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Resurgent Tesco Curbs Discounter Growth as Revival Speeds Up

  • Aldi and Lidl record slowest growth since 2011, Kantar says
  • Tesco’s sales growth accelerated to highest in three years

Market leader Tesco Plc continued to lead a counterattack by Britain’s supermarkets last month as German discounters Aldi and Lidl recorded their slowest sales growth in the U.K. since 2011.

Tesco’s sales rose 2.2 percent in the 12 weeks ended Nov. 6, researcher Kantar Worldpanel said Tuesday. The growth was the fastest in three years and sent the shares up 5.4 percent to 217 pence in London, the highest closing price in more than 15 months. Aldi’s sales gained 10 percent, while Lidl’s rose 6.1 percent, Kantar said, a slowdown on previous months.

The findings provide a further sign that the rise of the discounters may have peaked. With their low prices and no-frills approach, Aldi and Lidl have increased their share of U.K. grocery spending to almost 11 percent. Supermarkets have responded with a sustained period of price cuts that has closed the gap. Tesco in particular has seen customers return as Chief Executive Officer Dave Lewis has also improved service and product availability, though Wal-Mart Stores Inc.’s Asda continues to struggle.

“Overall the industry remains tough, making Tesco’s acceleration all the more impressive,” Dave McCarthy, an analyst at HSBC, said in a note.

Kantar’s findings were backed up by rival researcher Nielsen, which said the combined growth of Aldi and Lidl is at its lowest level since the end of 2011. Tesco’s 2.3 percent sales gain in the 12 weeks ended Nov. 5 was the strongest in more than three years, Nielsen said.

  • Asda’s takings fell 5 percent in the latest 12-week period, Kantar said, the worst performance of the big four supermarkets
  • Sainsbury sales slipped 0.7 percent, while takings at Wm Morrison declined 2.4 percent, partly due to last year’s closure of its convenience-store business
  • In good news for all the large supermarket chains, food price deflation eased to 0.5 percent, Kantar reported
  • Grocery prices likely to “creep up again” in December unless retailers offer new discounts for Christmas: Kantar
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