ASDA is on the brink of losing its position as the UK’s third-largest grocer, with Aldi set to overtake it by 2028, according to analysis by GlobalData, a leading data and analytics company.
The forecast comes as ASDA grapples with a range of challenges, including leadership turmoil, labour disputes, and a shrinking market share in an increasingly competitive retail environment.
The issues at ASDA stem in part from its past ownership by Walmart, which sold the grocer in 2009. Since then, ASDA has struggled to disentangle itself from Walmart’s legacy, including a costly £800 million IT system separation that has been ongoing since 2021.
Eleanor Simpson-Gould, Senior Retail Analyst at GlobalData, highlighted the critical need for ASDA to redefine its value proposition to distinguish itself from discount competitors like Aldi. “ASDA must redefine itself with a clear differentiation from discounters to secure its position in the UK food & grocery market,” Simpson-Gould said. “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.”
Internal tensions within ASDA have been exacerbated by disappointing sales performance, leading to public criticism of chairman Lord Rose and calls for majority shareholder Mohsin Issa to step back from managing the business. These leadership disputes, coupled with strained employee morale and recent strikes, have further complicated ASDA’s path forward.
In response to the mounting pressures, ASDA has implemented emergency measures, including a £30 million investment to ensure adequate staffing at checkouts during weekends, better replenishment of stores during the day, and improvements in in-store cleanliness. However, these efforts have been perceived by some as insufficient to truly compete with discount giants like Aldi and Lidl.
Simpson-Gould emphasised that ASDA needs to provide a more compelling reason for shoppers to choose its stores over competitors. “For ASDA to truly resonate with consumers, it must provide a compelling reason for shoppers to spend money,” she noted. “An intensified focus on price and expanding its core range of grocery products will be crucial.”
As Aldi continues to gain ground, ASDA’s ability to adapt and innovate will be key to maintaining its standing in the UK’s fiercely competitive grocery market.