Upmarket shoppers feel the pinch as top-of-the-range grocers suffer

By PETER RANSCOMBE
Published on 18/07/2012 00:00

austerity may finally be hitting the pockets of well-heeled shoppers after analysts yesterday warned of a slowdown in sales growth at up market grocers.

Waitrose, the high-end retailer owned by the John Lewis department store chain, grew sales by 4.8 per cent in the 12 weeks to 8 July, slipping back from its 7.5 per cent rise in the previous period, according to data from Kantar Worldpanel.

Premium own-label products – such as Asda’s “Extra Special”, Sainsbury’s “Taste the Difference” Tesco’s “Finest” ranges – fell by 6 per cent year-on-year, the figures revealed.

News of the slowdown at the upper end of the market came just a day after a report by insolvency practitioners’ trade body R3 revealed that one in four Scottish shops faced closure in the year ahead, with one in five hospitality businesses also on the verge of going bust.

Experts blamed the pressure on retailers on weak consumer spending in the face of low wage increases and lack of confidence caused by the eurozone debt crisis and UK government public sector cutbacks.

A slowdown at the upper-end of the grocery market came in sharp contrast to continued strong growth for the discounters though, with Aldi expanding by 26.1 per cent and Lidl clocking up a 11.5 per cent increase.

Tesco’s “Everday Value” range – which recently replaced its iconic blue-and-white striped “Value” brand – grew by 13 per cent, indicating customers are trading-down to cheaper items.

Edward Garner, director at Kantar Worldpanel, said: “We are seeing big cutbacks by consumers as they continue to respond to this current period of austerity. The success of the discounters is a clear example of shoppers watching their purses. Although Waitrose is still growing at over double the rate of the whole market, this growth has fallen back, suggesting the premium sector is beginning to slow. Another sign of austerity making an impact is the decline of premium own-labels.”

Among the big-four retailers, Tesco’s market share continued to dip, down to 30.7 per cent from 31.1 per cent, while Morrisons edged lower to 11.9 per cent from 12.1 per cent.

Sainsbury’s share of the market increased slightly by 0.1 per centage points to 16.5 per cent, with Asda’s holding steady at 17.3 per cent.

Any slowdown in consumer spending in the grocery market would add to the pressure on retailers, with figures due to be released today by the Scottish Retail Consortium (SRC) showing like-for-like sales were flat in June following heavy rain.

SRC economist Richard Lim said: “Consumers remain cautious about their personal finances and lower temperatures have cooled demand for summer fashions and outdoor leisure goods.”

Kantar Worldpanel reported that food price inflation fell to 3.8 per cent from a recent high of 6.2 per cent in November.

Those figures chimed with yesterday’s official UK inflation data, which showed the consumer prices index fell by more than expected to a 31-month low of 2.4 per cent last month.