Tesco And Lidl Remain Top Performers As Discounts Drive Growth

Latest data from Kantar shows that take-home sales in the grocery sector rose by 4.3% over the four weeks to 26 January as supermarkets ramped up discount activity to attract cash-strapped shoppers after the costly Christmas period.

This also helped drive down grocery price inflation from 3.7% in December to 3.3% during the opening weeks of 2025 at a time when retailers are warning they may have to increase prices later this year to offset the hikes in employer national insurance contributions and the minimum wage. In January, prices rose fastest in categories such as chocolate confectionery, chilled smoothies & juices and butters & spreads, while they fell fastest in ambient cooking sauces, household paper products and cat food.

Spending on promotions during the four weeks rose by £274m year-on-year, accounting for 27.2% of sales – the highest level in January since 2021. Fraser McKevitt, head of retail and consumer insight at Kantar, noted that people also turned to non-branded products to help keep costs down, with own label as a proportion of sales hitting a record high of 52.3% in January. Spending on supermarket own label lines was up 5.4%, boosted by consumers buying premium products in days leading up to New Year’s Eve.

Meanwhile, the Kantar data confirmed that shoppers started the new year with a focus on wellness and health. More than 10% of the average consumer’s January grocery bill was spent on fresh fruit, vegetables and salad, totalling £1.2bn – £193m more than in December. Nathan Ward, business unit director for usage and out-of-home at Kantar, commented: “Rolling into the new year, health tends to play a bigger role in our grocery choices. Over a quarter of take-home food and drink in January is chosen with health at least partially in mind, as shoppers tell us they want to eat less processed food and feel the benefit of fibre and vitamins.”

Protein products also pulled their weight at the tills as demand for bars, bites, and drinks boosted spending on sports nutrition products. Sales for this category at supermarkets were 47% higher than last year, with over two million households buying these items during the month.

Sales of low and no alcohol drinks were 7% higher than last January, and 6.7% of households bought at least one of these alternatives. McKevitt said: “It’s no surprise to see the low and no alcohol trend make its mark in January, but given some of the generational splits we have seen in grocery, it’s interesting that older shoppers are just as likely to take these products home as younger ones. Not everyone signed up for dry January though, with 49% of people buying an alcoholic drink this month – but this is a pretty big drop from December’s 76%.”

Looking at the performance of individual retailers, sales at Lidl rose 7.4% over the 12 weeks to 26 January, making it three continual years of growth for the discounter, whose market share now stands at 7.2%. Aldi’s growth accelerated for the third consecutive month, with sales up 4.2% and its market share increasing to 10.2%.

Tesco gained the most share, with its 28.5% hold of the market now 0.7% higher than this time last year after seeing its fastest rise in sales since April 2024 at 5.6%. Sainsbury’s also outpaced the market with sales growth of 4.2% and an increase in share from 15.7 to 15.9%.

Despite an upbeat trading statement last week, sales at Morrisons were unchanged, and its market share slipped to 8.6%. Asda continued its dismal run, with its sales sliding 5.2% ahead of last week’s launch of a major Price Rollback campaign aimed at kick-starting its recovery.

Ocado was the fastest-growing grocer for the ninth consecutive month. Spending at the online retailer grew by 11.3%, meaning it now holds 1.9% of the market.

Meanwhile, M&S, whose higher proportion of clothing and general merchandise in its sales mix means it does not fall under the definition of ‘grocers’ using the research group’s Till Roll methodology, saw its grocery sales increase by 10.5% in its bricks & mortar stores.

NamNews Implications:

• Brands promoted in January to pull back share from own label.
• (Possibly a continuing issue as retailers raise shelf prices in anticipation of Autumn Budget Tax increases)
• Retailers themselves may choose to reverse the brand/own label balance to 50/50…
• …to increase the appeal to brand owners as retail media grows.
• Tesco’s growth exceeding the grocery market continues to impress…
• While Aldi & Lidl’s rate of growth and increase in share has to be of concern to rivals.
• Meanwhile, the growth of the mults and discounters, largely at the expense of Asda and Morrisons…
• …has to add to the comeback pressures each.

Some Career-change Reassurance from the NamNews Team!

Morrisons Launches Major Loyalty Prices Campaign

 

Morrisons is hoping to accelerate its sales growth by lowering the prices of over 2,000 products for members of its More Card loyalty scheme.

