Belfast Telegraph

Tesco's share of market drops to seven-year low

By Jamie Grierson

Supermarket giant Tesco saw its share of the grocery market dip below 30% for the first time in nearly seven years as it struggled to compete with low-cost rivals, new figures have shown.

Tesco's drop in market share, to its lowest level since May 2005, came as Sainsbury's took its strongest hold on the market since March 2003 and Iceland soared to its best share of the market in 10 years.

Tesco, still the UK's biggest supermarket, saw its share fall to 29.9% in the 12 weeks to January 12, as it slashed prices in a failed bid to attract more customers.

The group admitted it had messed up its pricing strategy over a disappointing Christmas - triggering an unprecedented slump in share price, wiping billions of pounds from its market value.

The UK's top four supermarkets - Tesco, Asda, Sainsbury's and Morrisons - were embroiled in an aggressive war during the period, started by Tesco when it launched its £500m Big Price Drop campaign in early October.

Iceland saw its market share grow from 1.9% to 2.1% in the period, which is promising for potential buyers as bids for the chain are due today.

The supermarket's founder, Malcolm Walker, is reportedly facing a battle with two private equity firms, BC Partners and Bain Capital, for the grocer in a £1bn auction.

Meanwhile, low-cost chains saw their share of the market grow as well, with Lidl up from 2.4% to 2.5% and Aldi up from 3.1% to 3.5%.

Second biggest UK grocer Asda put in a record performance, lifting its share from 16.9% a year ago to 17.5%, however this was boosted by the Netto stores it acquired last year.

Sainsbury's, which saw its share grow from 16.6% to 16.7%, had a robust Christmas, reporting a 2.1% rise in like-for-like sales excluding fuel but including VAT in the 14 weeks to January 7.

The third biggest supermarket pledged to extend its price matching scheme after the successful festive trading period.

This contrasts with the disappointment at Tesco, where chief executive Philip Clarke said the supermarket wrongly pulled back on one-off promotions as its rivals increased them.