Supermarket slowdown across the board but Asda takes the biggest hit

ALL the major UK supermarkets have seen a slowdown in growth rates according to Kantar results released today, but Asda is one of the worst hit.

Overall sales for UK supermarkets increased by only 0.1% on this time last year, a slowdown from the 1.1% reported in April.

Morrisons is still feeling the impact of having less store space than last year – this period sales were down by 2.6%.

Morrisons yesterday announced that it would be cutting the prices of a further 847 items as part of its Price Crunch campaign, on top of 1,000 price reductions announced earlier this year.

The grocer is focusing on family essentials such as nappies, bread and tea bags with the cuts which average 20% and focus on grocery items that are a core part of Morrisons shoppers’ baskets such as bags of sugar, rice, and cereals.

It was hit by the sale of its M Local Convenience stores, but made a swift return to the FTSE100 after dropping out of it for several months following a difficult trading period over Christmas. It has also recently agreed a delivery deal with internet giant Amazon.

In April, chief executive David Potts through his weight behind turnaround plans and invested £360,000 in the business in shares after it reported a £1bn improvement in its financials earlier in the year.

Walmart-owned Asda has also been struggling this year despite ramping up its Project Renewal plans Asda, which now commands a 16% share of the market thanks to a sales fall of 5.1%.

This was a bigger decline than in April, when sales dropped 3.9%.

It has announced the sale of its photo division to Photo-Me at the end of April as it attempts to slim down its operations.

At the same time, the Leeds-based supermarket entered into agreements with the Competition and Markets Authority to ensure fair pricing following a Which? Super complaint over misleading deal offers across the grocery sector.

Sales were also down at Tesco, by 1.3%.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Consumers are enjoying a golden period of cheaper groceries with like-for-like prices falling every month since September 2014.

“Yet lower prices are not the result of more groceries being bought on promotion. In fact promotional levels fell in the last year – in the past 12 weeks 38.5% of spend was on promoted goods, a decline from the 39.8% last April. Retailers are aiming for simplicity in their pricing and only a quarter of promotional spend is now through multibuy deals – a 24% drop on last year.”