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Tesco sales and market share take knock in last three months

TESCO has lost more customers and market share in the last three months, according to new figures that underline the uphill struggle facing the supermarket's incoming chief executive Dave Lewis.

The tills at Britain's biggest supermarket took £7.1 billion in sales during the 12 weeks to August 17, down four per cent on the same quarter last year, research by Kantar Worldpanel shows. Tesco now represents 28.8 per cent of UK supermarket sales, down from 28.9 per cent in the quarter to July 20 and a significant slide from its 30.2 per cent market share a year ago.

The company is bringing in Mr Lewis to replace Philip Clarke on October 1 after several years of dwindling market share that resulted in Tesco issuing a profit warning in July.

Sainsbury's and Morrisons have also lost customers in the last month, though the latter's share price rose nearly two per cent in early trading as the figures showed a slower pace of decline.

Meanwhile, grocers with a greater focus on cheaper prices such as Asda, Lidl and Aldi attracted more value-conscious shoppers. Kantar said yesterday that more than half of households in Great Britain shopped at either Aldi or Lidl at least once during the summer, taking the German brands' sales up 29.5 and 18.3 per cent respectively compared to the same period last year.

Aldi took 4.8 per cent of all supermarket sales in the quarter, while Lidl had 3.6 per cent.

The bigger supermarkets have already begun to fight back by launching a price war on certain products in recent months. This competition has kept a lid on overall supermarket sales, which rose just 0.8 per cent on last year to £24.7bn in the quarter - the slowest rate of growth in a decade.

Clive Black, head of research at Shore Capital, said the discounters had benefited from a slow improvement in living conditions since the recession, which has led to careful household budgeting and shoppers treating themselves with cheap meals out rather than more expensive brands in supermarkets. "Such a mix is arguably a 'perfect storm' for the Big Four retailers, which were arguably taking their customers for granted through much of the economic downturn by depending upon inflation for sales and over-protecting gross margins," he wrote in a research note.

At the other end of the market, Waitrose lifted its share from 4.8 per cent a year ago to 4.9 per cent.

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