Supermarkets struggle as online sales surge
Published:  23 October, 2015

Supermarket sales grew just 0.8% for the 12 weeks ending 11 October 2015, compared to the same period last year, according to Kantar Worldpanel. 

It means revenue growth among the major supermarkets has not gone above 1% since March 2015, despite the steadier economy.

“With like-for-like grocery prices 1.7% lower than last year, the supermarket price war shows no signs of abating,” said head of retail and consumer insight at Kantar Worldpanel, Fraser McKevitt.

“Consumers have now enjoyed more than 12 months of continually falling prices and are currently pocketing these benefits rather than splashing out on substantially more grocery items, with overall volume growth of only 2%. This equates to £1.5 billion taken out of the market in the last year, saving each household £58 on average.”

Of the main supermarkets, Sainsbury’s was the only one to see sales growth this period. Strong performances in its online and Local stores helped it increase revenues by 1.1%. Its market share stood although at 16.1%.

Meanwhile, sales fell at Tesco by 1.7%, although the impact of its Brand Guarantee scheme is yet to be deliberated.

Asda saw sales fall by 3%, which led to a 0.7% decline in market share to 16.6%. Sales also fell at Morrisons by 1%, taking its share to 10.8%.

Juxtaposing the small growth experienced by the supermarkets, Kantar revealed that online grocery sales increased by 9.8% on last year. However, it is reported that less than half of households are doing their grocery shopping online, meaning that supermarkets have space to grow this sector.

McKevitt continued to say that there was potential for this area of the market to develop further: “Internet sales offer a chance of long term growth – only 18% of household bought groceries online in the last 12 weeks meaning there’s plenty of space for further expansion. The convenience factor and minimum spend restrictions mean online baskets tend to be larger, averaging £67 in value, compared with £14 for the average bricks and mortar trip. Amazon Fresh’s expected full launch early next year could be a major disrupter, bringing down average basket sizes, accommodating on demand shopping, and accelerating the growth of the whole online market.”

Leading supermarkets may have experienced stunted growth, but the discounters have been going from strength to strength. “For the second successive month Lidl has reached a new share high, now claiming 4.3% of the market and growth accelerating to 17.9%,” added McKevitt. “Growth was particularly strong in Scotland, the scene of its ‘smarter shopping’ card trial. It’s a similar story for Aldi, where revenues are up 17.6% on a year ago.”

Waitrose and the Co-operative also experienced growth, with sales growing 2.1% and 1% respectively. For the sixth consecutive month, Iceland experienced growth with sales rising by 3.2%, due to a range of more premium products.