Price war drives grocery deflation to record low

The latest grocery share figures from Kantar Worldpanel, published today for the 12 weeks ending 1 March 2015, show that deflation has reached a new low of -1.6% as price competition between the supermarkets continues to impact the market.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “A combination of lower general inflation and the grocery price war has saved shoppers £400 million in the past 12 weeks, with deflation driven to a record low of -1.6%. All of the major supermarkets are cutting prices to win shoppers, especially within everyday staples such as eggs, vegetables and milk. Retailers are focusing their efforts on simple price cuts rather than complicated ‘multibuy’ deals.

“Among the big four supermarkets Tesco has been the standout retailer. It has posted its strongest performance in 18 months with sales up 1.1% compared with a difficult 2014. Increasing sales have helped Tesco arrest its falling market share, which is down just 0.1 percentage point compared with last year. This resurgence has impacted Asda which competes for many of the same shoppers as Tesco. Asda’s sales are down by 2.1%, taking its market share to 17.0%. Morrisons and Sainsbury’s both grew behind the market average with sales falling by 0.4% and 0.5% respectively.”

Aldi has continued to grow well ahead of the market with sales up 19.3% compared with a year ago. This is Aldi’s slowest rate of growth since June 2011, but it was enough to take the discount retailer to a new record market share of 5.0%. Fellow German supermarket Lidl also performed well, with growth of 13.6% increasing share to 3.5%.
Sales at Waitrose increased by 4.9% in the latest period. The premium grocer is selling more products on promotion than it has done historically, in an effort to be more price competitive. Waitrose’s market share has remained at its highest level with 5.2%, up 0.2 percentage points.

Kantar Worldpanel has launched a new data visualisation tool that allows you to view and analyse Grocery Market Share data online. The latest sales share figures for all of the major grocers can be viewed and compared with historical figures here and all graphics within the Kantar Worldpanel dataviz are available to embed in your site. (Optimal viewing in recent versions of Internet Explorer or Chrome)

An update on inflation

Grocery inflation has seen its 18th successive fall and now stands at -1.6%* for the 12 week period ending 1 March 2015. This means shoppers are now paying less for a representative basket of groceries than they did in 2014. This is another record low since Kantar Worldpanel began recording GPI in October 2006 and reflects the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories including vegetables, milk and bread.

*This figure is based on over 75,000 identical products compared year-on-year in the proportions purchased by shoppers and therefore represents the most authoritative figure currently available. It is a ‘pure’ inflation measure in that shopping behaviour is held constant between the two comparison periods – shoppers are likely to achieve a lower personal inflation rate if they trade down or seek out more offers.