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But, it was Aldi and Lidl who were the real star performers, according to analysts Kantar Worldpanel, as both saw sales soar by 16.8%.

"For most of the year, location tends to be the most important factor in choosing where to shop, but over Christmas, customers are actually prepared to travel further in search of specific festive products or better value".

Overall supermarket sales increased in value by 3.8%, with Brits spending a nearly £30bn in the last 12 weeks before Christmas, an extra £1bn compared to the same period past year.

Its figures show that Britons spent £1 billion more than a year ago over the three months including Christmas.

The market share of up-market retailer Waitrose, a division of John Lewis Partnership PLC, stood at 5.2% in the 12 weeks ended December 31, as sales increased by 2.3% in, Kantar said.

Despite the upbeat sales performance, Tesco's growth remained behind the market, with a 0.2-percentage point dip in its market share to 28 percent.

McKevitt explained: "In some ways Christmas is a tricky time for the discounters - they tend to lose a little market share compared to earlier in the year as many shoppers return to the more traditional supermarkets in search of old favourites".

"Shoppers are splashing out despite fewer promotions to tempt them".

"With inflation outpacing income growth, shoppers continued to see more of their spending power absorbed by essential items, including food, leaving less left over for buying Christmas gifts". The combined market share of the two German supermarkets stood at 11.8%, up from 10.4% a year earlier, attracting almost one million additional households during the period, Kantar added.

The implication seems to be that Tesco has managed to grow sales volumes by cutting prices, which would put pressure on margins and, subsequently, profits.

As of 09:34 GMT, Tesco's share price had given up 1.77 percent to 210.50p, underperforming the benchmark FTSE 100 index, which has climbed marginally into positive territory and now stands 0.29 percent higher at 7,719.09 points.

This is against the backdrop of the retailer's continuing strategy of moving away from promotions, selling 5.6 per cent fewer items on offer than during the same period past year.

But sales of non-food items, such as clothing, fell 3.7% - marking their steepest drop in five years.

Keith Richardson, managing director retail sector at Lloyds Bank Commercial Banking, said: "Despite what were arguably the toughest festive trading conditions in a generation, Christmas still provided a boost for all the major supermarkets with shoppers absorbing rising prices to treat themselves".

Sainsbury's managed to increase sales across its convenience stores, larger supermarkets and online deliveries, growing by two per cent overall.

Online sales played a key part, with 18 per cent of households shopping online for groceries in December (up from 16 per cent last year).

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