Food bore the brunt of an overall drop in retail sales across the UK in the last three months, according to new figures.
The British Retail Consortium (BRC), in co-operation with KPMG, released its Retail Sales Monitor July 2014 report which showed a 0.3 per cent drop in like-for-like sales in the retail sector for the past three months. This was compared to July 2013, when the industry had experienced an increase of 2.2 per cent. Total sales were up 1.3 per cent, but this was in contrast to 2013's 3.9 per cent rise.
Pressure on the food industry increased once again as sales within the sector experienced the deepest three-month average decline since BRC and KPMG records began in 2008. The sector saw a 1.4 per cent drop in sales compared with 0.4 per cent growth during the past 12 months. It is further concern for companies operating within the sector.
Helen Dickinson, director general of the BRC, said: "Food experienced its deepest three-month average decline since at least December 2008, explained partly by the continuing keen price competition between supermarkets, which consumers are taking full advantage of, and record low food inflation."
There has been growing competition between supermarkets following the rise of budget grocery stores Aldi and Lidl. The two firms have been performing strongly of late and it has put increased pressure on the more traditional companies. Both Asda and Morrisons have recently announced job restructuring programmes with a number of redundancies being announced during this period.
Sainsbury's has looked to combat the rise of Aldi and Lidl by teaming up with Danish food group Dansk Supermarked to relaunch Netto in the UK. Around 15 Netto stores are expected to be launched initially but this could be increased depending on the success of the project. Sainsbury's and Dansk Supermarked have identified the north of England for its target market with the first store being opened later in 2014.