Asda has suffered another market share drop – as rival Aldi closes the gap to Britain’s third-biggest supermarket.
The chain’s sales dropped 5.6% in the 12 weeks to 23 March, industry analyst Kantar says – a slightly sharper drop than the previous two periods.
Its overall market share is now 12.5% – down from 13.6% a year ago.
All this has raised the prospect of Aldi, which overtook Morrisons to break the traditional “big four” in 2022, leapfrogging another of the giant British supermarkets.
The German discounter’s market share has risen over the last year from 10.3% to 11%.
A change of strategy
As we’ve reported here in Money, Asda is in the process of shifting to a lower price-point strategy, with an announcement earlier this year that it was reviving its 1990s Rollback scheme.
In March, this dented the share price of its listed rivals, amid concern from investors that a supermarket price war could be on the cards.
But Allan Leighton, the Asda stalwart who has now returned as chairman, has admitted the turnaround could take three to five years.
He said last month: “Our job is to fix it – but not just to fix it. We have to build it, reset it, turn it into what it was.”
Why has Asda struggled in recent years?
Business presenter Ian King tackled this in a long read for Sky News last year.
The chain’s downward turn, he said, could be pinned to Walmart selling a majority stake in 2020 to the private equity company TDR Capital and to brothers Mohsin and Zuber Issa (Zuber has since sold his shares).
King said the deal was underpinned by “financial engineering”.
“The buyers raised £2.75bn towards the purchase by selling a bond secured against Asda’s property assets and put just £780m of their own capital at risk – Asda became a heavily leveraged business as a result,” he wrote.
There followed a period of boardroom instability before Leighton returned at the end of 2024.
Clashes with unions and employees have also made headlines in recent years – while discount retailers such as Aldi and Lidl have gained serious ground.
What next?
Clive Black, a Shore Capital analyst, told the Telegraph: “At this rate, it wouldn’t be that far out before Aldi would become the number three in the UK.
“Allan Leighton is right to say it’s a three-year programme. There’s no quick fix, and there’s a lot to do.
“The data [yesterday] reconfirms that side of things. But I think generally, they’ve gone too quick, too soon with the messaging [about price cuts].
“I think they’ve made an error in blowing the trumpet too loud too early as the stores aren’t in a fit state to welcome new shoppers in.”
