Asda’s position as the UK’s third-largest grocer is under severe threat from discount rival Aldi, according to new evidence from leading data and analytics company GlobalData.
GlobalData predicts that Aldi could match Asda's market share as early as 2027 and potentially surpass it the following year.
A perfect storm of challenges is brewing for Asda.
The grocer is grappling with a shrinking market share, labour disputes, and leadership turmoil, all while operating under the long shadow of its former owner, Walmart.
The retailer has invested £800m ($1.04bn) since 2021 to separate its IT systems from Walmart, a process that began in 2009 when the American giant sold the business.
“Asda must redefine itself with a clear differentiation from [other] discounters to secure its position in the UK food and grocery market," said Eleanor Simpson-Gould, senior retail analyst at GlobalData.
"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.”
Recent public criticism of Asda's performance, including calls for leadership changes, has only added to the retailer’s woes.
Employee morale is also at a low point, with staff taking strike action earlier this year.
While Asda has invested in improving the customer experience, GlobalData suggests these measures may not be enough to stem the tide of shoppers switching to heavier discounters.
“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," added Simpson-Gould.
“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.”
The battle for the third spot in the UK grocery market is set to intensify as Aldi continues its rapid expansion.
Asda's ability to adapt and respond to these challenges will be crucial to its long-term success.
