Sainsbury’s and Asda, which yesterday confirmed plans to merge, have lost market share and saw the slowest sales growth among the ‘Big Four’ supermarkets, data showed today.
Sainsbury’s, Britain’s second-biggest supermarket, saw sales increase by just 0.2 per cent in the 12 weeks to April 22, while Asda saw growth of 1.4 per cent, according to Kantar Wordpanel.
In contrast, Britain’s biggest supermarket Tesco – which would lose its pole position if the merger goes ahead – and Morrisons outdid the two other supermarkets with sales growth of 2.1 per cent and 2.2 per cent respectively.
Slowest growth: Sainsbury’s saw sales rise by just 0.2% in the past three months
However, while traditional brick-and-mortar grocers try to recover lost ground by joining forces, online competitors and discounters continue to see the strongest growth and gain market share.
Online grocer Ocado saw the strongest sales growth, even higher than German discounters, with sales up 12.7 per cent in the period. Lidl followed, with sales growth of 9.1 per cent, while Aldi saw sales jump 7.3 per cent.
Overall, the British grocery market grew at its slowest rate in a year at 2 per cent as a result of lower grocery price rises. The like-for-like inflation rate is now 2.1 per cent and is expected to fall further in the coming months.
Prices are rising fastest for products such as butter, bottled colas and bread, and are falling in only a few markets, including ambient cooking sauces, fresh poultry and laundry detergents.
But cautious shoppers not only spent less than they did a year ago, but also bought fewer items, with the number of products purchased falling by 1.1 per cent on last year – the poorest growth figure for more than seven months.
Winner: Online grocer Ocado saw the strongest growth with sales up 12.7 per cent
Kantar said Sainbsury’s and Asda’s proposed tie-up marked signalled a ‘pivotal’ moment for the industry
‘A merger between Sainsbury’s and Asda would transform the traditional landscape placing nearly a third of market share in the hands of the joint supermarket giant, though the march of the discounters – and any enforced store closures – could impact this figure,’ said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
Traditional supermarkets have been struggling with competition from discount stores and new online competitors.
Both Sainsbury’s and Asda lost market share to discounters, with their portion of the market down 0.3 per cent and 0.1 per cent to 15.9 and 15.5 respectively compared to a year ago, Kantar said.
In comparison, Lidl increased its market share by 5 per cent to 5.4 and Aldi by 6.9 to 7.3.
Bigger stores: Asda made nearly two-third of its sales outside London and the South East
However, if Sainbsury’s and Asda merger goes ahead, the new combined group would have a market share of 31.4, overtaking Tesco, which currently has a market share of 27.6, unchanged from the same period last year.
Kantar said the two supermarkets appeal to different customer bases.
Sainsbury’s attract more affluent customers and makes the biggest chunk of its sales in London and the South East, where it has a vast network of local convenience stores.
On the contrary, Asda, which often has bigger stores outside of town, achieves nearly two-third of its sales outside those areas.
Morrisons saw the strongest growth of all Big Four, with sales up 2.2%
Sainbury’s premium own label line line ‘Taste the Difference’ clocked up sales of £832million annually – nearly two and a half times the size of Asda’s ‘Extra Special’ range, Kantar said.
Some 15.8million households bought their groceries at Asda over the past 12 weeks, 500,000 more than shopped at Sainsbury’s.
Elsewhere, the Co-op was the only supermarket to see sales fall (down by 0.4 per cent) as it continued to feel the impact of the disposal of 300 McColl’s stores. Its market share fell by 0.1 per cent to 6 per cent.
Sales at both Iceland and Waitrose rose by 0.2 per cent. Iceland continues to hold market share at 2.1 per cent, while Waitrose dropped share by 0.1 percentage points on last year to 5.1 per cent.