Lidl has overtaken Waitrose to become the UK’s seventh largest grocer as increasingly cash-strapped shoppers turn to the discounters.
The German discount chain reached a new market share high of 5.2% as sales rose 18.9% in the 12 weeks to 13 August – making it the UK’s fastest growing grocer, according to the latest market share data from analysts Kantar Worldpanel.
Fellow discounter Aldi’s sales rose by 17.2%, giving it a 7% market share. Aldi overtook Waitrose in 2015.
The first British Lidl opened in 1994. The chain now has more than 650 stores nationwide after an ambitious expansion programme. Aldi is also rapidly opening new stores and some analysts believe the two grocers could more than double their market share from a combined figure of just over 12% to as much as a quarter of the market.
Bryan Roberts, a retail analyst at TCC Global, said many senior supermarket bosses were operating under that assumption.
“These chains are destined to become very substantial indeed,” he said.
Roberts said the discounters were persuading shoppers to fill a trolley rather than a small basket and it was not all about price. They are also attracting families and more middle-class shoppers after broadening their ranges to include more fresh foods, such as bakery items, as well as good own-label alternatives to family basics such as nappies.
Although Lidl has overtaken Waitrose, the upmarket grocer’s share of sales held steady at 5.1%. It managed to increase year-on-year sales by 2.8%, continuing an unbroken run of growth dating back to March 2009.
The “big four” – Tesco, Sainsbury’s, Asda and Morrisons – all increased sales for the fifth period in a row, their best performance since 2013, but nevertheless lost market share as the discounters grew much faster.
“This welcome period of sustained growth hasn’t been enough to entirely offset pressure from the discounters,” said Fraser McKevitt of Kantar. “The big four now account for just 69.3% of the UK grocery market – down from 76.3% five years ago – and that looks set to fall further in the coming months.”
The grocery market is being lifted by inflation, underpinned by the fall in the value of the pound since the Brexit vote last year.
Kantar found the rate of inflation had increased slightly to 3.3% in the latest three-month period after being at 3.2% for the past two months. At the current rate, price increases could add a further £138 to the average household’s annual grocery bill. Prices are rising fastest in butter, fish and cola drinks but Kantar said all major grocery categories were now registering inflation.
While overall supermarket sales rose 4% during the period, Kantar said poor weather had affected sales of summer favourites in the past month.
Ice-cream sales were down 9%, while sales of burgers declined by 25% as rain dampened the nation’s appetite for barbecues.