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The UK’s two biggest supermarkets have increased sales at a faster rate than discounter Aldi for the first time in a decade, as the coronavirus pandemic spurred weekly shops and more online ordering.
In the 12 weeks to May 16, Tesco’s sales rose 11.7 per cent and those of J Sainsbury grew 11 per cent year on year, according to Nielsen. Sales at Aldi, the larger of the two German-owned discounters operating in the UK, rose 10.1 per cent.
But sales growth at the biggest supermarkets was still outstripped by its compatriot Lidl, which lifted sales 13.8 per cent.
Kantar, another researcher, highlighted similar trends albeit with slightly different growth rates due to different measuring methodology.
The period encompasses all of the current lockdown and the three weeks before it, when supermarkets benefited from a rush to stockpile essential items.
Since the lockdown began on March 23, all supermarkets have been helped by a trend towards larger spend in each trip. Nielsen found that store visits were down 24 per cent in the four weeks to May 16 as consumers tried to avoid exposure to crowded areas. But spend per trip was up 45 per cent.
Tesco and Sainsbury’s have also been boosted by their ability to expand their home delivery and click-and-collect operations. Both have effectively doubled the number of orders they can dispatch in a week, to 1.2m and 600,000 respectively, by hiring thousands of extra pickers and van drivers — although both acknowledge that they still cannot meet demand.
Asda and Wm Morrison have also expanded online delivery but their sales grew by less because they do not operate convenience stores, which have also prospered during the pandemic.
Overall, online grocery accounts for about 13 per cent of total sales, according to Nielsen, up from around 7 per cent before Covid-19 struck. Most analysts think that proportion will fall back a little once the pandemic ends, but will remain previous levels.
Aside from higher transaction values, the main driver of growth at Aldi and Lidl is likely to have been new stores. Aldi has opened more than 40 outlets over the past year, taking its total estate to 875.
Neither company offers online grocery ordering although Aldi did recently start a trial at a small number of stores where its staff pick online orders and Deliveroo takes them to customers.
Clive Black at Shore Capital said the pandemic has helped traditional supermarkets, which have large stores and car parks that make social distancing easier and wide product ranges that support big weekly shops.
Discounters tend to operate from smaller stores with more limited parking and offer a narrower selection of products.
Bruno Monteyne, an analyst at Bernstein, said that Covid-19 had been “a massive boon” to grocery ecommerce and that the discounters had no ready answer to this.
“[Online grocery] goes against their entire corporate DNA,” he said. “They have done trials all over the world and none of them has really worked.”
He also said that while a recession would help discounters, the market share boost would be less than the one that followed the financial crisis because the Big Four had material improved their pricing competitiveness.
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