Tesco is starting to regain ground on its rivals in the UK, industry analysts Kantar Worldpanel claimed today (14 August) as they issued their latest sales data on the country's grocery sector.
The UK grocery market grew by 3.9% in the 12 weeks to 5 August. Tesco, the country's largest retailer, saw its sales increase 3.4%.
Nearest rivals Asda and Sainsbury's increased their sales by 6.2% and 4.6% respectively.
Kantar Worldpanel said the results indicated Tesco was still losing market share but the analyst firm claimed the retail giant's performance relative to its competitors was improving.
"Although Tesco continues to lose share, this is now at a slower rate as it begins to close the gap with its rivals," it said.
After months of falling underlying sales in the UK, Tesco has been investing in its ranges and service levels in a bid to lure back consumers.
Morrisons, the UK's fourth-largest grocer, saw sales increase 1.8%, Kantar Worldpanel said.
The data also claimed grocery inflation was 3.2% in the 12-week period. "Shoppers might not yet notice it at the tills, but they are starting to benefit from lower grocery inflation, with prices now rising at 3.2% – the slowest rate for 18 months and a sign that things are starting to look up," Kantar Worldpanel retail analyst Fraser McKevitt said.
"Despite this, consumers are still seeking economy products and retailers are reflecting this demand in their store offerings. The lowest priced own-label lines, such as Tesco Everyday Value, are growing at 13% while premium own-label sales are falling by 4% year-on-year."
However, extreme weather conditions in the US and the UK has led to an increase in some commodity prices. In recent weeks, Premier Foods plc has said it would look to pass on higher wheat costs, while produce supplier PinguinLutosa said the wet weather in the UK between April and June could push up the price of products including green beans.
GROCERY MARKET BOUNCES BACK...
...with price inflation rate at its lowest for 18 months
The latest grocery share figures from Kantar Worldpanel, published today for the 12 weeks ending 5 August, show the grocery market has bounced back and is now growing at 3.9%. This is compared with the 2.1% reported just a month ago.
The big four supermarkets all performed strongly, with Asda and Sainsbury's leading the pack and growing at 6.2% and 4.6% respectively. Although Tesco continues to lose share, this is now at a slower rate as it begins to close the gap with its rivals.
Fraser McKevitt, retail analyst at Kantar Worldpanel, explains: "It's too early to attribute improved grocery sales to the Olympics, however, the increased market growth rate coincides with the opening week of London 2012 and the better weather in July.
"Shoppers might not yet notice it at the tills, but they are starting to benefit from lower grocery inflation, with prices now rising at 3.2%* – the slowest rate for 18 months and a sign that things are starting to look up. Despite this, consumers are still seeking economy products and retailers are reflecting this demand in their store offerings. The lowest priced own label lines, such as Tesco Everyday Value, are growing at 13% while premium own label sales are falling by 4% year-on-year."
The number of shoppers looking for value has helped both Aldi and Lidl maintain their double digit growth. Iceland continues to benefit from the strong frozen food sector with a year-on-year growth rate of 7.0%. At the other end of the price spectrum, Waitrose has grown by 7.4% – a considerable uplift on the relatively weak 4.8% growth posted last period.
An update on inflation
Grocery inflation stands at 3.2%* for the 12 week period ending 5 August 2012. This continues the downward trend from the recent peak of 6.2% for November 2011 and reflects lower inflation in dairy markets, particularly falling milk prices.
