Lidl is on track to overtake Waitrose to become the UK’s seventh-biggest grocer as early as this summer as the discounters benefit from new store openings and shoppers search out bargains amid a return to food price inflation.
Lidl and fellow German chain Aldi increased their pace of growth in the past three months to the extent that the former controls 5% of the £180bn UK grocery market, just 0.2 percentage points behind Waitrose.
Britain’s supermarkets enjoyed the fastest sales growth in three-and-a-half years over the past three months, boosted by a pickup in food inflation and strong sales of Easter eggs.
The UK grocery market grew by 3.7% over the period, adding almost £1bn in sales compared with a year earlier, according to consumer consultancy Kantar Worldpanel.
But Aldi and Lidl continue to grow the fastest, 18.3% and 17.8% respectively, up from 14.3% and 15% reported last month.
Fraser McKevitt, the head of retail and consumer insight at Kantar, said Lidl was likely to overtake Waitrose briefly this summer and consolidate its position next year at the current rate of growth.
Aldi overtook Waitrose in 2015 and then, in February, it moved past the Co-op to become the UK’s fifth-biggest grocer. McKevitt said the discounters would seek to cash in on shoppers’ concerns about rising prices and economic difficulties, but the major supermarkets would be fighting back.
“All 10 major retailers are in growth for the first time in three-and-a-half years, when we last saw like-for-like grocery inflation as high as it is now,” he said.
Lidl and Aldi were growing fast as a result of rapid store openings, and shoppers visiting them more often and buying more items on each visit. The discounters’ performance was also lifted by price increases.
Prices across the grocery market rose by 2.6% over the past quarter, up from 2.3% in the three months to the end of March.
The cost of groceries began rising towards the end of 2016 after two years of falling prices. Butter, fish and fresh lamb are dearer, but crisps, bacon and fresh poultry are becoming cheaper.
Shoppers splashed out £325m on Easter eggs, with almost three-quarters of the population buying at least one. Last year, £294m was spent on Easter eggs.
Separate monthly figures from data company Nielsen painted a similar picture. Takings at supermarket tills rose by 8.6% in the four weeks to 22 April, while the volume of goods sold rose by 3.2%. “Impulse purchases” such as crisps and confectionery led sales growth, followed by drinks and fresh food.
Mike Watkins, Nielsen’s UK head of retailer and business insight, said: “This shows the underlying health of the supermarket industry is pretty good, even if we exclude the positive distortion caused by the late Easter. For example, when purely comparing Easter weeks this year and last year, sales were up 3.5%.”
Kantar said premium own-label products were popular among shoppers, for example “The Best” line at Morrisons, which has pulled in more affluent customers since its launch last year, helping the Bradford-based grocer become the fastest-growing supermarket among the big four – including Tesco, Sainsbury’s and Asda.
Tesco returned to growth with sales up by 1.9%. Asda posted its first sales growth since October 2014, while Sainsbury’s sales rise of 1.7% was the biggest since June 2014.