The price cuts will roll out in September across branded fridge, freezer and cupboard filler items. Examples include Heinz Tomato Ketchup at £2, down from £3.40, Huggies Pure Extra Care Wipes at £7, down from £11, and Sure deodorant at £2.40, down from £3.50.

As well as being signposted onshelf, the latest deals will communicated through the supermarket’s More app and by emails to its members.

Meanwhile, Morrisons has added over 70 more products to its Aldi and Lidl Price Match scheme as it tries to win back shoppers from the discounters.

The retailer will also be signposting hundreds of ‘Low Everyday Price’ items across branded and own-label lines, including cupboard staples, bakery and snacks, toiletries, cleaning products, and baby care.

While Morrisons has seen an uptick in its sales performance since Rami Baitiéh took over the role of CEO, the business has continued to lag behind the likes of Sainsbury’s and Tesco, and lose market share.

Commenting on the latest campaign to improve its competitiveness, Group Marketing Director Alex Rogerson said: “Today’s move represents our single biggest investment in loyalty and pricing for many years. Driving strong value for customers remains our number one priority, and today we are getting the big bazooka out and slashing the prices on over 2,000 products for More Card customers.

“Together with our Aldi and Lidl Price Match and our vast range of Low Everyday Prices – we have thousands of products that not only offer outstanding value on brands and essential items our customers love – but also have the quality they’ve come to expect from us.”

Last week, consumer watchdog Which? called for action to tackle “murky and confusing loyalty pricing practices” after its latest research found that some deals may not be as good as they appear.

NamNews Implications:

• Price & loyalty promos, big time!
• All now depends on perceived value vs alternatives available.
• Leading to repeat purchase…
• …the only test of success.
• And thence share growth…
• Fingers crossed!

Tesco Rapidly Expanding New Online Marketplace

Just two months after its launch, Tesco has over doubled the number of SKUs on its new online marketplace.

When it went live at the beginning of June, the site listed 9,000 products from third-party sellers across various categories, including garden & DIY, home accessories, toys, sports & leisure, petcare, greeting cards, baby & toddler, furniture, and beers, cider & spirits. Tesco stated at the time that once the marketplace was at full scale, it would be a “one-stop shop for everything customers need”.

According to trade magazine The Grocer, the range on the supermarket’s marketplace now totals more than 20,000. The report noted that the marketplace has close to doubled the total number of SKUs on Tesco.com, which offered around 28,000 products before its arrival.

Peter Filcek, Tesco’s Marketplace Director, told The Grocer that it was “really excited about expanding Marketplace over the next few months to give customers even more choice, and we look forward to working with new sellers to introduce further categories and brands to Marketplace”.

Tesco has previously stated that it is not trying to replicate Amazon. Chief Executive Ken Murphy said in June: “The primary focus of marketplace is to build out and extend the range of food, food-related and home products available to customers – so to be very clear, we are not trying to be Amazon.

"We are not trying to be all things to all people".

He noted that the grocer was making “all of those niche products that you won’t necessarily find on our shop shelves” available to shoppers.

Amazon has over 500 million products listed on its marketplace.

NamNews Implications:

• Bearing in mind there are no limits to online portfolio size…
• (i.e. Amazon 500m+)
• …one wonders how far Tesco plans to go…
• …and to what extent suppliers should attempt to keep up.
• (for a fair share of the action and cost)
• For sure, it is not even the end of the beginning…

Many Consumers Have No Plans To Switch Back To Branded Goods

A new survey suggests that some brands might find it difficult to tempt back consumers who switched to private label during the cost of living crisis.

The EY Future Consumer Index (FCI),  a survey of 23,000 consumers, 30 countries, found 28% bought private label in response to rising costs, a trend that appears to have become a sustained habit, with 66% finding the less expensive O/L satisfying their needs just as well as branded lines, with 38% having no plans to switch back.

NB the research shows this trend is not exclusive to mid- to lower-income bands. Higher-income consumers are planning to buy private label brands in the future, across every category: fresh food (60%), home and household care (56%), packaged food (52%), clothing, shoes and accessories (49%), personal care (49%), and beauty and cosmetics (39%).

