Tesco put in its strongest sales performance since June over the past three months as the grocery market stepped back into growth amid an escalating price war.
Overall, prices fell by 0.7% compared with the same time last year, according to analysts at Kantar Worldpanel, who said retailers had increased the number of items on promotion, resulting in savings of £182m for shoppers on their festive grocery bills.
“Britain’s supermarket price war is ramping up ahead of the all-important Christmas period,” said Fraser McKevitt, head of retail and consumer insight at Kantar. “Cheaper groceries are an early Christmas present for shoppers.” He said price deflation would continue well into next year as German discounters Aldi and Lidl continued to grow rapidly, reaching a combined market share of 8.6% last month.
While Aldi’s pace of growth slowed to 22.3% from 25.5% last month, Lidl picked up to 18.3% in the 12 weeks to 7 December from 16.8% in the three months to 9 November.
Both chains are performing way ahead of their bigger rivals, which continue to suffer in the price-sensitive market. Tesco’s sales slumped 2.7% in the 12 weeks to 7 December, although this was an improvement from a 3.7% slide revealed last month, enabling it to relinquish its position as the worst-performing major supermarket to Morrisons. The Bradford-based chain’s sales dropped 3.2%, a similar fall to last month, despite the introduction of a loyalty card and heavy use of discount vouchers.
The improvement is good news for Dave Lewis, Tesco’s new boss, who was forced to issue the company’s fifth profit warning in a year as the cost of cleaning up the supermarket’s financial dealings with suppliers and drafting in extra workers to UK stores hit annual profits by £500m.
Market share - 12 weeks to 7 December 2014 (2013 figures)
• Tesco: 29.1% (29.9%)
• Asda: 16.7% (16.9%)
• Sainsbury’s: 16.5% (16.8%)
• Morrisons: 11.2% (11.6%)
• The Co-operative: 6.1% (6.2%)
• Waitrose: 5% (4.7%)
• Aldi: 4.9% (4%)
• Lidl: 3.7% (3.1%)
• Iceland: 2.1% (2.1%)
• Farmfoods: 0.6% (0.7%)
