Price war hits Tesco market share

A fierce price war raging among the major supermarkets has eroded the dominance of market leader Tesco, industry figures showed today.

Tesco's share has slipped from 30.7% a year ago to 30.5% while its growth rate of 3.8% has fallen behind rivals, according to figures from Kantar Worldpanel for the 12 weeks to November 27.

The supermarket, which has more than 2,700 stores in the UK, cut the cost of 3,000 items as part of its £500 million Big Price Drop campaign, which started at the end of September.

The move triggered an aggressive response as competitors hit back with their own schemes, such as Sainsbury's Brand Match campaign and Asda's move to bring petrol prices down.

Kantar said that while Tesco was the only supermarket among the big four to see its market share fall on a year earlier, its price cutting initiative is likely to have brought in more shoppers.

Edward Garner, director at Kantar Worldpanel, said: "With more products available for less, the amount of cash taken at the tills has understandably dropped. Despite this, Tesco has successfully attracted more shoppers to its stores through the promotion."

Morrisons continued its positive run, seeing its share rise from 11.8% a year ago to 12.1%, while Asda posted its strongest sales growth - 5.3% - since December 2009 as the integration of the UK Netto stores is completed.

Mr Garner said that Waitrose appears to be "immune" from the uncertain economic outlook faced by shoppers as its market share went from 4.1% to 4.3%.

Sainsbury's maintained its 16.4% market share and registered a 4.2% rise in till roll growth, keeping it on the tail of second-placed Asda on 17.2%.

Supermarkets at the lower end of the market out-performed the big hitters, suggesting that shoppers are drawn to deals and the prospect of bargains when they go out to buy groceries.

Iceland is enjoying a prosperous period as the frozen food revival continues to buoy its performance with year-on-year growth of 11% and a 1.9% market share.

Aldi posted strong growth of 15.4% and increased its market share to 3.5%, while Lidl achieved growth of 9% and boosted its share to 2.5%.

More details of Tesco's performance will emerge on Thursday when the retailer delivers a quarterly trading update. Analysts at Numis Securities expect the grocer will report a decline in UK like-for-like sales, excluding VAT and fuel, of 0.3%.