sales throughout the year.

A new television campaign, due next week from Sainsbury, added to concerns over increased competition.

The market leader, Tesco, fell 8p to 163p; Sainsbury fell almost 37p to 525.5p; Safeway slipped 12.5p to 305.5p and Asda dropped 6.25p to 174.5p.

Tesco, which reports half-year results on 22 September, is expected to confirm the trend. Analysts are looking for underlying sales growth of 2 to 3 per cent, compared with its last report in June of a 4.8 per cent gain.

"The underling trend is slightly downward, even if profitability remains strong," said one sector analyst.

However, William Morrison, the Yorkshire supermarkets group, reported half-year profits of pounds 68.3m against pounds 61.7m in the period last year.

Inflation-adjusted same-store sales in supermarkets rose just 0.1 per cent in August on a year ago, a steep fall from growth of 2.4 per cent in January.

As supermarkets move into non-food sectors such as clothing, entertainment and electronic equipment, they have reaped the benefits of higher margins. But the move into non-food leaves supermarkets more vulnerable to any slowdown in consumer spending and there are worries that customers might start to move away from expensive ready meals, where profit margins are high.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...

Ashdown Group: Development Manager - Rickmansworth - £55k +15% bonus

£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...

Recruitment Genius: Security Officer

£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...

Ashdown Group: Business Analyst - City, London

£50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss