Tesco and Sainsbury’s bolster market share ahead of Christmas trading updates

​​​Tesco and Sainsbury’s bolster market share ahead of Christmas trading updates

​Recent data suggests UK supermarket giants Tesco and Sainsbury’s have increased their market share, as have the German discount retailers, but can their shares keep gaining after a strong performance in 2023?

​The competition among grocery retailers in the UK remains fierce, with Tesco, Sainsbury's, Aldi, and Lidl all making significant gains in market share. Sainsbury's, in particular, experienced a notable increase, reaching its highest market share since December 2020 at 15.8%, according to data from Kantar. This growth was accompanied by a 9.3% increase in sales, indicating a strong performance for the supermarket chain.

​Tesco, the largest grocery retailer in the UK, also saw positive results, with its market share now standing at 27.6%. The company's sales grew by 7.5%, demonstrating its ability to attract and retain customers in a highly competitive market.

​Kantar also reported that supermarkets had their busiest Christmas period since 2019, thanks to promotions and increased consumer spending. In the four weeks leading up to 24 December, customers made a total of 488 million grocery trips, resulting in £13.7 billion in sales.

​Despite a decrease in food price inflation to 6.7% in December, the fastest drop ever recorded by Kantar, British households still faced financial pressures. On average, households spent £477 during the Christmas period.

​Kantar described the Christmas trading period as "a whopper," with Friday 22 December being the busiest day, seeing over 25 million trips to stores.

​Technical analysis on the Tesco and Sainsbury’s share price

​The Tesco share price, unlike global equity markets, continues where it left off at the end of December and advances towards its 304.1 pence January 2022 high. This bullish view will remain entrenched while the Tesco share price stays above its December trough at 277.8p.

Tesco Weekly Chart

​The Sainsbury’s share price is looking similarly bullish with it trading in 14-month highs and about to touch its 307.8p October 2021 peak. Once overcome, the August 2021 peak at 342.0p will be in focus.

​Good support can be spotted between the May and July highs at 291p to 290.2p. While the next lower 20 November low at 261.8p isn’t being slipped through, the medium-term uptrend should stay intact.

​Sainsbury’s Weekly Chart

​Since late-November the Sainsbury’s share price has been outperforming the Tesco share price, as it did throughout much of 2023.

​Tesco/Sainsbury’s 1-Year Comparison Chart

​Analysts recommendations and IG sentiment

​Fundamental analysts are rating Tesco as a ‘buy’ with Refinitiv data showing 3 strong buy, 8 buy, 3 hold and 1 sell - with the mean of estimates suggesting a long-term price target of 322 pence for the share, roughly 8% above the share’s current price (as of 4 January 2024).

​Sainsbury’s is rated as a ‘hold’ though with 3 buy, 5 hold and 3 sell recommendations by analysts and a mean long-term price target of 292 pence for the share, roughly 4% below the share’s current price (as of 4 January 2024).

​IG sentiment data shows that 72% of clients with open positions on the Sainsbury’s share expect the price to rise over the near term but 92% of clients with open positions on the Tesco share expect the price to rise over the term (as of 4 January 2024). This week saw between 1 and 50 IG clients buy the Sainsbury’s share and between 51 to 250 clients sell the Tesco share ahead of next week’s trading updates by both companies.