British supermarkets are fighting back

Boxing stomach punchREUTERS/Yuya ShinoChallenger Norberto Jimenez (R) of the Dominican Republic punches the champion Kohei Kono of Japan during their WBA boxing super flyweight title bout in Tokyo December 31, 2014.

British supermarkets are battling in a price war because the soaring popularity of discount food retailers, like Aldi and Lidl, is forcing them to become even more competitive.

However, grocers are making a “steady fight back,” said accountancy giant KPMG.

In the latest British Retail Consortium and KPMG survey, for the five weeks to April 4, total food sales rose by 1.8%, which is the strongest growth rate since July 2013. However, food sales still fell 0.4% on a like-for-like basis, compared with March last year.

Total UK like-for-like retail sales, which includes other sectors such as furniture, rose by 3.2% compared with March 2014. This is the strongest growth since January last year. It was largely down to the Easter bank holiday weekend.

“An early Easter and better economic news helped lift retail sales out of the doldrums in March and the sector posted the strongest sales growth seen in nearly a year,” said David McCorquodale, Head of Retail, KPMG in a statement.

“While the figures are inflated by the timing of Easter, they are still a welcome boost for retailers who have battled flat or falling like for like sales for the last quarter. Signs of recovery were also seen in the grocers’ figures, who are mounting a slow but steady fight back.

“However price deflation continues to dog the sector, and while supermarkets may be selling more, they are peddling hard to stand still. Demand is definitely pushing in the right direction, but there is a long way to go before like for like food sales are back in positive territory.

“Any retail recovery is built on confidence and uncertainty around the outcome of the election continues to cast a shadow over the long term recovery of the sector. If the result causes concern and confusion this could be the factor that stifles consumer spending.”

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