Discounters net record grocery market share as prices rise

(c) Sky News 2017: <a href="">Discounters net record grocery market share as prices rise</a>

There is further evidence that shoppers are looking for the cheapest deals and shunning non-essential spending as prices rise, according to a slew of retail industry reports.

Analysis by data specialists Nielsen (EUREX: 11400372.EX - news) showed that Aldi and Lidl accounted for almost £1 in every £8 spent on groceries in the UK - giving the pair a record combined market share of 12.3%.

It reported that during the 12 weeks ending 25 February, Aldi's sales grew 12% year-on-year and Lidl's by 9.1% - compared to overall market sales growth of 2.2%.

Morrisons enjoyed the strongest growth among the so-called Big Four, which also includes Tesco (Frankfurt: 852647 - news) , Asda and Sainsbury (Amsterdam: SJ6.AS - news) 's.

It said the return of grocery inflation at the till - a result of the weaker pound since the Brexit vote making imported goods more expensive - helped industry takings rise 1.1% over the four weeks to 27 February.

A further study by Kantar Worldpanel showed comparable grocery inflation had doubled since January to stand at 1.4% over the 12 weeks to 26 February.

It reported price rises across staples including butter, tea and fish, though eggs and bacon were among items falling in price.

The reports were released as separate figures from the British Retail Consortium (BRC (Shanghai: 600466.SS - news) ) demonstrated the wider impact of rising prices on the industry.

They showed stores endured their first quarterly fall in non-food sales since November 2011 last month.

The industry body admitted there was an "undeniable trend" of cautious spending on non-essential products as prices rise, despite stiff competition.

While many retailers were able to hold off, implementing price increases ahead of Christmas they are under pressure to protect profitability by passing them on to customers.

The latest official figures have the annual rate of consumer price inflation at 1.8% - with wages growing at a pace of 2.7%.

But a report by Sky News on Monday pointed to evidence that inflation was actually running at 3.3%.

It suggests that consumer spending power has gone back into reverse.

Paul Martin, UK Head of Retail at KPMG which compiles the BRC's figures, said: "Evidently February was yet another challenging month for the majority of retailers, with like-for-like sales down 0.4% on last year.

Food sales however, continued to buck the general trend by remaining in the black.

"That said, with inflation starting to have an impact on retail performance, it is clear that consumer confidence is showing signs of deteriorating."