LONDON (Reuters) - Rising pressure on Britain's big four grocers to slash prices in the face of competition from discount chains has led to the lowest growth in the grocery market for 11 years, according to industry data released on Wednesday.
A report by market researcher Kantar Worldpanel showed the UK grocery market continuing to polarise, with the big four - Tesco (L:TSCO), Asda (N:WMT), Sainsbury's (L:SBRY) and Morrisons (L:MRW) - being squeezed between discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL] and upmarket players such as Waitrose [JLP.UL].
Earlier on Wednesday, Sainsbury's posted its slowest annual profit growth in nearly a decade.
As British consumers shop around to save money, Tesco, Asda and Morrisons have all been cutting prices to try to combat the allure of discounters. Just last week, Morrisons offered reductions averaging 17 percent on 1,200 products.
"Lower prices across the board are great for shoppers, but have driven down market growth to its lowest level in 11 years," Kantar director Edward Garner said. Some 45 percent of the sales of the big four came from products being offered at a reduced price, he said, compared with just 3 percent at Aldi.
Kantar said Aldi's sales grew at a record-high 36.1 percent year-on-year in the 12 weeks to April 27, taking its market share to a record 4.7 percent. Lidl's sales rose 20.9 percent, its highest growth since August 2004, giving it a record 3.5 percent share. Waitrose's market share also hit a record at 5.1 percent.
Among the big four, Asda proved the most resilient, holding its 17.3 percent market share and narrowly beating overall market growth of 1.9 percent with a 2.0 percent sales rise.
Tesco, Sainsbury's and Morrisons all suffered declines in market share. Tesco and Morrisons also recorded a fall in actual sales, down 2.4 percent and 3.6 percent respectively.
Kantar said grocery inflation was 1.5 percent for the 12 week period - the lowest level since June 2010.
(Reporting by Neil Maidment; Editing by Larry King)