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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 08 May, 2017

Grocery market competition intensifies​​​​

Sainsbury’s has announced a 0.6% drop in LFLs in the year to March 11. The grocer’s pre-tax profits were also down 8.2% to £503m, following its takeover of Argos. However, Sainsbury’s believes that its food business remains resilient in a challenging market. Boosted by strong sales at Argos, total sales rose 11.6% to £26.8m, as it plans to open 250 Argos concessions within its supermarkets. Sainsbury’s online food business grew 8%, while its convenience business increased 6% in the same period.

Morrisons, meanwhile, reported strong LFLs, up 3.4% in the 13 weeks to April 30, as the grocer managed to keep prices competitive, despite rising costs for imported food due to the falling value of the pound. Morrisons’ results were helped by successfully adapting to changing consumer behaviour, including a tie-up with Amazon in November last year, offering same-day and one-hour delivery services. According to Kantar World Panel, Morrisons’ new line “The Best” has attracted a more affluent shopper, and helped Morrisons become the fastest growing of the Big 4 supermarkets over the recent weeks.

And finally, M&S has announced plans for a tie-up with online grocer, Ocado, in an attempt to meet customer demands for convenience. Tim Vallance, Head of Retail & Leisure at JLL UK, commented: “It’s clear that M&S are now looking to focus on growing their food offering. Exploring a delivery service hot on the heels of the expansion of their simply food stores, is a natural progression. The online grocery market has a lot of space to grow in the UK and Morrisons’ recent rapid growth is partly down to the expansion of their e-commerce business. The key to success is offering convenie​​nce: having a strong portfolio of stores, alongside the ability for consumers to access goods anytime and anywhere through the internet. Having these attributes will put any grocery business in the best position to flourish, in a world where the consumer is becoming increasingly time poor.”​

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