Growth in the value of grocery sales slowed in the latest quarter, when Tesco increased its stranglehold on the sector, according to a survey which indicated consumers may be tightening their belts in response to increased interest rates.
Analysis by TNS Worldpanel shows that the growth rate halved to 3% in the 12 weeks ending August 12, 2007, after reaching a three-year high of 6% in the 12 weeks ending May 20.
Worldpanel, which monitors the spending habits of 25,000 households, provides further evidence that some retailers have been struggling to maintain sparkling growth rates recently. While consumers have been grappling with the effect of five increases in borrowing costs since last August, persistent rain has kept many shoppers indoors.
Official figures published last week showed that comparing the three months to July with the same period of last year, food sales were up just 0.4%. This was the weakest three-month annual pace of increase in food sales since May 1999.
However, the TNS figures indicate that giants, led by Tesco, have been able to use their financial muscle to cash in on the change in sentiment by cutting prices.
Tesco increased sales by 4% in the 12 weeks to August 12 compared with the equivalent period in 2006. The company increased its share of the grocery market from 31.6% to 31.8%.
Asda enjoyed the strongest growth of the big four, boosting sales by 5% and raising its market share from from 16.6% to 16.8%.
J Sainsbury increased sales by 4% and increased its market share from 16% to 16.1%. Wm Morrison lagged the market growing sales by 2%. The Bradford-headquartered firm's market share slipped from 11% to 10.9%.
Somerfield had a tough time in the latest quarter, during which its sales fell 8%.
The company's market share in the period dropped to 3.9% from 4.4%.
Lidl, the German discounter did best outside the big four, growing sales by 10% and increasing market share from 2.1% to 2.3%.
Waitrose also out-performed the market, achieving 5% growth in sales. The employee-owned firm's market share edged up from 3.8% to 3.9%.
Edward Garner, the director of research at TNS Worldpanel, said the decline in the supermarkets' growth rates in part reflected renewed concentration on price competition as embodied by the latest Tesco "Swingometer" advertising.
Tesco, Asda and Sainsbury combined account for nearly 65% of the UK grocery market.
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