UK superkarket chains face challenges from price cuts, falling revenues

The UK's biggest supermarket chains are under increasing pressure from the impact of price cuts, deflating revenues and the discounters Aldi and Lidl grabbing more shoppers, The Telegraph reported.        

Tesco might be faced with a loss of 1 million UK shoppers a week with increasing numbers of consumers turning away from the supermarket chain.

According to new data from Kantar Worldpanel, in the 12 weeks to 25 May, Tesco's sales were down 3.1 per cent year-on-year, leading to its share of spending in the grocery industry falling from 30.5 per cent to 29 per cent, the highest decline in share for at least 20 years.

Sales for the total grocery industry were up by only 1.7 per cent year-on-year, the lowest level for at least 11 years.

The figures showed falling sales for Tesco and Morrisons, with Sainsbury's and Asda the best-performing major grocery retailers.

According to David McCarthy, analyst at HSBC, the figures were ''shocking'' and the  number of visits by shoppers to Tesco stores was falling over 1 million every week, The Telegraph reported.

However, even as the sales for the ''big four'' stagnated, the German discount chains were expanding rapidly. Aldi saw an increase in sales of 35.9 per cent even as Lidl grew 22.7 per cent, while, Waitrose, the upmarket grocer, grew sales by 6.1 per cent.

Tesco's sales retreated 3.1 per cent year-on-year, giving it a market share of 29 per cent, down from 30.5 per cent, with sales at Morrisons slowing 3.9 per cent, bringing its market share down to 10.9 per cent from 11.6 per cent, ifamagazine.com reported.

Sainsbury's sales increased 0.9 per cent, but its market share was down to 16.5 per cent from 16.7 per cent a year ago.

Asda's sales rose 2.4 per cent and it was the only leading grocer to see its market share rise. The company's market share was up 17.1 per cent from 17 per cent.

According to Kantar, price cuts by the big four supermarkets had led to a drop in the level of grocery inflation to 1.2 per cent, the lowest level since May 2010.