Shoppers are slow to 'trade down'
No-frills chains Aldi and Lidl see only muted growth in own-label brands
Sluggish sales of own-label products have added to pressure on supermarkets at a time when shoppers' budgets are being squeezed.
Total grocery sales rose by 3.8% in the 12 weeks to August 7 compared to the same period last year, down on the previous month's 4.6%, market research firm Kantar Worldpanel said.
Grocery inflation over the three months also jumped to 5.2% from 4.8% in July, making it the second month running volumes fell.
No-frills chains such as Aldi and Lidl are continuing to do well out of the trading-down trend, but the conditions are "challenging" for the big four supermarkets.
Kantar director Edward Garner said: "While the discounters are prospering, we are not seeing the shift towards consumers buying more own-label products that might be expected from cost cutting."
Budget own label is showing only muted growth of 2%, he said, while premium own-label is growing at more than 8%, confirming that "despite economic pressures, low-price is not the only motivation in this market".
In the last economic downturn, in 2008, sales of value products rocketed, but shoppers have now realised budget own-label products are cheap for a reason while retailers have become wary of introducing self-inflicted deflation and devaluing the business by pushing budget value products too hard, says Mr Garner.
The big supermarkets' appeal to a broad range of consumers may also be proving a handicap he adds, unlike the narrow focus of discount and premium niche specialists.
Only Morrisons grew faster than the market overall during the period, at 4.6%, with Tesco and Asda at two thirds of the pace at 2.6% and 2.7% respectively.
Tesco retained its number one grocer spot with a 30.5% market share, followed by Asda at 17.1%, Sainsbury's at 16.1% and Morrisons, which grew its market share, at 11.7%.
Tesco finds it harder to add new customers given its size, said Mr Garner, unlike Morrisons where a lot of its new store openings are in new areas in the south.
Asda's share includes last year's Netto acquisition, where the stores are being converted to smaller Asda-branded outlets.
No-frills chain Aldi posted the fastest growth over the quarter, with sales up 24.4% and its market share hitting an all-time high of 3.6%.
Rival Lidl also powered forward with sales up 13.4% though its market share was unchanged at 2.6%.
At the other end of the spectrum, John Lewis subsidiary Waitrose saw sales rise at more than double the total market rate.