According to the FCI, retailers are trying hard to capitalise on the opportunity by promoting private label aggressively – eye-level shelving and front-of-store placements – and increasing ranges. 

Instead of branded products at a lesser price, they are offering a range of product options, analysing POS data to identify early trends, (strong position to respond to buying patterns and consumer needs). EY: the closer retailers get to the consumer, the more power they have to curate buying choices, and the more they can drive lasting loyalty.

Kristina Rogers, the firm’s Global Consumer Leader, said: “..many consumer products (CP) companies are focusing on volume recovery. Simplifying the portfolio, driving down costs and unlock resources are important, but this must happen alongside innovation and marketing – they need to keep their brands inside the consumer’s circle of trust to maintain their margins and fund growth agendas.

“For retailers, better data analytics capabilities will help them target and reach consumers. They can use retail media and loyalty programs to incentivise private label purchases and create alternative revenue streams by promoting their partner brands. 

CP companies will need to take a balanced approach – promoting their brands to meet today’s goals, while also pursuing ways to keep these new consumers and earn their loyalty. Innovative new products that differentiate from private label and which consumers find valuable will be key to their future success.”

NamNews Implications:

• The brand nightmare!
• Consumer-switchers found these less expensive alternatives satisfy their needs just as well as branded lines.
• Retailers need to maintain a high level of consumer trust…
• (by delivering more than it says on the tin, every time)
• …whilst brands, the damage already having been done, have to either drop prices to a point that minimises the difference…
• …or develop the potential of Retail Media to a point where the retailer has more to gain from the brand, than from their own label alternative.

Brands Outperform Own Label While Tesco And Waitrose Make Share Gains

Latest data from Kantar shows that take-home sales at the UK’s leading grocers rose by 2.2% over the four weeks to 7 July, boosted by football fans purchasing beers, crisps and other snacks during the Euros.

Fraser McKevitt, head of retail and consumer insight at Kantar, commented: "Football fans drove beer sales up by an average of 13% on the days that the England men’s team played, compared with the same day during the previous week. Sales of crisps and snacks up 5% vs month before. With many matches played on ‘school nights’, though, some Britons chose moderation. Spending on no and low-alcohol beer soared by 38% on matchdays.”

Grocery price inflation down to 1.6% – lowest since September 2021. The drop coincided with the fastest rise in monthly footfall so far in 2024. Consumers supermarket trips up 2% this period vs one year ago.

Meanwhile, as cost of living pressures started to ease for some people, sales of branded products increased by 3.6%, outpacing own-label items, which grew by 2.7%.

After a difficult few years, Kantar noted that retailers will now be turning their attention to the King’s Speech on Wednesday to see what the newly elected government’s legislative agenda holds for the grocery sector.

Looking at the performance of individual retailers, Ocado was the fastest-growing grocer for the fifth month in a row, with sales up by 10.7% over the 12 weeks to 7 July. The online retailer now holds 1.8% of the market, up 0.1 percentage points compared with the same period last year.

Lidl saw a 7.8% jump in sales, bringing its share of the market to 8.1%. Aldi continued to struggle for growth, with its market share slipping to 10% after a 0.3% increase in sales.

Waitrose gained share for the first time since January 2022, achieving a 0.1 percentage point rise to 4.5% as spending at the retailer increased by 3.3%.

Tesco achieved its biggest share gain since November 2021, taking 27.7% of the market – a 0.7 percentage point increase versus last year – after a 4.6% rise in sales. Sainsbury’s saw its sales climb 4.7%, bringing its share to 15.3%.

Meanwhile, it was another difficult period for Asda, with its sales down 5.3% and market share slipping to 12.7%. Morrisons managed a 1% increase in sales, with its share unchanged at 8.7%.

NamNews Implications:

• Despite their efforts/initiatives, Asda continue to lose share to Tesco & Sainsbury’s.
• Given private equity involvement, anticipate cuts at Asda to improve EBITDA.
• Meanwhile, Morrisons is managing to hold share as part of a gradual turnaround.
• The switching back to brands reduces the risk of shoppers becoming loyal to own-label equivalents…
• …but the key question remains: What will Aldi do to restore growth vs Lidl?

#MarketShares
#Kantar

Tesco Aiming For Extra £1bn In Sales From Premium Range

The CEO of Tesco has revealed that the retailer is targeting an extra £1bn in sales for its Finest own-label range to meet growing demand for premium food & drink and challenge the likes of Waitrose and M&S.

