Cherry pickers

Flighty shoppers keep UK grocers on their toes

UK food shoppers are feasting on choice. They still visit Tesco and Sainsbury’s in much the same numbers, but they spend less in each. This pick ‘n’ mix approach to shopping, visible in data released by Kantar Worldpanel on June 1, shows customers are no longer a captive audience. That is a challenge to the grocery business model that the Big Four have yet to solve.

The largest stores — Tesco, J Sainsbury, Walmart’s Asda and Wm Morrison — all saw sales decline in the 12 weeks to May 22, according to Kantar Worldpanel data. Cheap German rivals Lidl and Aldi are the beneficiaries. A hopeful sign, though, is that shopper numbers contracted just 0.2 per cent in the period for the four largest retailers. Customers are still coming, but spreading their spend more thinly.

A decade ago, the idea that consumers ruled the roost would have seemed unthinkable. Competition regulators pored over data to examine the extent to which big supermarkets had captured their customers. That led to concepts like the “isochrone” — a measure of how far shoppers would have to drive before finding an alternative store.

That no longer seems an issue. New entrants to the market and the growth of online shopping mean customers now have more choice than ever about where and when to shop. Britain’s grocery spend is fragmenting as a result. Shoppers increasingly get their basics from the discounters’ limited ranges, and pick up the trimmings elsewhere.

Tesco and its peers are now trying to do to two things at once: be cheap, and also be appealing. That means getting prices of basics like eggs and washing-up liquid, where shoppers care less about quality, on par with the discounters. It also means having more effective staff, and a nicer shopping environment. In other words, supermarkets are entering an era where they must invest more and still charge less.

Lidl and Aldi are already wise to their own challenge — their premium labels are posting double-digit growth. Competition remains tough. More thinly spread shoppers mean more thinly spread profit for the sector.