In the UK, the big four supermarkets are Tesco, Asda, Sainsbury’s and Morrisons. But over the past few years, we’ve also seen a move towards smaller budget chains such as Aldi and Lidl. These two German giants have triggered a price war among the big four supermarkets, and it will be interesting to see what happens by 2023.
Aldi and Lidl have already triggered a price war among the big four supermarkets.
The discounters have grown in popularity as customers switch from the big four supermarkets to Aldi and Lidl. Tesco, Asda, Sainsbury’s and Morrisons have all responded by lowering prices, with Morrisons, in particular, cutting its costs for 2,500 products by up to 10%. As a result, this autumn saw Aldi overtake Waitrose as Britain’s fifth-largest supermarket chain with a market share of 5.6%, while Lidl overtook Iceland in sales volume last year.
The price war has already hit profits at Tesco and Sainsbury’s in recent months – Tesco shares fell 8% after it revealed that annual profits would be lower than expected, while Sainsbury’s shares dropped 5% after it warned on profits due to increased competition from competitors including Ocado among others – but analysts believe there will be more pain yet for traditional supermarkets firms before they reach equilibrium again with their budget rivals.
Aldi is snowballing in the UK as customers switch to budget supermarkets.
Aldi is snowballing in the UK as customers switch to budget supermarkets.
Aldi has become Britain’s fifth biggest supermarket, according to a recent report by Kantar Worldpanel. The discounter’s sales have risen by 2.6% in the past year, and its market share has increased from 5.7% to 6.1%. Tesco, Sainsbury’s, Asda and Morrisons all saw their market shares fall, while Aldi grew its stake at an impressive rate of 1%. This was despite Aldi opening fewer stores than last year – it opened 40 new shops compared with 49 during the same period the previous year.
Aldi is also growing faster than any other supermarket on British soil at the moment: Its sales rose 13% year-on-year in September 2017; Sainsbury’s grew 7%; Tesco expanded by just 0.1%; Asda increased by 0.3%; Morrisons fell 4% on a like-for-like basis over this period (see graph below).
It will be interesting to see what happens in 2023.
It will be interesting to see what happens in 2023. Aldi and Lidl have already triggered a price war among the big four supermarkets (Tesco, Asda, Sainsbury’s and Morrisons). Aldi is snowballing in the UK as customers switch to budget supermarkets. They have overtaken Tesco, Asda and Morrisons in terms of market share. However, it is still too early to say whether this trend will continue.
Bottom-Line
It looks like Aldi and Lidl are here to stay, at least for now. They’re driving down prices and changing how people think about food shopping. This could be a turning point for all of us who want to eat well on a budget, but it also poses some serious questions about how our society can cope with this rapid change in consumer behaviour. Are supermarkets going out of business because they’re not good enough? Or are their customers switching because they don’t have any other options?
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I am Dotun Adeoye, a Business Growth Strategist & Author of the 5 Pillars of Business Growth.
I’ve built up my experience via serial entrepreneurship, consulting leadership roles in business growth, business development and product innovation in large companies worldwide in the last 30 years.
Today, I consult with large businesses on how to sustainably grow their businesses, sustain infinite growth, ensure business continuity and achieve a legacy.
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