Supermarket sales plunge to record low as shoppers ditch Britain's 'Big Four' for German discounters

The stark figures came as the Office for National Statistics figures showed food prices down 1.6 % year on year in October

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Sales across the entire UK grocery market have fallen for the first time since records began as supermarkets wilt under the march of the discounters, industry figures have revealed.

The Big Four supermarkets, Sainsbury’s, Asda, Morrisons and Tesco, saw sales drop as shoppers flocked to cheaper rivals Aldi and Lidl.

Sales fell 0.2 per cent across the entire market in the past 12 weeks compared with a year earlier, according to analysts Kantar Worldpanel, the first such fall since records started in 1994.

The stark figures came as the Office for National Statistics figures showed food prices down 1.6 per cent year on year in October, the biggest annual decline since June 2002, despite overall Consumer Prices Index inflation edging slightly higher to 1.3 per cent.

Alongside a bitter supermarket price war, wheat prices have fallen more than 20 per cent on last year thanks to good harvests in the UK and worldwide, cutting a host of prices including bread, cereal and pasta. A dearer pound until recently has also meant cheaper import costs.

While good news for shoppers, if the revenue and profit squeeze continues for supermarkets it could lead to widescale redundancies and even the possibility of an entire supermarket chain collapsing. Asda and Morrisons have laid off hundreds of staff in recent months.

Tesco, the subject of a Serious Fraud Office probe into its accounting, suffered the hardest fall, as sales dropped 3.7 per cent in the 12 weeks to November 9 compared with a year ago.

Morrisons’ and Sainsbury’s sales sank 3.3 per cent and 2.5 per cent as both battle to win back customers from the discounters. Both have announced major price cuts and Morrisons has promised to price match Aldi and Lidl.

By comparison, the two German discounters grew their sales by an impressive 25.5 per cent and 16.8 per cent, permanently changing the supermarket landscape.

Analysts believe at least half of all shoppers visited either an Aldi or a Lidl at least once in the past three months.

Last week Asda revealed a surprise fall in sales, despite many predicting the Walmart-owned firm had managed to stave off the rise of the discounters. Sainsbury’s boss Mike Coupe last week admitted one in four of his stores was underperforming.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “The declining grocery market will be of concern to retailers as they gear up for the key Christmas trading season. This is bad news for retailers, but good news for shoppers with price deflation forecast to continue well into 2015.”