Even though the German retailer has moved ahead, the Co-op was still outperforming the market with a 2% increase, says the report on the 12 weeks ending 29 January.
Craig Noonan, spokesman for the Co-operative Group’s Food operation, said Aldi’s growth had come at the expense of the “big four” – Tesco, Asda, Sainsbury’s and Morrisons.
“We are also growing and we remain the most frequently visited non-discounter in the UK,” he said.
“It’s worth noting our recent divestments – McColl’s – have impacted our market share. As we focus on convenience, it means we have fewer larger stores and in effect less retail space – yet we’ve held our own.”
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Despite being overtaken by Aldi, the Co-op’s 2% sales increase was well ahead of the market, continuing a run of growth stretching back to July 2015.
“A significant own-label sales increase of 7% was behind the strong performance, with healthier ranges successfully catering to consumers’ good intentions for the new year.
“Not all shoppers were convinced by the health message though: while overall sales of healthy own label lines increased by 3%, a dry January was certainly not on the cards for many of us – sales of beer increased by 4% over the past 12 weeks, with wine up by 1% over the same period.”
Aldi increased its market share by 0.6 percentage points, with sales up 12.4% year on year, putting it behind the “big four”.
“Just a decade ago Aldi was the UK’s tenth largest food retailer, accounting for less than 2% of the grocery market,” said Mr McKevitt.
“Since then the grocer has grown rapidly, climbing the rankings by an impressive five places to hold a 6.2% market share. Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year.”
Waitrose, part of the worker-owned John Lewis Partnership, also performed well, boosting sales by 3.4% and increasing its share of the grocery market to 5.3%.
The grocery market continues to grow faster than it did in 2016, says Kantar, with supermarket sales up 1.7% on last year: eight of the nine major retailers saw positive sales growth during the past 12 weeks.
Morrisons was the fastest-growing retailer within the big four, increasing its market share for the first time since June 2015 with a sales uplift of 1.9% year on year.
Growing for the fifth period in a row, Tesco’s sales were up 0.3% year on year as its market share fell to 28.1%. Sainsbury’s sales remained flat, while its share fell by 0.3 percentage points to 16.5%.
Asda’s 1.9% fall in sales signalled a decline which continues to slow. Although its share dropped by 0.6 percentage points over the quarter, the retailer did manage to increase the number of shoppers visiting its stores compared to the same period last year.
Lidl and Iceland continued to grow. while Iceland – up 8.6% year on year – showing sales growth for the tenth consecutive period. A 9.4% year on year sales increase for Lidl buoyed the retailer’s market share by 0.3 percentage points, leaving the discounter holding 4.5% of the UK grocery market.