U.K. Grocers Get Price War Respite as Heatwave Boosts Sales

(Bloomberg) -- Britain’s beleaguered grocers gained some respite from a price war this month as warm summer weather caused customers to splurge on ice creams and chilled drinks.

Sales across the industry rose 0.3 percent in the 12 weeks ended Aug. 14, researcher Kantar Worldpanel said Tuesday. While discounters Aldi and Lidl continued to take business from the main supermarkets, market leader Tesco Plc had its best performance in six months as its sales fell just 0.4 percent.

Tesco’s revenue fell by less than any of its main competitors as the retailer took advantage of its larger scale in a battle to halt the growth of Aldi and Lidl. The grocer’s revamped fresh food ranges found their way into more than a quarter of all shoppers’ baskets, Kantar said.

“Tesco is the fastest-growing retailer in volume for most suppliers and is using this to build relationships with suppliers to ensure growing momentum," Dave McCarthy, an analyst at HSBC, said in a note. 

Tesco shares rose as much as 3.4 percent to 164.95 pence, the biggest gain since June 29.

Kantar’s report adds to evidence that Britons’ purchasing decisions are being driven more by the weather than the country’s decision to leave the European Union. Sales of frozen confectionery rose by almost a quarter compared with the same period last year, the researcher said.

While grocers aren’t suffering from a Brexit hangover, they remain locked in a price war that’s dragging down growth. Wm Morrison Supermarkets Plc announced price cuts on more than 1,000 lines this month.

Lidl and Aldi’s sales rose by 12 percent and 10 percent, respectively. The increase in sales of their premium own-brand ranges demonstrated how the discounters continue to broaden their appeal to the British public.

To contact the reporter on this story: Sam Chambers in London at schambers7@bloomberg.net. To contact the editors responsible for this story: Matthew Boyle at mboyle20@bloomberg.net, Paul Jarvis, Thomas Mulier