Food prices are falling as the German discounters Aldi and Lidl continue to force Britain’s big supermarkets to cut prices, a survey showed.
Groceries were 1.7% cheaper in the 12 weeks to 21 June compared with a year ago, according to figures from Kantar Worldpanel. The number of items sold barely rose, meaning that the overall market slipped back into decline for the first time since November.
Britain’s big grocers have cut prices as customers have shopped around and defected to Aldi and Lidl for everyday items. The German companies have embarked on big store opening programmes to capitalise on their popularity.
Aldi’s sales rose 15.4% in the last three months giving it a record 5.5% share of the market. Lidl’s sales rose 9.1%. At the other end of the spectrum, John Lewis’s upmarket Waitrose chain also raised sales faster than the overall market, by 1.2%.
Kantar Worldpanel said: “Aldi and Lidl showed no signs of slowing down and are continuing to take share away from the competition. Falling prices reflect the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories including eggs, butter and bread.”
Tesco and Sainsbury’s each suffered 1.3% sales falls while Asda’s sales fell 3.5%. The only member of the big four grocers to boost sales was Morrisons, where online purchases helped sales rise by 0.6% – the second month running that sales rose at the struggling chain. Its share of the market crept up by 0.1 percentage point to 11%.
Fraser McKevitt, Kantar Worldpanel’s head of retail and consumer insight, said: “Morrisons has seen the largest sales increase among the ‘big four’ retailers for the second month in a row. While only a small increase against a weak 2014, this does represent the first market share gains made by Morrisons since December 2011.”
Morrisons had suffered the most at the hands of Aldi and Lidl because its customers are more price-conscious and the group lacks the firepower of Tesco. But the signs of revival are encouraging for Morrisons’ new chief executive David Potts, who has put more staff back in stores.
The overall rate of price decline has slowed from 1.9% a month ago and prices are expected to start edging up by the end of this year.
