Discount stores show the greatest profit in the run up to Christmas 2013

It comes as no surprise that the biggest share of the UK’s retail grocery market went to the discount stores during the run-up to Christmas. Analysts have been predicting various scenarios, but as of recent reports the stores that gained most in the last quarter of 2013 were not all the biggest chains like Sainsbury’s and Tesco, but two German companies, Aldi and Lidl, and the more upscale Waitrose chain.

Though Sainsbury’s actually reported that the chain had the ‘best Christmas ever’ based on record numbers of customers and concentrated sales during the pre-Christmas period, the increase in like-for-like sales during the three months to year end was only 0.2%. CFO John Rogers said they were revising goals for the first quarter 2014 downward, expecting to see no more than 0.1% and opposed to previous projections of 1 to 1.5%

The German company Aldi published a statement regarding their better-than-ever Christmas, saying it was the best in the 24 years the store has operated in the UK. They also cited the store’s consistently low or competitive prices, and especially the quality of their goods, noting that items such as fresh lobster tails, luxury mince pies and free-range turkeys were all big sellers.

Lidl made a similar statement to the effect that low prices bring in customers but quality keeps them coming back. One of their top sellers was high-end champagne (Comte de Brismand), and they reportedly sold out of fresh turkeys. The chain already has 600 outlets in the UK and plans to add at least 16 more this year.

Tesco, the UK’s largest supermarket chain, did about as expected, which was not a superior showing.

Some estimates were confirmed, showing like-for-like sales down about 1.5%, presumably due to competition from the discounters. However Tesco’s recent launch of a number of innovations such as the “click and collect” plan for convenient pick-up, and numerous refurbishments are starting to pay off, according to analysts.

In any event, when the economy improves and customers have more to spend, stores that offer the best quality and variety at competitive prices are likely to keep and increase their share of the market.