Tough times ahead for UK supermarkets
31/12/2014
2015 will be a very tough year for supermarkets, according to Asda’s chief executive, Andy Clarke.
In an interview with the BBC, he said he has never seen profitability fall so quickly in the UK supermarket sector, and believes that 2015 is set to be just as challenging. He cited discount grocers as one of the main reasons for this.
Analysts Kantar Worldpanel say Aldi and Lidl have reached a record combined market share of 8.6% of all shopping done at major UK grocery chains. This rise has taken the market share away from the “Big Four” UK supermarkets, Tesco, Asda, Sainsburys and Morrisons.
Aldi and Lidl don’t show any signs of slowing down, with Aldi planning to double its number of stores and create 35,000 new jobs by 2022. Former UK managing director of Aldi, Paul Foley, believes that the rise of discount supermarkets is “unstoppable”. He believes they will grow to take 20% of the market share. He said:
"The golden age of food retail profits by big, very successful, very well run businesses is over and discounters are the disrupters."
Asda’s market share has fallen by 1% due to discount supermarkets. Morrisons have reported a 6.3% fall in sales in the three months to November and a fall in half year profits of just over 30%. Tesco and Sainsburys have also seen falls in market shares, and the value of UK grocery sales has fallen for the first time in two decades.
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