Market growth was 1.4% in the 12 weeks to 16 June 2019, according to the latest results from Kantar. Performance has slowed compared to this time last year, when growth was 2.1%. We look at the factors influencing this and key retailers' performance.
Cooler weather slows growth
This year growth is more modest due to the cooler weather and lack of celebratory occasions such as the World Cup to encourage spending. This month does however mark three years of continuous growth in the sector, and is an increase on May when growth was 1.3%. Also, as inflation is down 0.2pp this month to 1.0%, volumes have slightly increased 0.3pp to 0.4%.
Ocado becomes the fastest growing supermarket
Online specialist Ocado became the fastest growing supermarket with sales at +11.3%. This was ahead of the overall e-commerce market at 6%. The growth comes from a small base, with only 3% of shoppers buying from Ocado. However, the results are very positive for the retailer as it was expected to be negatively impacted by the fire at its Andover CFC for the next two years.
For subscribers who want to find out more about Ocado's results and strategy, take a look at our strategic outlook.
Discounters grow share as they expand in London
Discounters continue to win, although sales were slower this month than in May. Aldi grew the fastest at 9.3% (compared to 11.3% in May), increasing its share to 7.9%. This is up 0.5pp on last year. Lidl’s sales grew 7.5% (compared to 8.5% in May), growing its share to 5.7%.
Both discounters announced in June that they are focusing on expansion in London. Aldi 'Local' is growing, with one new store and six conversions opening in June. Lidl has set out plans to invest £500m in expansion in small London stores. This will include 40 new branches.
The new stores for both Aldi and Lidl will be smaller than their traditional format, and will have a reduced range. The discounters have previously struggled in London with the lack of large sites with car parks they prefer to operate in. The new format gives the retailers more flexibility to expand in the city.
Co-op grows through frequent store visits
Co-op continues to have positive results, growing its market share to 6.2%. The retailer continues to expand in London and the South, which has made the region its largest area for growth. Shoppers frequently visit stores for small basket shops, with the average visiting 22 times over the course of 12 weeks.
Tesco is the best performer of the big four
Tesco was the only one of the big four to not lose sales. Last week, the retailer updated its strategic priorities and going forwards will prioritise total sales growth over LFL growth in its continuing drive to rebuild its profit margins.
The other retailers in the big four; Sainsbury's, Asda and Morrisons continue struggle in the challenging market, with negative sales growth.
Iceland remains in growth
Iceland continues to perform well, with growth of 0.6%. The retailer recently revealed its results for the 52 weeks ending 29 March 2019. Sales increased by 4.5% to £3.08bn in the reported period. This was driven by new store openings as like-for-like sales were broadly flat.
||12 weeks to 17th June 2018
||12 weeks to 16th June 2019
||Sales growth (Y-O-Y%)
|Symbols & Independents
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