Tesco turnaround on track as Aldi and Lidl growth slows

Aldi and Lidl saw their lowest combined sales growth for five years in the 12 weeks ending 5 November, according to the latest Nielsen data.

Aldi: Christmas ad stars Kevin the carrot
Aldi: Christmas ad stars Kevin the carrot

Aldi’s year-on-year sales were up 11.3%, while Lidl’s grew 5.2%, meaning their combined growth rate was the lowest since 2011.

Tesco, meanwhile, proved that the measures implemented by chief executive Dave Lewis to turn around the vast retail business are taking effect; its sales growth of 2.3% was the best in more than three years, and crucially, it also grew its market share, from 27.5% to 27.7%.

Mike Watkins, Nielsen’s UK head of retailer and business insight, said: "It’s inevitable that a time would come when the discounters experienced a slowing growth rate, and three factors have combined to see this happen. Firstly, the growth rates a year ago were particularly high due to a period of new store openings, so it’s always harder to maintain growth against that.

"Secondly, the supermarkets have had more time to alter strategies to fend off the discounters, particularly Tesco whose recovery continues apace – its 2.3% growth was the strongest in over three years.

"Finally, shoppers are still spending freely and we’ve seen a return of sustainable growth in the volume of items people are buying, helped by industry-wide price cuts, so one of the discounters’ USPs is less pronounced in shoppers’ minds."

Tesco is the only one of the "big four" supermarkets to enjoy positive figures. Morrisons recently reported a fourth straight quarter of like-for-like sales growth, along with increased profits – a sign that its turnaround plan under chief executive David Potts is working. But it has achieved this in part by shutting less successful stores, meaning its total sales are down 2.7%.

Sainsbury’s suffered a less sharp fall in overall sales – 0.9% – but unlike Morrisons, this figure tells most of the story. The supermarket disappointed investors last week when it announced that both revenues and profits had fallen.

Asda, meanwhile, continued to see sales fall sharply, by 4.9% in this period. The Walmart-owned retailer announces its third quarter results on Thursday and will hope to find evidence of some improvement under new chif Sean Clarke.

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