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UK: Record high market shares for discounters in UK

Updated: Dec 8, 2022

Record high discounter share and continuing strong growth of own label are the headlines from the kantar UK data for 12 w/e 27th Nov 2022.

Take-home grocery retail sales are up 5.9% YoY, up from +5.2% in the previous 12-wk period.

Grocery inflation over the 12-wk period is at 14.1%. The last 4-weeks has dropped slightly from 14.7% to 14.6%, suggesting a levelling out of the rate of price increases across the market.

This is likely to only be a temporary position. At this time of the year retailers tend to minimize the number of price increases as they concentrate on delivering a successful key trading period.

In January we will see further price inflation, as cost increase pressures have not disappeared and, in fact, remain crucial to suppliers who continue to face huge challenges with the prices of raw materials, energy, labour and transport.

In November we saw further increases across key food staples such as milk, cheese, sugar and eggs, the latter of which is in short supply with many retailers limiting purchases to 3 packs per customer.

The discounters’ surge in sales and share shows no sign of slowing. Aldi's and Lidl's growth of 24.4% and 22.0% respectively are their highest growth rates in at least 5 years. Over that time they have gained 4.7% points of the UK market whilst the former “Big 4” have lost the same amount.

Morrisons continue to struggle. Their sales value decline of 4.7%, combined with inflation at 14.1%, indicates a volume loss of over 18% year-on-year. With nearly a fifth less volume running through their suppliers', and their own factories, efficiencies and therefore costs will be rising even more rapidly. Morrisons desperately need to turn their performance around quickly.

The other retailer struggling at the moment is Waitrose, whose customers are being tempted away by lower prices elsewhere at this time where everyone is looking to save money. Their share of 4.5% is the lowest in at least the past 5 years.

The shift from brands to own label (OL) continues, with OL sales up 11.7% YoY, well ahead of the market. The value tier of OL is surging, with sales up 46.3%. Nevertheless, this tier remains less than 5% of total OL.

As consumers look to eat out less to save money, they are buying in-home alternatives from the premium OL ranges. This top tier has grown by 6.1%.

Next 4-wk outlook:

Kantar continues to report that Christmas sales have been slower so far this year. With just 18 trading days to go before the Big Day expect to see some good offers as retailers look to clear Seasonal over-orders.

Over the days leading up to the 15th we always see silly prices on key Produce lines (falling as low as 14p for 500g of sprouts last year). With a much higher cost base and tighter overall margins this year, which retailer will lead the others down in 2022?

Source: Kantar and Paul Stainton

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