Everyone is focusing on Morrisons this morning as its stock price shot price following better than expected results during Christmas.
But frankly, there are only two winners from the Christmas grocery sales sector — German discount supermarkets Aldi and Lidl.
While Morrisons posted its first positive sales growth in four years, with a piddly 0.2% improvement beating City forecasts of a 2% decline, market research group Kantar Worldpanel pointed out that:
- Lidl was the fastest growing retailer overall, with sales up by 18.5% [in the 12 weeks ending January 3, 2016]. An expanded product range, especially in its Deluxe premium line, has encouraged consumers to increase the size of their shop, with average basket sizes up by 7% to £17.20.
- Aldi followed with an increase in sales of 13.3%.
It puts the grocery sector sales in perspective, especially when the markets rejoice that one of the biggest supermarkets in the UK is able to post a slight uptick in sales, compared to a predicted drop.
It practically screams “low standards.”
But Kantar Worldpanel said that the biggest challenge facing Aldi and Lidl is to become more entrenched in British brand awareness so consumers don’t automatically go to incumbent grocers during the festive season.
“The discounters are continuing to establish themselves in the minds of British consumers — almost one in eight did their single biggest December shopping trip in Aldi or Lidl, on top of the 15.6 million households who visited at some point in the 12 weeks,” said
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel in a statement.
“That is an increase of nearly one million shoppers on last year, and their combined share is up from 8.3% last year to 9.7%. Despite Aldi and Lidl’s success, consumers are still spending most of their money in more traditional supermarkets, particularly in December, and total discounter share has dipped from the 10.0% achieved just before Christmas.”
Supermarkets have been locked in a price war for the last 18 months due to the rise of German discounters Aldi and Lidl, who have stolen market share from the so-called “Big Four” — Tesco, Asda, Sainsbury’s, and Morrisons.
Aldi and Lidl may have had a slight seasonal dent it their market shares while they strive to become more well-known among traditional shoppers but their combined growth is still phenomenal in the short amount of time they have set up shop in the UK.
Furthermore, their Christmas sales is just a taste of the kind of numbers they post on a regular basis.
This is how quickly Aldi and Lidl are claiming market share from April 2013 until now and how Britain’s biggest supermarkets are struggling to stop their slice being chipped away.
So if Morrisons, and the rest of the “Big Four,” want to keep on top, they have got to start posting better sales than sub 1% at a time.
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