The change in shoppers’ essential spending habits continues to force traditional supermarkets – Tesco, Carrefour, Sainsbury’s and Morrisons – to stay price competitive and defend market share vs. discounters Aldi and Lidl, says Bloomberg Intelligence analysts. Volume is likely to remain subdued through 2023 while pricing becomes the only sales-growth lever.
Charles Allen, retail analyst at Bloomberg Intelligence commented: “UK consumers continue to change their essential spending habits as they are forced to pay more to take home fewer items. Pricing has become the main food-retail growth lever, driving the 8.3% sales increase in February.
“Volume could remain subdued, evidenced by the 16th consecutive month of sales growth, trailing the record-high food inflation of 14.5%, according the BRC Nielsen IQ Shop Price Index. Shoppers are lured by availability amid shortages and cheap assortments, which is triggering price reductions linked to loyalty programs from traditional supermarkets like Waitrose. They’re trying to defend their position against Aldi and Lidl which saw their combined market-share reach a record of 16.5% in February. The profit dynamic for the country’s food retail could have changed as the UK Food CPI moves ahead of PPI output.”
