Aldi extends reach over supermarket sector as sales lag

Discounter Aldi has extended its reach over the UK grocery market and Sainsbury’s has been overtaken by Asda in main store sales as shoppers held back on spending, figures suggest.

Year-on-year supermarket sales over the 12 weeks to March 24 lagged to 1.4% – the slowest rate since March last year – in part due to the late Easter and Mother’s Day falling outside the reported period, Kantar said.

Aldi saw its sales increase by 10.6%, helping it to a new record high market share of 8%, as 13 million households visited at least once over the last quarter – now more than those shopping at Morrisons.

Lidl was the second fastest-growing supermarket, with sales increasing faster than last month at 5.8% and market share growing by 0.3 percentage points to 5.6%.

Sainsbury’s sales fell 1.8% over the quarter, cutting its market share to 15.3% from 15.8% in the same period last year.

Asda overtook Sainsbury’s with a market share of 15.4% as its sales climbed 0.1%, fuelled by a greater number of affluent households and shoppers making more regular trips.

However Sainsbury’s remained the biggest seller of food and drink out of the two retailers as its figures do not include its Argos arm.

Sainsbury’s agreed £7.3 billion takeover of Asda is currently being considered by the Competition and Markets Authority, which gave an initial view last month that the deal should be blocked in the absence of the sale of a large number of stores, or even one of the brands. A final report is due by April 30.

Meanwhile, British shoppers have already spent £146 million on Easter eggs this year, while 42% of households have bought hot cross buns.

Elsewhere, some 21% of fruit, vegetable and salad items were sold loose over the past 12 weeks, with sales growing twice as quickly as packaged produce, suggesting consumers are continuing their pressure on retailers over single-use plastics.

Analysts Nielsen also reported a slowing in grocery spending, to 1.2% in March from 2.5% the month before.

It attributed the slowdown to several factors, including the increased costs of living from rises in energy and fuel prices to the forthcoming increase in council tax, while extended uncertainty over Brexit negotiations also appeared to be causing shoppers to tighten their grocery budgets.

Mike Watkins, Nielsen’s UK head of retailer insight, said: “We can see that the last few weeks have continued to be challenging for retailers. However, there should be brighter times ahead, with Easter on the horizon bringing attractive seasonal promotions to encourage shoppers to spend more on confectionery, snacks and drinks.

“If this is accompanied by warm spring weather and more clarity over the status of Brexit, this will help to kick-start growth for the big supermarkets and boost sales in time for summer.”

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