Grocery Spend Comes Under Pressure As Inflation Rises

Only Morrisons has managed to add share this period (11.6% to 11.7%), with year-on-year growth of 4.6% - slightly ahead of the market.

The latest grocery share figures from Kantar Worldpanel, published today for the 12 weeks ending 7th August 2011 show the grocery market growing at 3.8% per year, below the 5.2% grocery price inflation in this period.

Edward Garner, Director at Kantar Worldpanel, explains: “It is evident that shoppers are trying to manage their ‘personal’ inflation by trading down. This can be done by seeking out lower priced outlets and cheaper alternative products.

“It’s therefore unsurprising that the discounters have pushed further ahead this month. Lidl has recorded year-on-year sales growth of 13.8% enabling it to retain its record market share of 2.6%. However, the stand-out performance comes from Aldi this month, with growth of 24.4% and an all-time record share of 3.6% - up from 3.0% a year ago.”

The sharp decline of 36.8% for Netto is a result of the store conversions to the Asda brand alongside store disposals, as required by the OFT.

Edward continues: “While the discounters are prospering we are not seeing the shift towards consumers buying more own-label products that might be expected from cost cutting. In fact, budget own-label is showing only muted growth of 2%, while premium own-label is growing at over 8%, confirming that despite economic pressures, low-price is not the only motivation in this market.

“This is further demonstrated by the continued ‘two nations’ theme, as Waitrose shrugs off any gloom with sales growth of 8.3% - over double the market growth.”

This is a challenging market for the big four grocers, which have to appeal to a broad range of consumers, unlike the discount and premium niche players. Only Morrisons has managed to add share this period (11.6% to 11.7%), with year-on-year growth of 4.6% - slightly ahead of the market.

Watch the previous commentary here