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Retail

German discount grocers Aldi, Lidl bite into profits of UK retail giants

Britain’s biggest retailers have reported heavy falls in sales around Christmas amid rising competition in their home market. They lost market share to Germany’s Aldi and Lidl which saw booming seasonal sales in the UK.

Britain's biggest supermarket group Tesco reported Thursday that crucial Christmas sales had dropped substantially. In the six weeks to January 4, sales in its home market declined 2.4 percent compared with the same period a year ago, Tesco said.

Further weakness in the UK grocery market continued to impact Tesco's performance, Chief Executive Philip Clarke noted.

Tesco's results for the all-important Christmas season came one day after Britain's second largest retailer Sainsbury announced shallow sales with gains of just 0.2 percent around Christmas. Sainsbury blamed tightening consumer budgets amid austerity for the drop.

To add to the gloomy picture, WM Morrison issued an unscheduled trading update in which it revealed a sharp fall in like-for-like sales over Christmas and said its full-year profit might come in at the bottom end of market expectations.

Britain's fourth largest supermarket chain was hit especially hard by the growth of German discount grocers Aldi and Lidl. On Tuesday, both retailers said they enjoyed record trading.

Although it has not disclosed sales figures, Aldi said it recorded its busiest Christmas since opening in Britain two decades ago. For Lidl, Christmas shopping at its 600 nationwide stores was the best to date.

Industry data published by Kantar Worldpanel in December showed that more than half of Britain's households shopped at Aldi or Lidl in the previous two months. As a result, the combined market share of the German grocers grew to 6 percent at the end of 2013.

uhe/lw (Reuters, AFP, AP)

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