UK food sales have jumped as consumers splashed out for the Queen's Diamond Jubilee, but the latest figures from Kantar Worldpanel show that Tesco and Morrisons struggled to take advantage of this market growth.
Both Tesco and Morrisons saw their market share dip 0.4 points in the 12 weeks to 10 June.
The problems that Tesco has in the UK have been well-flagged and the retailer is taking corrective measures that it hopes will enable it to regain momentum in the market. However, while this update is the latest in a line of 'bad news' for Morrisons (in May the group reported its first like-for-like sales drop since 2005), there has been little indication from the supermarket group that it believes there is a problem with its strategic direction.
One hotly contested area in UK retail has been the use of coupons and vouchers - activity that Morrisons had initially said it would "sit back from" but is now trialling. Sainsbury's has been able to build its reputation as offering good value through its strong couponing initiative, which provides targetted vouchers at the till, coupled with its brand match price campaign. This has enabled the group to grow organic sales ahead of the market and steal share from its competitors.
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JUBILANT JUMP IN SALES...
...but it's still mixed fortunes for the big four
The latest grocery share figures from Kantar Worldpanel, published today for the 12 weeks ending 10 June 2012, show the market growing at 3.2% with a dramatic jump to 11.3% in the run-up to the Diamond Jubilee (week ending 3 June 2012). This meant there was an extra £213 million in the tills that week.
Edward Garner, director at Kantar Worldpanel, explains: "The remarkable growth rate recorded over the Jubilee is a sign of what's to come during the Olympics when we expect grocery sales to soar. Competition is likely to be fierce with fortunes now considerably different among the big four.
"Both Tesco and Morrisons suffer share dips of 0.4 points this month whereas Asda and Sainsbury's have seen their shares strengthen. The two retailers have taken different paths to growth with Asda expanding its estate through its acquisition of the UK Netto stores and Sainsbury's enjoying a long-term trend of organic growth as stores are added one-by-one. What both outlets have in common is strong price messages - Asda with its Price Guarantee and Sainsbury's with its Brand Match - and this is supporting them well."
The polarisation seen in recent months continues unabated with Aldi, Lidl, and Waitrose all holding on to all-time record shares - Aldi and Lidl both have 2.8% and Waitrose has 4.6%. All three outlets have successfully appealed to their respective shoppers who are now spending more in store.
Edward Garner continues: "Iceland is growing at nearly twice the market average lifting sales by 6.3% this period. This is largely a result of the buoyant frozen food market, which tends to do well during times of economic uncertainty, and is currently the fastest growing grocery sector."
An update on inflation
Grocery inflation stands at 4.4%* for the 12 week period ending 10 June 2012. This is a welcome decrease from the level of 5.1% last period but remains above the market growth meaning that households are still trying to rein in grocery spending by managing down their 'personal inflation'
