Hot weather and inflation give supermarket sector summer boost

Catherine Neilan
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The Great British Seaside - Weston-Super-Mare
We were enjoying it while it lasted (Source: Getty)

Tesco, Sainsbury's and Ocado's share prices were all given a boost this morning, after Kantar gave the supermarket sector another thumbs up.

Inflation and good weather helped buoy the supermarket sector in the 12 weeks to 16 July, with sales up 3.9 per cent. Like-for-like inflation steadied at 3.2 per cent - the same rate as last month - with prices rising following the result of the EU referendum.

But it wasn't just impending Brexit which helped boost the sector - the heatwave prompted a rise in spending on items including ice cream and suncare products, with sales up 34 per cent and 40 per cent respectively in June. Over the 12 week period, Britons spent an additional £158m on alcohol, while food and vegetable sales also climbed seven per cent.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Robust market growth this year has been boosted by higher grocery inflation, but consumers will be pleased to hear that price rises are no longer accelerating... One year on from the EU referendum – which had a marked impact on the price of imported groceries – hard-pressed shoppers could soon start to feel upward pricing pressures ease."

In total, "shoppers parted with an extra £170m to help offset the summer indulgence,” McKevitt added.


Market share (percentage change)

Tesco 2.3%
Sainsbury's 2.2%
Asda 1%
Morrisons 2.1%
Aldi 17.9%
Co-op 0.4%
Waitrose 2.8%
Lidl 19.4%
Iceland 5.7%
Ocado 11.7%
Other multiples -0.6%

Lidl was once again Britain’s fastest growing supermarket, increasing sales by 19.4 per cent – its strongest growth since October 2014. The German grocer's market share now stands at a record high of 5.1 per cent. Close behind, Aldi’s sales grew by 17.9 per cent, increasing its share of the market by 0.8 percentage points to seven per cent.

Tesco, Sainsbury’s and Morrisons grew sales by 2.3 per cent, 2.2 per cent and 2.1 per cent respectively. Asda continues to be the weakest performer, growing sales by just one per cent - although this marks the fourth consecutive period of growth.

The fastest-growing of the big four retailers, Tesco continued to perform well in its larger stores and a particularly strong performance online, Kantar said.

McKevitt explained: “Tesco clearly sees its online business as a crucial component of its ongoing recovery, evidenced by its move into nationwide same day grocery delivery ahead of the competition. It remains to be seen if this investment will pay off – while it has the largest share of online sales Tesco overall is still losing market share, down 0.5 percentage points to 27.8 per cent over the past 12 weeks."

Tesco's share price was up 1.2 per cent in early trading, against the FTSE100's rise of 0.5 per cent, while Sainsbury's share price rose 1.3 per cent. Ocado - which saw market share climb 11.7 per cent - nudged up 0.2 per cent.

However Morrisons' investors were less happy with the figures. Its share price dropped 0.6 per cent this morning.

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