More reports on: World economy

UK grocery sector declines for the first time in two decades

19 November 2014

The UK grocery sector has recorded its first sales decline in 20 years with shoppers deserting the Big Four for no-frills rivals, reported.

According to statistics from Kantar WorldPanel, sales dipped by 0.2 per cent in the past quarter, the first fall since data started to be collected in 1994.

Tesco saw the largest decline at 3.7 per cent, according to Kantar's data.

Morrison's sales declined 3.3 per cent, while the fall at Sainsbury's was 2.5 per cent and Wal-Mart owned Asda 0.2 per cent.

The figures for the no-fills groups Aldi and Lidl, however, were markedly different.

Aldi sales were up 25.5 per cent, Lidl by 10.6 per cent and Waitrose, which was squeezing the big four at the top end of the market, notched up a gain of 5.6 per cent.

While the Big Four continue to dominate with a combined 73 per cent share, the two discounters' share was now up to 8.4 per cent and Waitrose exceeded 5 per cent.

Tesco, Sainsbury's and Morrisons all had launched rejuvenation strategies over the past few months, mostly based around lower prices and/or heavy retrenchment.

According to many brokers, prospects for the giant chains were pretty dim and more retrenchment could be expected as they adjusted to what Mike Coupe, Sainsbury's recently appointed chief executive, described as a structural shift in the sector.

According to Fraser McKevitt, head of retail and consumer insight at Kantar, the shrinking market would worry retailers as they made preparations for the key Christmas trading season, reported.

Also, the price of a standard basket of groceries experienced its 14th successive decline in the period, falling 0.4 per cent year-on-year.

McKevitt said this was bad news for retailers, but good news for shoppers with price deflation forecast to continue well into 2015.

Aldi, which looks to create 35,000 new jobs in the UK by 2022, achieved year-on-year sales growth of 25.5 per cent to reach a record-high market share of 4.9 per cent.

According to Kantar, the retailer continued to benefit from "disruption" in the grocery market, adding that Lidl "also performed strongly," with sales growth of 16.8 per cent to reach market share of 3.5 per cent.

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