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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 05​​​​​​​​​​​​​​​​​ October, 2015

Grocery market battle heats up

Sainsbury’s has announced a 1.1% decline in LFL sales for the 16 weeks to September 26, as the Big Four Grocer continues to feel the pressure of food price deflation and strong competition. This was the seventh consecutive quarter of LFL decline for Sainsbury’s, although the rate of decline was an improvement from the -2.1% registered in the first quarter, and it now expects full-year underlying profits to be "moderately ahead" of analysts' expectations of £548m. Sainsbury’s total retail sales edged up 0.3% during the same period, as it maintained its market share of 16.2%, despite increasing competition from the discount sector in particular.

In addition, competition from pure play retailers is intensifying, as demonstrated by Amazon’s foray into the UK grocery market. Amazon launched its one hour groceries online business, Amazon Fresh, in Birmingham this week, with its London launch scheduled for later in October. Whatever the result of this bold move from Amazon, it will add to the pressure being felt by the big four in an already crowded market.

And finally, home improvement retailers ScS and Topps Tiles have both announced positive trading figures this week. ScS’ LFL order intake rose 5% for the year ending July 25, while Topps Tiles LFL sales increased 5.0% for the fourth quarter ending October 3. Both retailers have benefited from increasing demand for big ticket items, boosted by a robust housing market, improving consumer sentiment and the continued low interest rate and inflationary environment.

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