Food retail revenues dropped by 3% to £99 billion in the second quarter, according to The Share Centre’s Profit Watch UK study, with overall revenues of UK plc slipping 2% to £341.7 billion over the period.
The rise of discounters Lidl and Aldi has severely affected market share of supermarket giants Tesco, Morrisons, Sainsbury’s and Asda.
Meanwhile, the UK launch of online grocery service AmazonFresh in June looks set to make the grocery sector’s future even tougher.
Helal Miah, investment research analyst at The Share Centre, said: “Intense price pressure led to a tough year for UK supermarkets, while companies exposed to UK consumer spending enjoyed a fillip from a ‘burgeoning’ UK economy.”
Figures from the British Retail Consortium recently revealed that shoppers have so far shrugged off fears about the UK quitting the EU with spending rising last month.
High street retailers have been struggling against falling footfall as more people turn to online shopping.
Footfall in July was 0.4pc down on a year ago, although this was an improvement on the 2.8pc drop in June.
In June, Kantar Worldpanel revealed that discount retailers achieved record market share while consumers awaited the possible impact of Brexit on grocery prices.