Discount retailer Aldi is snapping at the heels of the big four supermarkets and has overtaken Waitrose to become the UK’s sixth biggest grocery chain.
Aldi’s growth has been fuelled by over half a million new shoppers choosing to visit Aldi this year and average basket sizes increasing by seven per cent, according to the latest industry figures from Kantar Worldpanel.
The German discounter has recorded double-digit sales growth for the past four years and is now hot on the heels of The Co-operative group in terms of market share.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said that if Aldi continues on its current growth trajectory, it will overtake the Co-op “in the next year or so”.
“That relies on Aldi sustaining its growth rate,” he said.
“It is falling - it was 30 per cent growth in the summer but it’s still at 16.8 per cent. The wheels haven’t fallen off, but it will find it hard to sustain that massive growth.”
Market leader Tesco and number three player Sainsbury’s also saw an increase in sales in the 12 weeks to March 29, but both number two player Leeds-based Asda and fourth player Bradford-based Morrisons saw a further fall.
Asked when Aldi could overtake Morrisons, Mr McKevitt said: “It’s a long way off before that happens. The discounters have an ambitious plan to double the number of stores so they would double market share. They will certainly have 15 per cent market share by 2020 - they’re at 40 per cent in Germany.
Aldi’s share of the market rose from 4.6 per cent to 5.3 per cent in the three months to the end of March, while German rival Lidl saw its share rise from 3.4 per cent to 3.7 per cent.
This gives the German discounters a 9.0 per cent market share, just shy of Morrisons, which saw its share slip from 11.1 per cent to 10.9 per cent.
Mr McKevitt said: “Morrisons has seen a minor improvement. It’s still sluggish and we’re still waiting for the turnaround to come. The new management team is encouraging more people to get on the shop floor and giving managers more local control. Morrisons is moving in the right direction.”
He said that Tesco, which saw its market share fall from 28.6 per cent to 28.4 per cent over the three month period, has fallen back slightly.
“Tesco is still stabilising. They will have to work very hard - they can’t take the recovery for granted. They will have to come up with some new ideas.”
Tesco’s sales rose 0.3 per cent.
Sainsbury’s market share slipped from 16.5 per cent to 16.4 per cent, but it drew in more shoppers and sales rose 0.2 per cent.
“Sainsbury’s has been moving quite a lot more on price. It’s going well for them,” said Mr McKevitt.
“Also the slightly improved economy helps, especially with Sainsbury’s focus on the South.”
Asda suffered the most with sales falling 1.1 per cent and its market share dropping from 17.4 per cent to 17.1 per cent.
“It’s a continuation of the Tesco effect,” said Mr McKevitt, referring to the market leader’s revival usualy having an impact on the number two player.
“There isn’t room for both of them to grow. It’s hard to put the finger on anything that Asda is not doing well.”
In addition Sainsbury’s revival has hit Asda.
Despite losing its sixth place position, Waitrose increased its sales by 2.9 per cent and now accounts for 5.1 per cent of the grocery market, up from 5.0 per cent.
“The changing structure of Britain’s supermarket landscape is illustrated by two facts,” said Mr McKevitt.
“Firstly, the so called discounters Aldi and Lidl now command a combined 9.0 per cent share of the market. In 2012 the same two retailers only accounted for 5.4 per cent of grocery sales. Secondly, the 72.8 per cent share taken by the biggest four retailers is now at the lowest level in a decade.”
Across the market consumers are continuing to benefit from falling prices.
All major supermarkets are offering higher levels of promotion and as a result groceries are now 2.0 per cent cheaper than they were a year ago.