Asda grows its share of the market

Asda has closed the gap on struggling giant Tesco (GETTY IMAGES)

Asda has closed the gap on struggling giant Tesco after a report today revealed that its share of the grocery market has grown to record levels.

Asda's market share rose to 17.9% in the 12 weeks to March 18 from 17.3% a year ago, Kantar Worldpanel said, boosted by buying 147 Netto stores and the impact of its price guarantee scheme, which offers to refund customers if their shop is not 10% cheaper than at rivals.

But Tesco continued to feel the pain after its £500 million Big Price Drop campaign failed to win over customers - its share dropped to 30.2% from 30.6% a year ago, although the falls were less dramatic than earlier in the year.

The UK's biggest retailer also came under further pressure from the success of discounters Aldi, Lidl and Iceland.

Kantar director Edward Garner said: "The findings make particularly good reading for Asda. Its 17.9% share is an all-time record performance and its year-on-year growth rate of 7.8% is leading the big four, largely thanks to the full integration of its Netto stores." The price war between the big supermarkets has intensified in recent months, with Sainsbury's also launching its own Brand Match guarantee scheme.

Mr Garner said the schemes from Asda and Sainsbury's had helped "defuse" Tesco's Big Price Drop.

He added: "Even if people don't redeem the Asda Price Guarantee, it has still put down a marker to say you can trust us on price."

Meanwhile, the survey revealed that the Co-operative Group's sales fell 2% - despite the grocery market growing by 4% as the cost of food pushed higher.

Its market share has fallen to 6.5% from 6.9% previously, fuelling speculation that it is struggling to integrate the 800 Somerfield stores it acquired in 2009.

Mr Garner said it is also suffering increased competition as Tesco and Sainsbury's open large numbers of convenience stores.

Sainsbury's and Morrisons both held their share of the market at 16.6% and 12.3% respectively.

Iceland's sales grew 10%, delivering some good news to boss Malcolm Walker, who recently led a £1.45 billion deal to buy back the chain he founded more than 40 years ago.

German discounter Aldi saw the strongest growth, with sales up 28.5%, bringing its market share to 2.6%.

The survey showed that grocery price inflation was up 5.5% in the period - the same as in the 12 weeks to February 19 - but the market only grew by 4% as shoppers took advantage of the raft of special offers to save money.

PA