Shore Capital, a leading UK Investment Bank, has released research today on UK Supermarkets.
Clive Black, Vice-Chair and Equity Analyst at Shore Capital, said: “NIQ has revealed that trading patterns across the UK grocery scene were sound overall, up 4.6% in value terms, in the 4-weeks (4W) to 13 June albeit a strong initial 14-day period was followed by a flatter 2Ws. Sainsbury & Tesco are facing into tough comparatives, their respective NIQ scores, especially over 2Y, are sound to us; Marks & Spencer (M&S) excels albeit with a comparative boost – Ocado Retail Limited remains the fastest growing name. Asda and Aldi still lag in a very competitive but rational market, where we foresee solid earnings expectation conditions, and so still strong free cash flow generation. Now, can Thomas T., propel June-July trade?”
Detail from the note:
- Sound summer trade: NIQ has reported 4W UK grocery retail colour to 13 June 2026, a dataset that we believe implies sound overall trading momentum, so a bit of a continuum, set against what we believe is an unhelpful current hiatus around the Kantar market material, which we do not profile; that stated, we would discount the current Kantar dataset.
- Back with NIQ, 4W values are said to be 4.6% ahead year-on-year (YoY), forty basis points (bps) ahead of the prior monthly period. Within the May-June trading period, activity was strong in the first two weeks, over 6% value growth in the more clement weather, set against tough comparatives, but flatter thereafter as the skies became less favourable.
- In terms of deeper colour on the trading picture, online continued its stronger momentum of 2026, 9.3% ahead YoY, Ocado Retail Limited (ORL, in which M&S has a 50% equity holding was 16% ahead over 12W) whilst Convenience 1.7% higher YoY, albeit the Coop (6.0% higher on a 12W basis) rebounds from the 2025 cyber-attack.
- Current very high UK temperatures are likely to be boosting the impulse segment, in our view. We note with interest that private label (PL) sustains share gains, 5.4% ahead 4W YoY, with premium PL (PPL) 9.1% higher. As may be expected, on the warmer days, seasonal lines gain traction. NIQ record that promotional participation increased c150 bps to 25% in the period, no doubt supported by the arrival of the FIFA World Cup.
- M&S excels: Against the backdrop of an interrupted late spring 2025, albeit trading momentum remained robust at the time, M&S continues to perform very strongly in the food segment, suggesting to us that new space is performing well, whilst same store performance remains strong.
- Our store visits reveal an M&S that is in fine fettle, outlets in Northern Ireland looked very strong last weekend. Additionally, as referenced above, it is important to pint out the fact that about one-third of ORL’s trading activity is M&S brand, which adds over 0.5% to the label’s UK share.
- Sound SBRY & TSCO: Of the two other listed grocers, NIQ records that against tough multi-year, but particularly 1Y, comparatives, Sainsbury delivered good 3.5% 12W sales progress with Tesco, which only confirmed actual Q1 activity on 17 June, coming in at 2.1%. Sainsbury will update the market on its Q1 performance on 30 June, and like Tesco, we would be surprised to see any change to FY27 financial guidance. We note that NIQ records full service Morrisons achieve 1.8% 12W sales growth with Waitrose on 2.6% and Iceland, commendably at 4.5%.
- Asda & Aldi lag: Losing market share in the UK grocery scene is Asda, where NIQ records minus 4.5% 12W trading momentum, and Aldi GB, which was said to be flat YoY, the latter after c3.5% new space growth, so notably lower like-for-like (LFL) volume momentum.
- In terms of Asda, whilst our store visits reveal better presented outlets, the trading momentum remains weaker than we anticipated at the start of the year. For Aldi, the current flat trading momentum, against quite modest comparatives, suggests to us that it is struggling with residual trading densities, whilst Lidl, which is growing at over 9% (12W) looks like it is a quite formidable direct competitor in the discount channel; Aldi may also be missing out on the benefits of a credible loyalty mechanism as its advertisements seek to call foul those its competitors.
- What of the footy? Tesco’s management, in its FY27 Q1 update, spoke to an evident boost to its trade from the FIFA World Cup, including a sharp spike in IRN BRU sales north of the border around the Scotland vs., Haiti game. Can Scotland achieve the result against Brazil to make the knock-out rounds; let’s hope so, and if so, oh Lord!
- As for England, a defeat of Ghana may mean a first knock out game against the DRC and then, perhaps, a trip to Mexico City; what could possibly go wrong? That said, with Tesco’s CEO eschewing the virtues of Mr., Kane for Dan Carter and Roger Federer, will Sir., Harry wreak revenge? A good England run will register for the trade albeit a PE score of 1.0, perhaps.
- Matters Middle East? We set out amidst the more violent phases of the Middle East conflict in spring that an ongoing closure of the Straits of Hormuz could fuel in Q3 CY26 5.0-7.0% ONS food inflation. It remains unclear as to whether trading patterns will normalise, but some of the inflationary intensity has eased, noting Brent Crude prices notably off their recent highs albeit still ahead of the c$60-65/barrel of February.
- With UK forecourt fuel prices easing, maybe consumer confidence stabilising with the forthcoming end of the shambolic Starmer regime, the grounds for a slightly brighter H2 for the consumer economy may yet be a building tailwind for British retailers, including the grocers. Let’s see…
- Conclusions: For the much of the UK grocery retail scene, Q2 CY26 is a bit of a slog, set against last year’s sustained clement weather; hence, the importance of the FIFA World Cup to current trading momentum. M&S’ food activities are excelling, we sense the UK apparel market is trickier YoY, whilst Sainsbury and Tesco look to be grinding trade out satisfactorily, to us – as such as Q3 approaches, we are content with current forecast expectations.
- The trade remains very competitive but, as Ken Murphy, CEO of Tesco stated only last week, rational, which is sound and expected, for us. Progressing further in the FIFA World Cup may be challenging for the Scots, can Mr., Tuchel delivers a proper trade boost, Stateside?
