Retail Competition - Aldi becomes 4th largest UK supermarket

July 2022 marked an important moment for the UK retail grocery industry. The German discount chain Aldi has overtaken Morrisons to become the 4th largest supermarket by market share.

The surge towards discount food retailers continues – for many people and especially during a cost of living crisis, price is the most important consideration for customers when choosing where to shop.

• Aldi have grown their UK market share to 9.3% overtaking Morrisons who have seen their share drop to 9.1%.
• This has undoubtedly changed the contestability of the UK food grocery industry.
• Key to the growth has been a rapid expansion in Aldi's store network. Aldi increased their store numbers across the United Kingdom from 514 in 2013 to 960 in 2022.
• Around 14.2 million shoppers have visited an Aldi in the last three months.

The gap between Morrisons and Aldi has closed quickly in recent months. This is perhaps reflective of a marked change in behaviour among UK consumers. Millions of people are seeing their real wages fall, and with household budgets under pressure, they are searching for stores that offer the best overall value. But you need a store close by to help this happen - so key to Aldi's surge in market share has been the strong growth in new store openings in recent years. Expect Lidl to catch up soon too - they have become the dominant deep-discount retailer in many European countries.How can predominantly food retailers such as Morrisons respond to this competitive challenge?