Aldi to overtake Asda as UK’s third-largest supermarket in the next five years

Supermarket giant Asda finds itself at a “critical juncture” beset by leadership issues, rolling labour disputes and shrinking market share, as well as the ongoing advance of the discounters, a recovery under new management at Morrisons and the continued strength of Tesco and Sainsbury’s, according to GlobalData.

As a result of all these factors, Aldi is set to “approach” Asda’s market share by 2027 and could overtake it by 2028.

In the most recent grocery market share data from Kantar, Asda’s share stood at 12.6%, down more than a percentage point year on year.

Aldi also lost market share for the period year on year, down to 10%, although its sales for the period inched up by 0.5%.

GlobalData said the “current state of affairs at Asda is a result of a long shadow cast by the sale of the grocer by the previous owner Walmart”, adding that “Asda is still grappling to separate its IT systems from Walmart, at a cost of £800m since 2021”.

“Asda must redefine itself with a clear differentiation from discounters to secure its position in the UK food and grocery market,” said GlobalData senior retail analyst Eleanor Simpson-Gould.

“The grocer must focus on its online capabilities this year to re-establish 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.” 

A spokesperson for Asda said market share data is in a constant state of ebbs and flows, with “gains and declines for grocery retailers each year”.

They also pointed to the fact that, taking into account the last 12 months’ worth of grocery market share data from Kantar, “Aldi has also decreased in market share”, with its year-on-year share decreasing “in every 12-week Kantar period since February”.

The news caps another tumultuous week for Asda. Last week, the retailer posted its financial results for the second quarter, which showed that sales had slumped 2.2%, while like-for-like sales dipped by 5.3%.

In response, the grocer unveiled what it called a “clear and decisive plan” to turn the business around, focusing on three areas: customer satisfaction, enhanced product availability and a renewed trading plan.

Despite this, chair Lord Rose said he was “embarrassed” by the latest figures and publicly called for co-owner Mohsin Issa to step away from the day-to-day running of the retailer in an interview with The Sunday Telegraph.