Sales at discount supermarkets Aldi and Lidl now account for more than 10% of grocery sales at the UK’s leading supermarkets, data from Nielsen Homescan has revealed.
During the twelve weeks to 31 January, Aldi’s year-on-year sales grew 17.3% and Lidl’s 13.8%, compared to an increase of total supermarket sales of just 0.7%. Aldi and Lidl hit a combined market share of 10.7% – 5.8% and 4.9% of the market respectively – up from 9.3% in the corresponding period last year. A 10.7% share equates to £1 in every £9.31 spent at UK supermarkets. This is concrete evidence of what is anecdotally true: discounters, led by Aldi and Lidl, are effecting a fundamental change in the UK grocery market.
Woebegone grocery giant Tesco – whose UK market share reached a high of 31.2% in 2007 – remained ahead of the pack with a 27.7% market share in the 12 weeks to January 31, down from 28.2% last year. Although Tesco’s sales declined 1.2% year-on-year, the UK’s biggest grocer may take heart from the fact the decline was worse for its nearest competitors Sainsbury’s and Asda, for whom sales declined 1.6% and 1.9% respectively. Sainsbury’s market share during this period was 16.3% and Asda’s 15.9%, both down 0.4%.
At the other end of the price and quality scale, the figures also reflected the success of Marks & Spencer and particularly Waitrose. M&S’ like-for-like sales were up 1.5% in the 12 weeks to 31 January. Waitrose’s sales were up 7.7% from the same period in the previous year with its market share rising from 4.1% to 4.4%.
Morrisons, who sacked CEO Dalton Philips on January 12 over a poor Christmas performance, maintained its market share from the previous year at 10.8%. It seems inevitable that, with current sales growth, Lidl and Aldi’s combined will pass Morrisons in the first half of this year in a further symbolic gesture of the discounters’ rise.
“The 10% market share for discounters has not been seen since the heyday of Kwik Save some 15 years ago,” said Mike Watkins, Nielsen’s UK Head of Retailer and Business Insight. “Initially built on the premise of saving money, the new wave of discounters are now a regular part of grocery shopping and have changed shopping habits forever. For instance, switching to cheaper grocery brands is again the number one household tactic for saving money. Furthermore, nearly half of those cutting costs will continue to buy cheaper grocery brands even when economic conditions do improve” he added.
“However, what is different this time is that discounters are no longer solely associated with price. They’ve been very astute at promoting the quality of their offerings to appeal to a wider range of consumers.”
Watkins also noted the importance of advertising in the shift. “The discounters’ rise in market share has been aided by investing heavily in advertising spend,” he said. “In the 12 week period, for example, Aldi spent the most on advertising in relation to its market share. Lidl is third in this regard behind M&S.”