Finest currently has annual sales of £2bn. Speaking to the Financial Times, Ken Murphy said: “We haven’t yet set our stall out to say ‘what would it take to get to £3bn’, but we’re very conscious it is playing an increasingly important role.”

He added: “We genuinely believe . . . that our intrinsic [food] qualities are every bit as good as anything you would get at Sainsbury’s and increasingly out of Waitrose … M&S, we probably still have a bit of work to do.”

The report notes that in the face of higher living costs, shoppers are shunning restaurants and becoming more adventurous with their cooking at home.

Data from Kantar shows that spending on premium own-label lines in the leading UK supermarkets rose 12% in the year to 9 June even as inflation eased. The figure was also nearly double the 6.9% growth in all brands owned by the grocers, including their budget ranges.

The FT highlighted that Tesco’s Finest products account for only over 3% of the group’s £61.4bn sales, although this is equivalent to about a quarter of Waitrose’s total sales and M&S’s food sales, respectively.

However, it has taken Tesco about a decade to reach the £2bn level from £1.4bn in sales in 2013. Murphy did not reveal whether there was a target date set for getting sales to £3bn, but Clive Black, a retail analyst at Shore Capital, told the FT that it would not be earlier than “the medium and long term before that number is reached” given that the industry’s annual growth is relatively modest.

NamNews Implications:

• ‘Shoppers are shunning restaurants and becoming more adventurous with their cooking at home…’
• …heightening consumer awareness of the difference made by quality ingredients…
• …and the home-cost of ingredients vs the price paid in hospitality.
• All potential threats to ‘eating out’ long term.
• Apart from increased savviness re branded equivalents in store.
• One to watch…

#OwnLabel #Hospitality

Co-op’s Retail Media Activities Boosting Brand Sales In Neighbouring Grocery Stores

Research by Co-op – in partnership with Circana – shows retail media activity for brands in its convenience stores not only boosts its own sales but also generates up to four times more sales in surrounding grocery outlets.

Brands seem to benefit from a halo effect when advertising in Co-op shops, which can boost sales in the longer term. Circana found a ‘global beer brand’ RM Co-op campaign increased sales by 12% in Co-op stores + a 3% uplift in nearby non-Co-op stores.

The non-Co-op stores uplift was 4x total incremental sales value in Co-op stores. Circana said the impact on total sales due to halo stores where the sales uplift occurred and the larger pack sizes bought in those stores.

Dean Harris, Head of Co-op Media Network, commented: “The Co-op Circana results show when brands activate campaigns with Co-op, there is an immediate positive sales impact [not only] in our store, but also with competitors in the surrounding area. As an RMN, our main goal for the brands that advertise with us is to generate sales regardless of where that customer purchases the product.”

Convenience is a frequently shopped channel for top-up missions, often in addition to a bigger shop. The data showed that Co-op shoppers engage the most with other grocers, which provides convenience retail media with an extra amplifier effect on halo sales.

Harris continued: “The analysis of the beer campaign shows that by influencing brand purchase decisions in other non-Coop stores, the retail media activation is able to generate higher incremental sales by tapping into larger pack sizes available in supermarket stores.

“This halo effect data is incredibly insightful and gives further confidence to talk to our clients about the power of retail media in the convenience setting.”

Mark Hurst, EMEA Head of Retail Media at Circana: “As the advertising industry continues to expand traditional retail media inventory and accelerate digital and addressable channels and privacy regulations limit traditional measurement methods, retailers are increasingly in need of more agile and accurate ways to measure campaign performance across channels and tactics.

“Being able to analyse media lift through a range of sales-based measurement approaches, including Test & Learn, tactical comparisons and mid-campaign analysis, results in faster and more cost-effective decision making, enabling retailers like the Co-op to demonstrate brand impact and how it drives incremental value.”

Co-op launched its retail media network early this year, claiming it was the first in the convenience sector.

NamNews Implications:

• Think of the halo-impact when several mults are advertising the same brand via retail media…
• “(Our Goal) to generate sales regardless of where that customer purchases the product.”
• i.e. A compelling sales proposition.
• Begging the question: Who needs blunt traditional media?

#RM