ASDA is set to lose its place as the UK’s third-largest grocery chain, with Aldi set to overtake it by 2028, according to analysis by GlobalData, a leading data and analytics company.
The forecast comes as Asda faces a range of challenges, including leadership turmoil, labour disputes and shrinking market share in an increasingly competitive retail environment.
The problems at ASDA stem in part from its previous ownership by Walmart, which sold the grocery store in 2009. Since then, ASDA has struggled to separate itself from Walmart’s legacy, including a costly £800m IT spin-off that has been ongoing since 2021.
Eleanor Simpson-Gould, principal analyst for retail at GlobalData, highlighted the urgent need for Asda to redefine its value proposition to differentiate itself from discounter rivals such as Aldi. “Asda needs to redefine itself by clearly differentiating itself from discounters to secure its position in the UK food and grocery market,” said Simpson-Gould. “The grocer needs to focus on its online capabilities this year to re-establish itself as a dominant player in the market and differentiate itself from Aldi. Without immediate action, it risks falling out of the coveted ‘big three’ position sooner rather than later.”
Internal tensions within Asda have been exacerbated by disappointing sales performance, leading to public criticism of chairman Lord Rose and calls for majority shareholder Mohsen Issa to step down from running the business. These leadership disputes, coupled with strained staff morale and recent strikes, have complicated Asda’s path forward.
In response to the mounting pressure, Asda has implemented emergency measures, including investing £30 million to ensure there are enough staff at checkouts over the weekend, better replenishing stock during the day, and improving in-store hygiene. However, some have deemed these efforts insufficient to truly compete with discount giants such as Aldi and Lidl.
Simpson Gould stressed that Asda needs to give shoppers a compelling reason to choose its stores over rivals. She noted: “For Asda to truly appeal to consumers, it needs to give shoppers a compelling reason to spend money. A strong focus on pricing and expanding the range of essential grocery products will be crucial.”
As Aldi continues to gain ground, Asda’s ability to adapt and innovate will be key to maintaining its position in the highly competitive UK grocery market.