A branch of Aldi
(Picture: PA Wire)Price-conscious shoppers are switching to Aldi and Lidl as the cost-of-living crisis squeezes household budgets.
The German discounters were two of only three grocers to grow market share and sales over Christmas, according to new data from market research firm Kantar.
In contrast, most of the “Big Four” supermarkets suffered a drop in both sales and market share.
It comes as people increasingly shop around for the best prices as inflation soars. Kantar said grocery inflation was running at 3.8% — adding £180 to the average annual shopping bill.
“Prices are rising on many fronts, and the weekly shop is no exception,” said Fraser McKevitt, head of retail and consumer insight at Kantar.
“Like-for-like grocery price inflation, which assumes that shoppers buy exactly the same products this year as they did last year, increased again this month.”
Beef, crisp and savoury snack prices are rising fastest, while the cost of bacon, vitamins and beer fell over the period.
Inflation is now running at a 30-year high of 5.4% across the economy and forecast to keep rising. That is prompting people to hunt for deals to help manage costs.
McKevitt said: “We’re now likely to see shoppers striving to keep costs down by searching for cheaper products and promotions. Supermarkets that can offer the best value stand to win the biggest slice of spend.”
Aldi’s market share rose from 7.4% to 7.8% in the 12 weeks to 23 January, Kantar said, as sales rose slightly to £2.45bn.
Lidl grew from 5.9% to 6.2% of the market, taking in £1.94bn in the period.
Both are renowned for cheap prices: consumer publication Which? named Aldi the cheapest supermarket of 2021, just ahead of Lidl.
Kantar said Tesco was the best performer among the “Big Four” over Christmas, managing to increase market share despite a drop in sales. The retailer is currently trying to lure customers with its “Aldi price match” promotion.
The worst performer was recently privatised Morrisons, which suffered an 8.5% drop in sales to £3.1 billion.
Overall, grocery spending fell 3.8% in the 12 weeks to the end of January as more people ate and drank out at pubs, bars and restaurants.
McKevitt said: “Increasing confidence about heading out and about, combined with the return to the office, means we’re starting to see pre-pandemic shopping patterns once again.
Spending was still 8% above pre-pandemic levels despite the year-on-year dip.
Aside from Aldi and Lidl, Ocado was the only other major grocery to grow sales and market share over the period, though it is still only around a quarter of the size of Lidl.
London is Ocado’s top market, with the online grocer enjoying double the market share it has nationally in the capital.
