Analysts at GlobalData have predicted that Aldi will overtake Asda as the third-biggest supermarket in the UK within the next five years, based on current market share trends.
Kantar data released last week showed that sales at Asda had fallen 6.0% over the year to 4 August, with its market share down 1.1 percentage point to 12.6% – the lowest level in at least 13 years.
Asda’s own data showed that its like-for-like sales had slid 5.3% during the second quarter to 30 June, with the group outlining the urgent steps it was taking to win back shoppers. These include upgrading its larger stores, improving product availability, and increasing the number of staff on its checkouts.
Eleanor Simpson-Gould, Senior Retail Analyst at GlobalData, commented: “Asda must redefine itself with a clear differentiation from discounters to secure its position in the UK food & grocery market. The grocer must focus on its online capabilities this year to reestablish itself as a dominant player in the market and set itself apart from Aldi. Without immediate action, it risks dropping out of the coveted ‘big three’ position even sooner.”
GlobalData noted that Asda Chairman Lord Rose’s public embarrassment over recent sales performance and calls for co-owner Mohsin Issa to step back from running the business will have exacerbated internal tensions, which have already reached boiling point.
Simpson-Gould concluded: “Such leadership disputes will do little to restore employee morale, already under such strain that colleagues have chosen to strike this year. Despite emergency plans to spend £30m to ensure staff is on checkouts at the weekend, stores are replenished during the day, and improvements are made to in-store cleanliness, Asda’s enhancements to the customer experience feel more like the bare minimum to persuade remaining customers not to shift to discounters.
“For Asda to truly resonate with consumers, it must provide a compelling reason for shoppers to spend money, an intensified focus on price and expanding its core range of grocery products will be crucial.”
NAM Implications:
- Only issue is how this ‘Aldi overtake Asda’ issue will pan out…
- …given Aldi are currently losing market share every month?
- Meanwhile, suppliers should complete ‘what-ifs’ re the possibility at face value…
- …and explore possible outcomes for their categories.
