August 22, 2017 / 8:57 AM / a year ago

UPDATE 2-Lidl overtakes Waitrose in Britain's supermarket wars

    * Lidl now No. 7 UK grocer with 5.2 pct market share
    * Aldi's market share grows to 7.0 pct
    * Tesco best performer of big four, shares rise 3.9 pct

 (Adds detail, background, Aldi CEO comment, shares)
    By James Davey
    LONDON, Aug 22 (Reuters) - Discounter Lidl            has
leapfrogged upmarket Waitrose          in Britain's competitive
food retail market, industry data showed on Tuesday, a sign that
cash-strapped shoppers are still having to count their pennies.
    Lidl and rival German discounter Aldi             have
steadily cut into the market shares of Britain's big four
supermarket chains - leader Tesco, Sainsbury's
, Asda and Morrisons - with aggressive
store openings fuelling their sales growth.
    The two discounters started opening stores in Britain in
1994 and 1990 respectively, but their big breakthrough came when
the economic crisis hit in 2008 and more British shoppers were
prepared to give them a go.
    In February, Aldi overtook the Co-operative to
become Britain's fifth largest supermarket and on Tuesday Lidl
recorded a market share of 5.2 percent becoming the No. 7,
market researcher Kantar Worldpanel said, usurping
    Waitrose has a loyal middle class clientele but even it has
felt the effect of Aldi and Lidl, who have pushed prices down
across the sector.
    Kantar Worldpanel said Lidl's sales rose 18.9 percent
year-on-year in the 12 weeks to Aug. 13, while Aldi's sales rose
17.2 percent, giving it a market share of 7 percent.
    "Ten million households visited (Lidl's) expanding network
of stores during the past 12 weeks, with alcohol and fresh
produce performing particularly well," said Kantar Worldpanel's
Fraser McKevitt.
    He said that Aldi attracted 1.1 million more shoppers
through its doors than this time last year.
    “Rising food price inflation continues to stretch household
budgets and as a result consumers are increasingly focusing on
the price that they pay at the till," Matthew Barnes, CEO Aldi
UK and Ireland, said.
    Though all of the big four increased sales for the fifth
consecutive period - a run of success not seen since 2013 - it
partly reflected grocery price inflation and they still all lost
market share to the discounters.
    The big four now account for 69.3 percent of the UK grocery
market, down from 76.3 percent five years ago.
    "That looks set to fall further in the coming months," said
    Tesco was the strongest performer among the big four, with a
sales increase of 3 percent, sending its shares as much as 3.9
percent higher.
    Overall UK supermarket sales rose 4 percent year-on-year.
    Like-for-like grocery inflation increased slightly to 3.3
percent after holding steady at 3.2 percent for the past two
months. The inflation has been fuelled by the fall in sterling
since last year's Brexit vote.
    At the current rate, price increases could add a further 138
pounds ($177.3) to the average UK household’s annual grocery
bill, with the price of butter and fish most affected, Kantar
Worldpanel said.
    Overall, British retail sales growth slowed in July, adding
to worries about a fall in consumer demand, official data showed
last week.
    Market share and sales (percent)
                  12 wks to     12 wks to     pct change
                  Aug 13 2017   Aug 14 2016   in sales
 Tesco            27.8          28.1          3.0
 Sainsbury's      15.8          16.1          2.0
 Asda             15.3          15.7          1.4
 Morrisons        10.4          10.6          2.6
 Aldi             7.0           6.2           17.2
 Co-Operative     6.3           6.6           -0.4
 Lidl             5.2           4.5           18.9
 Waitrose         5.1           5.1           2.8
 Iceland          2.1           2.1           5.2
 Ocado            1.4           1.3           12.6
    Source: Kantar Worldpanel

($1 = 0.7783 pounds)

 (Reporting by James Davey; Editing by Susan Fenton and Jane
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