UK Grocery 2018 (updated) Release date: July 15th, 2018 (86 pages) PDF/Powerpoint format. Price: GBP995.00 PDF brochure Buy

Abstract

In a nutshell: consumer spending is under enormous pressure. Prices are rising, wage growth is flat and interest rates are on the up. At the same time, retailers face increasing cost pressures from online, rate rises, minimum wage rises and input cost inflation.

Aldi and Lidl’s successful run in the UK is continuing unabated. Together they now account for around 12% of the market according to Kantar. While the big four are losing share with Tesco, Sainsbury’s, Asda and Morrisons only growing in a lacklustre fashion or with declining lfls, Aldi UK broke through the £10bn barrier in sales for the first time in 2017. And a stop to this growth is not in sight.

The structure of the market is changing, with both Tesco and Sainsbury’s buying into wholesale (Booker) and non food (Argos) respectively. (To us it looks like there is a distinct Brexit shadow hanging over this, a Tesco retreat from overseas to concentrate on the UK and gain better access to the supply chain as well as tapping a new domestic market) Morrisons is the only vertically integrated grocer among the big four and further pushing its agricultural business. The only one of the big four not reacting is Asda.

Looking ahead, the two discounters could more than double their market share from a combined figure of 12% to as much as a quarter of the market over the next 3-5 years.

If it comes to a no deal Brexit then the damage to the sector would be immense. The big 4, Tesco, Sainsbury, Asda and Morrisons would suffer for years to come. And we are saying this without even taking into account their respective challenges and opportunities, by just pointing to the considerable darkening of their horizons in the domestic market.

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