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Wednesday 26 February 2020

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Big four grocers feel the festive chill

Written by Hannah McGrath
08/01/2020

The UK’s big four grocers have suffered a slump in sales over the festive period, as discount retailers Lidl and Aldi drove up competition in the sector.

Like-for-like sales at Sainsbury’s dropped 0.7 per cent in the 15 weeks to 4 January, driven by a slowdown in sales of gaming and toys in the division including Argos, which was bought by Sainsbury’s in 2018. Grocery sales were up by 0.4 per cent.

Meanwhile, the challenging trading period also saw sales at Tesco fell by 1.5 per cent, with Asda sales down 2.2 per cent and sales at Morrisons down 2.9 per cent, according to data firm Kantar.

Group like-for-like sales at Morrisons were down 1.7 per cent for the 22-week period to 5 January.

The picture was much brighter for budget retailers, with Aldi toasting a 7.9 per cent jump in sales in the four weeks to Christmas eve, passing £1 billion, driven by a bounce in sales in beer, wine and spirits, as well as its premium range.

Lidl achieved the fastest growth in the 12 weeks to 29 December, with sales up 10.3 per cent.

Online players also fared well, with Ocado increasing sales by 12.5 per cent.

However, the mixed trading updates delivered a picture of sluggish growth overall, with data from Kantar pointing to supermarket sales growth over Christmas at its lowest level in four years.

Morrison’s chief executive David Potts said: “It was encouraging that during an unusually challenging period for sales, our execution was strong and our profitability robust, demonstrating the broad-based progress we have made during the turnaround.”

Commenting on the general trading update results picture, Georgie Lawrie, vice president and retail analyst at Forrester, said: “In general grocers around the world see their future in more fresh and pre-prepared or snacking categories. I notice that Giles Hurley, Aldi UK chief executive, recognizes the trend too since he mentioned strong sales in the premium range.”



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