Discounters slow as Tesco jumps

Aldi and Lidl lowest growth since 2011 say researchers

DISCOUNTERS Aldi and Lidl have seen their lowest level of growth in five years, according to market analysts.

Kantar Worldpanel released its findings for the 12 weeks to 6 November and Nielsen published its figures for 12 weeks of trading to 5 November, with both showing the discount retailers growing at their slowest rate since 2011.

The Tesco comeback appears to be continuing. Nielsen records 2.3% growth. Kantar Worldpanel says it’s 2.2% – the best in three years.

Nielsen said Aldi’s year-on-year sales revenue increased 11.3% while Lidl’s increased 5.2%. Between them, they account for 11.8% of UK grocery sales, up from 11.1% a year ago.

Mike Watkins, Nielsen’s UK head of retailer and business insight, said: “It’s inevitable that a time would come when the discounters experienced a slowing growth rate, and three factors have combined to see this happen.

“Firstly, the growth rates a year ago were particularly high due to a period of new store openings, so it’s always harder to maintain growth against that. Secondly, the supermarkets have had more time to alter strategies to fend off the discounters.

“Finally, shoppers are still spending freely and we’ve seen a return of sustainable growth in the volume of items people are buying, helped by industry-wide price cuts, so one of the discounters’ USPs is less pronounced in shoppers’ minds.”

On shoppers continuing to spend freely, Watkins said that this was “despite the so-called Brexit impact, which in reality isn’t expected to hit consumer spending until next year.”

Meanwhile, both analysts recorded good news for Tesco, which grew at its fastest rate in three years.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Tesco’s 2.2% growth is a considerable improvement on the numbers it was delivering this time last year, and indeed in 2014.

“Branded sales did see an increase but most of the gains were made through its own-label products, both at the cheaper and more premium ends of the price spectrum.”

Kantar said sales at Sainsbury’s declined by 0.7% over the period, contributing to a 0.3 percentage point fall in market share to 16.3%. Morrisons saw a boost in premium own-label thanks to its ‘The Best’ line, though total sales fell by 2.4%, partly because the group now has fewer stores.