Tesco's Pain Continues as Embattled Retailer Loses Market Share to Supermarket Rivals

Embattled UK retail giant Tesco has received more bad news as new figures revealed that the FTSE 100 firm lost some of its market share to its supermarket rivals.

The latest grocery market share figures from Kantar Worldpanel showed that Tesco's market share dropped to 28.8% in the 12 weeks to September, down from 30.2% over the same period last year.

The research also revealed that discount supermarkets saw their market share grow, with Asda increasing its market share to 17.4%, up from 17.3%.

The study also found that Aldi (up to 4.8%), Lidl (up to 3.5%) and Waitrose (up to 5.1%) saw their market share grow.

But overall the data showed that grocery market growth slowed to a new record low of 0.3% as price inflation fell to zero.

"Consumers are currently benefitting from intense price competition between the grocers," said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

"For the first time ever we've seen the average basket of everyday goods bought today costing exactly the same as it did a year ago.

"With some staple groceries such as vegetables, milk and bread prices are actually falling as the big retailers all compete for a bigger slice of shoppers' wallets.

"As a result the grocery market is currently growing by just 0.3%, the lowest level since our market data was first compiled in 1993."

The figures come after shares in Tesco dropped by 11% on market open on September 22 after the firm revealed that an accounting error resulted in the retailer overstating its profits by £250m ($407m, €317m).

The Tesco stock price fell sharply before slightly recovering to 209.00p around half an hour after market open.

The company said in a trading update that the guidance issued on 29 August for the group profits for the six months to 23 August 2014 was overstated by an estimated £250m.

Some of this impact includes in-year timing differences, the company noted.

On 29 August, Tesco said it expected first-half profit of £1.1bn.

It added that the error was primarily "due to the accelerated recognition of commercial income and delayed accrual of costs."

"Work is ongoing to establish the extent of these issues and what impact they will have on the full year," Tesco added.

The company asked its accountants Deloitte to "undertake an independent and comprehensive review of these issues", and is working closely with its external legal advisers, Freshfields.

"We have uncovered a serious issue and have responded accordingly.

"The chairman and I have acted quickly to establish a comprehensive independent investigation," said Dave Lewis, the chief executive of Tesco.

"The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."