More than half of British households have shopped at Aldi or Lidl in the past three months, putting further pressure on market leader Tesco as cash-strapped consumers search out the best deals.
German retailer Aldi, which opened its first UK store in 1990, now commands a record 4 per cent share of the UK grocery market as shoppers turn their backs on Tesco and its fellow “big four” chains Asda, Sainsbury’s and Morrisons, according to market researcher Kantar Worldpanel.
Some 50.1 per cent of households took their custom to Aldi and Lidl in the past 12 weeks, up from 46.1 per cent a year ago, and a Which? judging panel recently rated the firms’ mince pies ahead of rival offerings from upmarket stores Harrods and Fortnum & Mason.
Aldi is also a strong supporter of Scotland’s burgeoning micro-brewing industry and recently rolled out a “winter beer festival” that was expected to be worth almost £100,000 for the sector. The chain’s first beer event, which took place across its 45 Scottish stores at the end of last year, sold 55,000 bottles.
Lidl retained its 3.1 per cent slice of the sector during the 12 weeks to 8 December.
Kantar director Chris Longbottom said: “Value continues to be a powerful incentive for the British shopper, a fact that is further highlighted by Farmfoods which, while still a relatively small player in the market, has gown its sales by 36.6 per cent compared with last year.”
Cumbernauld-based Farmfoods, majority owned by chairman Eric Herd, posted an annual profit of £20 million in April, up from £17.6m in 2011, and now has a 0.7 per cent market share, according to Kantar’s survey of 30,000 households.
Lidl recently said it wants as many as 1,500 stores in the UK, under plans to build on its rapid growth of recent years.
UK managing director Ronny Gottschlich described new Lidl customers as “Maidstone mums” who were once too embarrassed to be seen in Lidl shops.
He said: “I think that people’s perception in the past, and this is something that is definitely changing, is there must be something wrong with the quality of what those people at Lidl offer because they have such reasonable pricing in their stores.”
As well as the strong growth seen at the discount end of the supermarket sector, Mr Longbottom said upmarket grocer Waitrose – part of the employee-owned John Lewis Partnership – has been performing well, with year-on-year growth of 6.7 per cent.
He added: “Based on past patterns, it is likely to further boost its market share over the busy Christmas period, as is Iceland which traditionally performs well with its party food offering.”
As the market becomes more polarised, all the major chains are losing market share. Although Tesco held on to its dominant position with a 29.9 per cent command of all grocery spending, that was down from 30.6 per cent a year earlier.
Earlier this month, the group blamed a 1.5 per cent drop in UK like-for-like sales on the weak grocery market during the three months to 23 November.
Tesco chief executive Philip Clarke said consumers were having to deal with “an unprecedented period of declining real incomes and a higher cost of living”, as average spending power was now about 10 per cent lower than its peak in 2007.
But retail analysts said the continued slide in sales raised questions over Mr Clarke’s £1 billion strategy to reinvigorate the supermarket giant’s fortunes, and Joe Rundle, head of trading at ETX Capital, said investors were “now doubting the company’s ability to turn around”.
Kantar’s figures showed that Sainsbury’s was the best performer among the major chains with a sales growth of 1.8 per cent.
Market share by each supermarket:
Source: Kantar Worldpanel, for the 12 weeks to 8 December