Aldi to drop Morrisons from the Big 4

Since the dramatic 2004 takeover of Safeway by the smaller Morrisons the grocery retail market in the UK has had a group of four big British grocery retail chains. They have been referred to as the Big 4.

Change after 18 years

The German discounters have been in the UK for decades already (Aldi entered already in the 90s). Initially their growth was sluggish, but since the 2008 financial crisis they have started to steadily gain ground.

In 2016 it was big news that the combined market share of the German discounters surpassed 10%.

The market share growth continued its steady march until the pandemic. During the Covid lockdowns customers tried to minimize the number of trips to the grocery stores. This meant focusing on the big hypermarkets. Thus the market share of Aldi and Lidl dropped from highs of 14,3%. It took 14 months until the market share reached that level again.

Rapid rise with the inflation

As the pandemic pressures have eased and the inflation has started to increase, the discounters have really accelerated their growth. Since January, the combined market share of Aldi & Lidl has grown by 2,1%-points. This double to a normal seasonal pattern.

Since the spring of 2011 Aldi & Lidl have increased their combined market share from 4,8% up to 16,1% currently. This 11,3%-point increase correlates rather closely to the 11,9%-point decline in the combined market share of the current Big 4 grocers (Tesco, Sainsbury’s, Asda, Morrisons).

It is not hard to see that the growth of the German has been the single biggest reason for the problems of the Big 4.

It is surprising how little the Big 4 has done to counteract the growth of Aldi & Lidl.

During this year Tesco and Sainsburys have really doubled down on the Price match to Aldi prices. On the surface this seems to be a reasonable thing to do. However, by promoting the Price match both Tesco and Sainsburys go on to tell customers that Aldi is the cheapest grocer in UK.

This can be seen as free advertising for Aldi from its biggest competitors.