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Market Commentary

​​Weekly Retail & Leisure News - 26​​ September, 2016

Supermarket sales up, but price war continues​

Supermarket sales inched up 0.3% in the 12 weeks to September 11, according to Kantar Worldpanel data, driven by more frequent shopping trips which benefit supermarkets with small store formats. Sales were also boosted by the warm weather and the national celebrations following the UK’s success in the Olympics and Paralympics. Sales at Iceland rose 6.3%, Co-op sales rose 3.1%, while Waitrose sales increased 3.4%, resulting in a record high market share of 5.3%. Grocery inflation dropped 1.1% in the period, the 26th consecutive period of price deflation, according to Kantar.

But despite overall growth in the sector, the fierce supermarket price war continues. Aldi reported record sales in the UK and Ireland in the year to December 31, with 12% total sales growth YoY to £7.7bn, as it continues to win market share, which is currently standing at 6.2%. However, profits were hit and fell 1.8% to £255.6m, as the company continues to invest heavily in prices. Aldi plans to open 70 new stores in the UK next year as part of plans to increase the number of its outlets from 659 to 1,000 by 2022.

In other news, sales and profits jumped at Inditex in the first six months to July 31. The retailer reported net profits of £1.1bn, up 8% on the same period last year. Sales jumped 11%, from €9.4bn to €10.5bn. Inditex emphasised the importance of the firm’s investment in technology, as it expanded its online stores to 11 new countries in the period, as well as launched mobile phone payment in all of its Spanish stores. Chairman and chief executive Pablo Isla commented: "Both our online and bricks-and-mortar stores are seamlessly connected, driven by platforms such as mobile payment, and other technological initiatives that we will continue to develop."

To read more about the vital role technology plays in retailers’ expansion strategies, please register to receive our recent report, Destination Retail 2016.

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