Why discount supermarket growth is slowing


While discount supermarket chains Aldi and Lidl are still growing, they have slumped to their slowest rate of growth in five years.
Tesco, meanwhile, the UK’s biggest supermarket, is continuing to gain market share.
Aldi and Lidlcame onto the market as huge disrupters, attracting people from all income levels.
However, they are now not making as many inroads into the market as they once were.
Tesco has now seen its sales rise by 2.2 per cent in the 12 weeks up until November 6. That is an increase of 1.3 per cent as reported last month.
That means Tesco is the only one of the big four supermarkets to be growing, taking the firm’s market share up from 27.9 per cent last year, to a current figure of 28.2 per cent.
However, even though grown at Aldi and Lidl is not on a hockey stick trajectory any more, the two are still the fastest growing supermarkets in the UK.
Aldi still enjoyed growth of 11.4 per cent, while Lidl grew by 8.4 per cent, according to figures from Kantar.
Analysts said the discount supermarkets are finding it hard to retain the very strong levels of growth from a year ago.
Meanwhile, while Tesco posted huge losses of £6.4 billion last year, it is now having something of a resurgence, which is making the market trickier for Lidl and Aldi.
Tesco is now selling more of its fresh meat and produce after taking a strategic decision to reduce prices as well as introducing its own more affordable Farm Brand range.
However, it is not just at the discount end of the market that Tesco is making inroads. Its premium range, Tesco Finest, has also seen increases of six per cent over the time period.
Iceland, which specialises in frozen food has taken its marketing in a different direction, prompting people to rethink what they expect of the retailer. New adverts put the focus on families exclaiming about the variety, cheapness and quality of its food.
That strategy would appear to have paid off as it has seen sales increases of 8.3 per cent, with its partnerships with Slimming World and Pizza Express proving particularly popular, along with its range of seafood.
As the big supermarkets cut their prices, the discounters have been drawn into the price war and are reducing their own. However, consumers are being warned to brace themselves for rising inflation during 2017.