Business

Grocery sales 'fall for first time since 1994'

An Aldi store Image copyright Getty Images
Image caption Aldi continues to win sales from the big four supermarkets.

UK grocery sales have fallen for the first time in two decades, a survey suggests, underlining the challenge faced by supermarkets.

Kantar Worldpanel said that the value of sales fell by 0.2% for the 12 weeks to 9 November compared with the same period last year.

That was the first decline since the market research company began tracking the industry in 1994.

Price competition has pushed down grocery prices by 0.4%.

Price war

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said the fight to attract customers had sparked a price war that meant the average basket of staple goods now cost less than it did last November.

The fall in grocery inflation was another record low since Kantar began tracking prices in October 2006.

"This is bad news for retailers, but good news for shoppers with price deflation forecast to continue well into 2015," Mr McKevitt said.

The fall reflected the impact of discounters Aldi and Lidl, as well as lower prices of staples such as vegetables, milk and bread.

Image copyright Getty Images

In a separate report, investment bank Goldman Sachs said that Sainsbury's, Morrisons and Tesco were "totally addicted to space".

If they want to return to profitable growth they need to cut their selling space by 20%, which could involve closing some stores altogether, according to Goldman.

It says that Tesco, with the largest amount of store space and the biggest stores, would benefit the most from cutting back.

Discount challenge

The Kantar report showed that for the 12 weeks to 9 November, Tesco, Asda, Sainsbury's and Morrisons continued to suffer from falling sales.

Kantar said that Asda's sales were down 0.2% from a year earlier, while its market share remained steady at 17.2%.

Sales at Sainsbury's were down by 2.5%, with a market share 0.4 percentage points lower at 16.4%. Morrisons' sales fell 3.3% compared with the same period last year, and its market share was 11.1%, down from 11.5%.

Tesco recorded the worst sales slide, down 3.7%, with a 1.1 percentage point fall in market share to 28.7%.

In contrast, Aldi sales have jumped by more than 25% from a year earlier - slightly less stellar than the 32% growth recorded in the 12 weeks to 20 July. It now has a record market share of 4.9%.

Lidl also did well, with its market share hitting 3.5% following a 16.8% rise in sales - also slightly lower growth than the previous three months.

Waitrose had another good result, with a 5.6% rise in sales and a 5.1% market share, up from 4.8% in the same period last year.

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