Two-thirds of UK households visited a discounter over Christmas, handing Aldi and Lidl their biggest ever slice of spending as political uncertainty appeared to prompt shoppers to keep a tight hold on their wallets.
All the major supermarkets lost market share in the 12 weeks to 30 December as Aldi’s sales jumped 10.4%, according to the latest data from Kantar Worldpanel, and Lidl’s by 9.4%.
This took their combined market share to a record 12.8%, up from 11.4% the previous year. UK-based discounter Iceland’s sales also rose 1.8%, increasing its share of the market to 2.3%.
Fraser McKevitt, the head of retail and consumer insight at Kantar: “The discounters have continued to make their mark over Christmas: two-thirds of all households shopped at either Aldi or Lidl over the 12-week period, culminating in a highest-ever combined Christmas market share of 12.8%.”
Asda was the strongest performer of the big four food retailers, with sales growth of 0.7% according to Kantar, followed by Tesco and Morrisons. Sainsbury's had the most difficult period, with sales falling by 0.4%.
Overall, supermarket sales growth slowed to 1.6% over Christmas, the poorest performance in more than a year, as shoppers reined in spending amid political uncertainty ahead of Brexit negotiations. While shoppers spent £450m more than in 2017, growth in 2018 was tempered by lower inflation of 1.3%, less than half the level seen the previous year.
Online sales rose just 3.9%, with all of that growth coming from existing shoppers. McKevitt said Amazon would be the company to watch this year as its grocery sales rose 16% over the three-month period.
RPA Perspective The industry figures were released as Morrisons reported a slowdown in sales growth over Christmas as it said shoppers had become “more cautious and careful” amid the political uncertainty around Brexit.
Sales at its established supermarkets rose 0.6%, including a 0.4% contribution from online sales, in the nine weeks to 6 January. Wholesale sales were up 3% and Morrisons said that it had held the price of 100 key traditional Christmas goods, such as mince pies, at the same level as last year.
The figures were slightly behind some City expectations and were down on the robust Christmas performance achieved by the company in 2017, as well as on the 1.3% in stores and 4.3% via wholesale reported for the three months to 4 November.
David Potts, Morrisons chief executive, said of the figures: “Going into November there was a sense that customers were a bit more cautious, a bit more careful with their spending and there was a feeling of uncertainty in the country that may have led to that. People became increasingly savvy and conscious of the macro political situation in the country and how it may influence 2019 and how it may affect them.”
He said he expected consumers would continue to be price-conscious through 2019 and said retailers would have to “trade hard and offer great value” in order to win over shoppers.
Morrisons recently announced it was cutting the prices of over 900 products by an average of 20% and Tesco has also revealed price cuts on hundreds of items in the annual attempt to win over shoppers who find their finances squeezed after Christmas.
Potts said: “This is Morrisons’ fourth consecutive Christmas of like-for-like sales growth during the turnaround. Our performance shows colleagues are listening hard and responding to customers, providing consistently great value and good quality when it matters most.”
Sainsbury’s, Tesco and Waitrose will report their festive trading figures later this week.
