Tesco Plc, the U.K.’s biggest grocer, regained some market share in April, signaling a campaign of price cuts to keep discounters at bay is starting to work.
Tesco accounted for 29.1 percent of British supermarket revenue in the four weeks to April 27, compared with 28.6 percent in the period through March 30, analysts at Citigroup Inc. said in a report, citing data from researcher Kantar Worldpanel that isn’t publicly available. Tesco’s sales rose 0.9 percent, versus a 7 percent drop in March. Third-ranked J. Sainsbury Plc also gained market share, while Wal Mart Stores Inc.’s Asda unit and Wm Morrison Supermarkets Plc declined.
Tesco said in February that it will commit at least 200 million pounds ($339.4 million) this year to set product prices lower in a bid to counter German budget chains Aldi and Lidl, which have lured shoppers away from the U.K.’s four market leaders with cheap and low-frills offerings. Tesco’s price cuts, along with those by Asda, Morrison and Co-Operative Group Ltd., will amount to almost 1 billion pounds invested this year.
“Lower prices across the board is great for shoppers, but has driven down market growth to its lowest level in 11 years,” Edward Garner, director at Kantar Worldpanel, said in a separate release of 12-week U.K. market share data.
In that period, Cheshunt, England-based Tesco’s portion of U.K. grocery spending narrowed to 28.7 percent from 30 percent a year earlier. Asda’s share was unchanged at 17.3 percent while London-based Sainsbury’s slid by 0.2 percentage point to 16.6 percent and Morrison’s fell to 11 percent from 11.6 percent.
Aldi and Lidl clocked up record revenue increases of 36 percent and 21 percent respectively, and their combined market share widened to 8.2 percent from 6.5 percent a year earlier, Kantar said.