Subscriber login Close [x]
remember me
You are not logged in.

Supermarkets lose £400m in sales as price deflation gives further savings to consumers

Published:  10 March, 2015

Supermarkets are missing out on £400 million in sales as price deflation continues to pick up pace offering further savings to consumers, according to latest figures from Kantar Worldpanel.

 

Supermarkets are missing out on £400 million in sales as price deflation continues to pick up pace offering further savings to consumers, according to latest figures from Kantar Worldpanel.

This month's retailer numbers show that price deflation is picking up pace and is "coming down at an even faster rate," said Kantar. 

The savings have added up to £400 million for consumers compared to this time last year, according to the numbers, which cover the last 12 weeks ending March 1, 2015.

Fraser McKevitt, head of retail and consumer insight at Kantar said: "Prices are still falling but coming down at an even faster rate. Our basket of 75,000 like for like products is now 1.6% cheaper than it was last year. The average household is spending just shy of £1000 over 12 weeks, so that is a savings of about £16 each. Sum up all those £16s and that is £400 million taken out of the supermarket tills."

Promotions are becoming an increasingly critical selling tool for supermarkets in the what has become one of the most competitive periods for the sector in decades.

"Consumers love promotions. Forty per cent of FMCG revenue is spent on some kind of deal. Lower grocery prices are mostly being brought about through straight price cuts, rather than more complicated multi-buy deals. Most retailers are not seeing off promotion sales growing at all," said McKevitt.

The changing retailer market is being driven primarily by the growing share of the market that discounters are taking at the expense of the big four grocers, according to McKevitt. He said: "At least part the price wars has been caused by the success of Aldi, who posted yet another record market share of 5%."

But even the discounters growth, which is still incredibly strong, is beginning to slow. "Aldi's growth of 19% is actually their slowest since June 2011, but back then they only had a tiny 2% share of the market. Growth is also slowing at Lidl, but a still very robust 14% and that pushes their share up to 3.5%, " said McKevitt.

Tesco turnaround

Tesco seems to be turning around and is now growing at the same pace as the market, but McKevitt warns this does put pressure on the other big four. He said: "Tesco has very nearly stemmed their market share losses, growing at the same 1.1% rate as the market."

"The slight improvement at Tesco squeezes the rest of the big four, as there simply isn't room in this deflationary environment for everyone to grow. Asda, the number two player, has suffered the most with 85% of their shoppers also shopping at Tesco.  Asda sales fell by 2.1%, with Sainsbury's down 0.5% and Morrisons down 0.4%"

Waitrose saw growth of 4.9% but it now investing, like other retailers, in promotions which is helping to support continued growth.

"Growth of 4.9% is still well ahead of the market but does represent a slower increase in recent months. Waitrose have recently invested much more in promotions and  the promotional gap between them and the rest of the big four has narrowed considerably over the last year," said McKevitt.

Overall supermarket growth is still the same as February at 1.1%.

Keywords: