Comment: Supermarket wars | Mis-selling pay-outs

Martin Flanagan
Martin Flanagan
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THE food retailing discounters have moved beyond merely knocking on the door of Britain’s supermarket industry. Their latest eye-catching growth figures confirm they have entered the big boys’ house, made themselves at home in the lounge, turned on the telly and poured themselves a beer.

The data from consultancy Kantar Worldpanel shows that Aldi grew sales a stunning 35 per cent in the 12 weeks to 30 March compared with the same period in 2013.

Sales at fellow discounter Lidl jumped more than 17 per cent, taking the two groups’ joint market share to 8 per cent – very worrying news for the big four of Tesco, Asda, Sainsbury’s and Morrisons. While sales at the latter established players all fell in the latest period, Aldi and Lidl’s have revved up sharply, with value supermarket Iceland also increasing sales by not far off 3 per cent.

Meanwhile, the likes of Poundland have eaten away relentlessly at the big supermarkets’ non-consumable sales. In short, we are witnessing a supermarket industry revolution.

It has happened through a combination of company-specific and macro-economic factors. Tesco has not had its problems to seek as Sir Terry Leahy’s previously glittering legacy has looked tarnished from the United States to the Far East.

Under new boss Phil Clarke, the market leader is still only halfway through a major effort to regain lost ground on its home UK turf.

Morrisons, meanwhile, has proved woefully slow in hitching its wagon to the internet and local stores, the key drivers of the wider sector. And as Tesco and Morrisons have languished, the likes of Aldi and Lidl have stepped into the gap.

Clearly, the discounters have also had a sails-unfurling tailwind from the chronic pressures on consumers since the 2008-09 recession, which have only eased in the past year or so.

Such is the transformation wrought in the sector that stock market investors have fundamentally changed their approach and assumptions on the prospects for major, more established players.

It has become conventional wisdom that the food retailing industry will cut back permanently on bigger-store openings, and that hypermarkets are complete dinosaurs in the sector.

Consumers are shopping more often, more locally, with less brand loyalty than ever before. Industry executives say it is accepted now that the same customer may go to Waitrose for some products, Sainsbury’s or Asda for others, and Aldi, Lidl, Iceland etc for yet others.

The discounters have been quick-witted and nimble-footed in exploiting this more kaleidoscopic food retailing canvas, and the wheel of change is still spinning.

No fast resolution over hedging products

IT’s a little disappointing that banks have paid out less than £600 million in compensation to small businesses mis-sold complex interest rate hedging products out of £4 billion set aside.

However, it doesn’t seem to exercise the Financial Conduct Authority, the regulator saying that banks are on course to meet an end-May deadline for reviewing nearly 30,000 cases of mis-selling.

I suppose getting it right is better than speed in such matters. But hedging mis-selling is just one of several scandals overhanging the banking sector – payment protection insurance and Libor manipulation being two others – hindering its public rehabilitation.