Aldi overtakes Co-op to become UK's fifth biggest food retailer

Aldi has accelerated passed Co-op to take its place as the fifth biggest food retailer in the UK, the latest Kantar Worldpanel data has revealed.

Sales at the German discounter were up 12.4% to £1.7bn in the 12 weeks to 29 January, increasing its market share by 0.6 percentage points to clinch fifth place for the first time.

The overall market also continued to grow faster than in 2016, with supermarket sales up 1.7% on last year and eight of the nine major retailers recording sales growth.

“Just a decade ago Aldi was the UK’s tenth largest food retailer, accounting for less than 2% of the grocery market,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel. “Since then the grocer has grown rapidly, climbing the rankings by an impressive five places to hold a 6.2% market share. Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year.”

Despite being overtaken by Aldi, Co-op’s 2% sales increase was well ahead of the market, continuing a run of growth stretching back to July 2015. A significant own label sales increase of 7% was behind the strong performance, with healthier ranges catering to consumers’ good intentions for the new year.

Morrisons was the fastest-growing retailer within the big four, increasing its market share for the first time since June 2015 with a sales uplift of 1.9% year on year. Although growth came from across the store, premium own label was a particularly strong area – sales were up by 35%, while its revamped The Best range made its way into 14% of Morrisons baskets.

Growing for the fifth period in a row – albeit at a slower rate than previously – Tesco’s sales were up 0.3% year on year as its market share fell to 28.1%. Sainsbury’s sales remained flat, while its share fell by 0.3 percentage points to stand at 16.5%.

Meanwhile, Asda’s 1.9% fall in sales signalled a decline which continues to slow. Although its share dropped by 0.6 percentage points over the quarter, the retailer did manage to increase the number of shoppers visiting its stores compared to the same period last year.

Elsewhere, Waitrose, Lidl and Iceland all continued to grow. Boosting sales by 3.4%, Waitrose increased its share of the grocery market to 5.3%, while Iceland – up 8.6% year on year – saw sales growth for the tenth consecutive period. A 9.4% year-on-year sales increase for Lidl buoyed the retailer’s market share by 0.3 percentage points, leaving the discounter holding 4.5% of the UK grocery market.

Prices have continued to rise in January after Kantar found inflation had crept back into the market over Christmas for the first time since 2014. Like-for-like inflation on a basket of everyday groceries climbed to 0.7% in the past 12 weeks.

“If prices continue to rise at the same rate for the rest of 2017, shoppers will find themselves around £27 worse off,” McKevitt said.

Although not significant enough to dampen the market, well-publicised supply issues over the past few weeks have affected sales in fresh produce. McKevitt added: “11 million households buy courgettes annually, but supply issues contributed to 759,000 fewer shoppers buying them this January – that’s a 31% drop in spending compared with the same month last year. Sales of spinach also fell by 12%, in a clear sign that the poor weather in southern Europe has had a tangible impact on British shopping baskets.”