First drop in UK grocery sales in 20 years

London - A price war, led by German-based discounters, has pushed Britain's grocery market into its first sales decline in 20 years, industry data showed on Tuesday.

"The fight for a bigger share of sales has ignited a price war, which means an average basket of everyday goods such as milk, bread and vegetables now costs 0.4% less than it did this time last year," Fraser McKevit, head of retail and consumer insight at Kantar Worldpanel, said in a statement.

Market researcher Kantar Worldpanel said British grocery sales fell 0.2% in the 12 weeks to November 9 compared with the same period last year, the first decline since its records began in 1994.

"This is bad news for retailers but good news for shoppers, with price deflation forecast to continue well into 2015," McKevit said.

Price deflation reflects the impact of discounters Aldi and Lidl and the market's competitive response.

Kantar said sales at market leader Tesco, which is currently mired in an accounting scandal, fell 3.7% over the 12-week period, though the rate at which it has been losing market share has slowed.

Asda, the British arm of Walmart, recorded the best performance among the so called "big four". Its sales fell in line with the overall market, and its market share was steady at 17.2%t.

Sainsbury's and Morrisons both recorded a decline in share compared with last year, with sales down 2.5% and 3.3%, respectively. Aldi's sales rose 25.5%, giving it a record market share of 4.9%.

Lidl's sales increased 16.8%, giving a market share of 3.5%. At the premium end, Waitrose's sales rose 5.6%, taking its share to 5.1%.

November 10 2013 in sales:

Tesco 28.7 29.8 -3.7
Asda 17.2 17.2 -0.2
Sainsbury 16.4 16.8 -2.5
Morrison 11.1 11.5 -3.3
Co-operative 6.2 6.3 -1.3
Waitrose 5.1 4.8 5.6
Aldi 4.9 3.9 25.5
Lidl 3.5 3.0 16.8
Iceland 2.0 2.0 -0.8