Growth slows at major UK retailers

Retail sales growth at the UK’s top grocers has fallen to its lowest level since August 2007, according to figures for the 12 weeks ending 21 March 2010 from Kantar Worldpanel (formerly TNS Worldpanel).

Although there are some share winners, the overall year-on-year growth rate for all the major retailers has dropped to a pre-recession low of 3.6%. This slowdown coincides with the continued fall in inflation from 2.4% in February to 1.8% in March.

Fraser McKevitt, retail analyst at Kantar Worldpanel, said: “We can see the dramatic fall in inflation by comparing this month’s figure to March 2009 when inflation was running at 9.1%. While this has had a dampening effect on retailer growth, lower inflation brings benefits to consumers and the latest figures suggest shoppers are taking advantage of slower grocery price increases by trading up to more expensive lines such as Tesco Finest.”

Despite a 2% fall in year-on-year growth since February, Morrisons has continued to perform ahead of the pack, increasing sales by 7.8% and growing its share of the grocery market by 0.5%. This growth in market share is slightly ahead of Waitrose, which has gained 0.3% share by being the fastest growing retailer with sales up by 14.1% year-on-year.

Sainsbury’s, which is growing at 4.6%, has also maintained its strong run, recording a 0.2% increase in market share.

According to Kantar, this strong performance can be partly attributed to the ongoing expansion of existing Sainsbury’s sites and new stores. Tesco also gained 0.2% in market share but on the back of slightly slower growth of 4.1%.

Asda, growing at 2.7% year-on-year, has found its market share coming under pressure with a loss of 0.2% as it faces strong comparatives from 2009 when it was growing at over 8%.

The discounters continue to languish behind the market with Lidl and Aldi experiencing loss of market share. As yet, they are seeing no return to the heady double digit growth experienced in 2009, reports Kantar.