Aldi becomes fourth largest supermarket as grocery inflation hits 12.4%

Lidl also reports big sales increase as research shows discount stores benefiting as shoppers economise

Aldi has overtaken Morrisons to become the UK’s fourth largest supermarket for the first time, as grocery inflation hit a new record of 12.4% last month.

Higher supermarket prices in August, adding £571 to the average annual grocery bill, encouraged more shoppers to closely manage their budgets, with the discount grocers benefiting, according to the market research company Kantar.

Official figures published on Wednesday are expected to show the headline rate of annual consumer price inflation rose to 10.2% in August from 10.1% in July, which was a 40-year high and sharply higher than the Bank of England’s 2% target.

Aldi’s sales rose by 18.7% year on year over the 12 weeks to 4 September, according to Kantar, which gave it a 9.3% market share and entry into the top four biggest supermarkets alongside Tesco, Sainsbury’s and Asda. Lidl increased sales by 20.9% and its market share increased to 7.1%.

“At the start of the 2010s, Tesco, Sainsbury’s, Asda and Morrisons together accounted for over three-quarters of the sector but that traditional big four is no more,” said Fraser McKevitt, the head of retail and consumer insight at Kantar.

“The discounters have seen dramatic sales increases in recent months, bringing more and more customers through their doors. For the fourth month in a row Lidl was the fastest-growing grocer and recorded its strongest sales performance since October 2014.”

Commenting on its demotion from the top four, a spokesperson for Morrisons said: “Market share is partly a function of new store openings and, although Morrisons has not put on any significant new space for a while, some competitors are still opening many new stores. But customers don’t really care about market share statistics – they care about value, quality, provenance and service and that is where our focus is going to remain.”

Kantar said the typical annual grocery bill rose to £5,181 from £4,610. Milk, butter and dog food were among the items affected by the biggest increases, going up in price by 31%, 25% and 29% respectively in the four weeks to 4 September compared with a year earlier.

Sales of the cheapest value own-label products were up by a third compared with a year ago, as customers attempted to cope with surging living costs. Overall spending on all retailer own-label lines was £393m higher during the four-week period, pushing own-label’s share of the market to 51.1%.

“It seems there’s no end in sight to grocery inflation as the rate at which food and drink prices are increasing continues to accelerate, McKevitt said.

“In what is a fiercely competitive sector, supermarkets are reacting to make sure they’re seen to acknowledge the challenges consumers are facing and offer best value, in particular by expanding their own-label ranges. Their efforts seem to be well received by consumers with sales of the very cheapest value own-label products up by 33% this period versus a year ago and nearly one in four baskets containing one of these lines.”

Analysis by the Resolution Foundation thinktank found that Liz Truss’s plans for an energy price freeze and sweeping tax cuts would give Britain’s richest households twice as much financial support with living costs as the poorest households.

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Meanwhile, Tesco, Sainsbury’s and Asda achieved their best sales performance since April 2021.

Amid the price rises, parents prepared for the end of the summer holidays as the majority of schools reopened in early September. In the week before that, to 4 September, parents stocked up for packed lunches. Sales of sliced bread were up by 12% in comparison with the previous three weeks, while cheese snacks grew by 18% and children’s yoghurts by 57%.


Julia Kollewe

The GuardianTramp

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