Price wars lead to record slide in food sales

Retailers have suffered a record drop in food sales amid increasing competition in the grocery sector, where discounters such as Aldi and Lidl are piling more pressure on the big four supermarkets.

Picture: PA

Figures released today by the Scottish Retail Consortium (SRC) and KPMG show total food sales north of the Border fell 1.3 per cent last month. Excluding the effects of Easter trading, the decline was the steepest since records began in January 1999.

The figures come a day after Sainsbury’s revealed its nine-year run of quarterly growth had ended as its sales struggled because of the late arrival of Easter and Mothers’ Day compared with last year.

Like-for-like sales, excluding petrol, fell 3.1 per cent in the ten weeks to 15 March, the group’s financial fourth quarter.

Sainsbury’s, which is battling Asda for second place behind market leader Tesco, had enjoyed an unbroken run of growth in the previous 36 quarters.

As large chains such as Morrisons attempt to fight off the challenge posed by their discount rivals, KPMG head of retail, David McCorquodale, said consumers stand to benefit from the price wars, “but at a cost to the retailers and their suppliers in terms of margin”. He added: “The next few months will be dominated by the spotlight being shone on the grocery sector and how that filters through to family budgets.”

Earlier this week, the SRC called for a shake-up of the business rates system as it revealed a sharp drop in the number of shoppers venturing into Scotland’s stores in February.

GARETH MACKIE