Supermarkets see first sales reverse in at least 20 years

SUPERMARKET sales have gone into reverse for the first time in at least 20 years as the ongoing price war and continued constraints on consumers take their toll.

Kantar said the average basket of everyday goods now costs 0.4 per cent less than a year ago. Picture: Phil Wilkinson
Kantar said the average basket of everyday goods now costs 0.4 per cent less than a year ago. Picture: Phil Wilkinson

The latest till-roll figures from Kantar Worldpanel suggest the sector saw a decline, with sales 0.2 per cent lower over the last 12 weeks at £24.9 billion.

It is the first time since Kantar records began in 1994 that the sector has recorded a negative reading, and comes as official figures show falling food prices continued to keep inflation low last month. Consumer inflation rose slightly, from 1.2 to 1.3 per cent, but most economists said it was most probably just a blip in the downward trend.

Sign up to our daily newsletter

Kantar said the average basket of every­day goods such as milk, bread and vegetables now costs 0.4 per cent less than a year ago, highlighting the impact of price cutting brought on by the rise of ­discounters such as Aldi and Lidl.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “This is bad news for retailers, but good news for shoppers, with price deflation forecast to continue well into 2015.”

He said the dwindling market would concern retailers in the run-up to the Christmas trading season.

The big four chains all saw falls, with Asda faring best as sales in the 12 weeks to 9 November fell 0.2 per cent, with its market share holding at 17.2 per cent.

US-owned Asda, which posted its worst quarterly sales performance in nearly a decade last week, has accused its major rivals of panicking through a range of costly promotional measures such as the giveaway of vouchers.

Tesco saw sales fall 3.7 per cent and Sainsbury’s, which launched £150 million of price cuts last week and said it would make cost savings of £500m over the next three years, saw sales dip 2.5 per cent. Morrisons also suffered, seeing sales fall 3.3 per cent and market share slip to 11.1 per cent.

Last week, Sainsbury’s chief executive Mike Coupe said the UK grocery industry was facing a “once-in-a-generation combination of cyclical and structural change” and cautioned that like-for-like sales would be negative for the next few years.

The big four are having to deal with a price deflation, customers shopping around and a post-recession trend of people eating out more often. Their big out-of-town stores selling clothing and electrical goods as well as food have also lost appeal among consumers preferring to use local shops, or to shop online.

On Monday, investment bank Goldman Sachs said Britain’s three listed supermarket chains had 20 per cent too much space and needed to close stores.

Meanwhile discounter Aldi’s sales were 25.5 per cent higher than a year ago and its market share up to a record 4.9 per cent.