Rivals 'reduce Tesco market share' in the UK

Rival supermarkets took a further slice out of Tesco’s market dominance in the UK during the key Christmas battleground period, figures suggested today.

Ahead of the retailer’s festive update on Thursday, research firm Kantar Worldpanel said the chain’s share of the market for the 12 weeks ending on Christmas Day dropped from 30.5% a year ago to 30.1%.

Investors are already braced for another small drop in sales from the heavyweight chain this week, even though it instigated a price war among the “big four” chains with its Big Price Drop campaign last September.

Asda’s response, where it guaranteed to be 10% cheaper than its rivals, looks to have paid off after Kantar said its share rose from 16.8% to 17.2%, helped by the conversion of recently acquired Netto stores.

Sainsbury’s, which updates on Wednesday, achieved its highest share of the retail market since March 2003 with 16.7%. And Morrisons also fared well in recent months because it only sells small amounts of non-food items, allowing it to grow just ahead of the market and retain share.

Kantar director Edward Garner said: “Tesco’s Big Price Drop has had an aggressive response from its competitors and put pressure on its share.

“Behind these top line numbers, there is now strong evidence that households are shopping around more.

“Nearly all retailers can claim to have more shoppers, who are making more trips than last year. However, basket sizes are now smaller – a classic response to tight household budgets.”

Tesco recently reported falling sales for the fourth quarter in a row despite its £500m price-cutting campaign.

Matthew Truman, an analyst at JP Morgan Cazenove, has predicted a 1.5% fall in underlying sales at Tesco over the Christmas period, compared with a 0.9% fall in its previous quarter.

“It is clear that the retail industry has suffered a difficult Christmas and we do not believe that Tesco has emerged unscathed,” he said.

Discount supermarkets such as Iceland, Aldi and Lidl performed relatively well, bolstered by the demise of competitor Netto in September, while upmarket chain Waitrose slightly increased its market share to 4.4%.