August 27, 2014 / 9:56 AM / in 3 years

Tesco sales slide worsens as UK grocery market slows again

* Tesco sales fall 4 pct y/y in 12 weeks to Aug. 17
    * UK grocery sales up 0.8 pct, lowest for 10 years
    * Discounters Aldi, Lidl continue strong sales growth

    LONDON, Aug 27 (Reuters) - Incoming Tesco boss Dave
Lewis was served a stark reminder of the challenge he faces to
revive Britain's No.1 grocer on Wednesday, as industry data
showed its sales decline had worsened, hurt by the weakest
market growth in a decade.
    The data from market researcher Kantar Worldpanel showed
Tesco's sales fell 4.0 percent year on year in the 12 weeks
ended Aug. 17, with its market share dipping to 28.8 percent
from 30.2 percent.
    The fall was worse than the 3.8 percent decline Kantar data
showed for Tesco sales in the 12 weeks to July 20 last month.
    Last month Tesco ditched Chief Executive Philip Clarke in
favour of turnaround specialist Lewis, who will arrive from
Unilever on Oct. 1. The decision to end Clarke's
disastrous three year reign came as Tesco issued its second
profit warning in two years. 
    Overall UK grocery market growth for the latest period fell
to 0.8 percent - the lowest figure for 10 years, Kantar said, as
consumers shop around for deals to save money and waste less by
buying little and often in local convenience stores or online.
    Market growth was also impacted by grocery price inflation
falling for the eleventh consecutive period, standing at 0.2
percent, the lowest level in Kantar's dataset which began in
October 2006.
    No.4 player Morrisons, which like Tesco is
undergoing a turnaround plan aimed at improving its fortunes,
saw its sales fall by 1.9 percent in the 12 week period, with
its market share down from 11.3 to 11 percent.
    Tesco and Morrisons are being particularly hurt by the rise
of the German hard discounters Aldi and Lidl
, and have responded by cutting prices.
    Sales rose 29.5 percent at Aldi and by 18.3 percent at Lidl,
with both firms maintaining record market shares of 4.8 percent
and 3.6 percent respectively, helped by half of UK households
shopping at either outlet in the past 12 weeks, Kantar said. 
    Sainsbury, battling with Wal-Mart's Asda to
be the UK's No.2 grocer, saw sales rise 0.3 percent, though its
market share fell slightly from 16.5 percent to 16.4 percent.
    Sales at Asda grew 1.2 percent, while Waitrose was the other
strong performer in the period, buoyed by home delivery offers,
with sales up 3.6 percent.
    Market share and sales (percent) 
                  12 wks to     12 wks to     pct change
                  Aug 17, 2014  Aug 18, 2013  in sales
 Tesco            28.8          30.2          -4.0
 Asda             17.2          17.1           1.2
 Sainsbury        16.4          16.5           0.3
 Morrison         11.0          11.3          -1.9
 The Co-Op         6.4           6.6          -1.2
 Waitrose          4.9           4.8           3.6
 Aldi              4.8           3.7          29.5
 Lidl              3.6           3.1          18.3
 Iceland           2.0           2.0          -0.3
 (Reporting by Neil Maidment; Editing by Mark Potter)
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