Tesco loses further ground to rivals as price war rages on

Tesco has seen its market share slip further as competition between discount supermarket rivals rages on, figures yesterday revealed.

In a fresh blow for Britain’s biggest retailer, which last month issued its first profit warning in living memory, Tesco’s share of the UK grocery market slipped from 30.3 per cent this time last year to 29.7 per cent.

It marks a further decline on the 29.9 per cent reported by market research firm Kantar Worldpanel last month – the first dip below 30 per cent in nearly seven years.

The squeeze on Tesco comes as low-cost chains gain custom while up-market operator Waitrose enjoys record market share.

According to the latest Kantar data, Iceland’s share rose from 2 per cent to 2.1 per cent, year on year, Aldi enjoyed a hike from 3.1 to 3.6 per cent and Lidl was up from 2.4 to 2.6 per cent.

The figures coincided yesterday with the CBI’s monthly snapshot of the UK high street, which fuelled hopes of a recovery in the retail sector, although the picture was mixed from sector to sector.

Food retailers reported their strongest sales growth since last May, but sales of durable household goods continued to fall sharply and clothing sales declined at their fastest pace in almost three years.

Waitrose saw its share rise to 4.5 per cent from 4.4 per cent, Kantar noted, which is an all-time record for the John Lewis-owned retailer after it stepped up its store expansion.

Edward Garner, director at Kantar Worldpanel, said: “Tesco’s market share remains under pressure as it faces stiff competition from its rivals.

“Waitrose saw its share rise this month to an all-time record for the retailer. Its continuing strong performance shows that it is a mistake to talk about the ‘average’ UK shopper.”

Co-operative saw its share fall to 6.3 per cent in the 12 weeks to 19 February from 6.7 per cent in the same period last year. The figures will fuel speculation that the Co-op’s food division is struggling to integrate the 800 Somerfield stores it acquired in 2009.

A report yesterday suggested that there had been a drop in food sales in the former Somerfield stores over the eight weeks to 25 February, compared with a modest rise at the Co-op’s own grocery stores.

Sainsbury’s recovery continued with a 0.1 per cent year-on-year increase in market share to 16.6 per cent, albeit down from 16.7 per cent in January.

Asda – the UK’s second biggest grocer – remained consistent with a 17.5 per cent share of the market, while Morrisons was down 0.1 per cent on a year ago to 12.2 per cent.

Kantar said grocery inflation was 5.5 per cent for the 12 weeks, a decrease on the 5.7 per cent reported in the last similar period and a decline from the peak of 6.2 per cent cited for November last year.

The CBI report also showed department store sales falling at their fastest pace since May 2010.

Judith McKenna, who chairs the CBI’s distributive trades panel, said: “With disposable incomes under constant pressure, retailers remain concerned about the general business outlook for the rest of 2012.”