Are the ‘Big 4’ being £’ed?

Tesco, Asda, Sainsbury’s and Morrisons continue to face pressure from the record growth of Aldi and Lidl. While Waitrose has seen strong growth over the last year what is next for the ‘big four’ and how are they going to stem the tide?

The total market share for Tesco, Asda, Sainsbury’s and Morrisons stands at an incredible 75% compared with just 7.5% for Aldi and Lidl. Astonishingly in 2007, for every £8 spent in the UK retail sector £1 of that was spent in Tesco. Although this has decreased it shows just how much power Tesco had before the pressure was put on them over the last 2 years.

For the first time on record the ‘big four’ are starting to lose market share and this is down to the incredible and rapid growth of Lidl and Aldi.

As businesses Aldi and Lidl are steeped in history they are not simply young market newcomers. Lidl are part of the Schwarz Group which generates more revenue in Europe than any other retailer- it has over 10,000 stores across Europe and as a brand Lidl is modelled closely towards the Aldi format. The growth they are both looking to achieve is staggering; Lidl is looking to grow from 600 stores to 1,500 over the next 10years and Aldi has committed to spending £400m a year on 50 new openings.

This double pronged attack on the status quo has certainly ruffled some feathers amongst the big four and they have started to combat them by introducing their own cut price products including ‘50p aisles’, petrol discounts and offering interesting multi-channel initiatives-this is highlighted by Asda’s recent introduction of ‘click and collect’ across 6 Tube stations across London.

Asda are looking to grow significantly over the next 5 years and the recent visit to the UK from the President and CEO of Walmart Doug McMillon indicated just how committed the business is to the UK market. He was quoted as saying: “We know that the UK is a great place to do business and since Walmart acquired Asda 15 years ago we have been able to invest £8 billion in the UK economy – creating over 100,000 jobs, opening 342 new Asda stores and bringing lower prices to millions of customers.

A seismic shift in the structure of the retail market is underway – not just in the UK – but right across the world. Asda recognised the change in its market and took early action to develop and implement a strategy that will see it grow – creating more new jobs and bringing real value to more customers in the UK”.

This commitment from the food retailers to the UK is indicated in how many Property Jobs are being advertised across the food industry. Foundation Recruitment are fortunate enough to be a part of this push and as a specialist property recruitment consultancy we are well placed in assisting clients finding the very best candidates for this market.

It is unquestionable that the big four face a difficult few years ahead as consumers continue to be selective on where they shop based on price. However as retailers start to offer more intuitive and creative ways to shop the big four will continue to dominate the market. It may never reach the 2007 level when Tesco took the lion share of money spent in the UK . However, it is certainly not the end for the big brand supermarket- maybe it’s only the beginning for what is an exciting time for the consumer and the retailers.