Aldi is set to surpass ASDA as the UK’s third-largest grocer by 2028, amid ongoing leadership issues and labour disputes at ASDA.
ASDA is currently grappling with various challenges, including leadership turmoil, labour disputes, and a shrinking market share. These issues trace back partly to its past ownership by Walmart, which divested the grocer in 2009. Since then, ASDA has struggled to disentangle itself from Walmart’s legacy, including a costly £800 million IT system separation that has been ongoing since 2021.
Eleanor Simpson-Gould, Senior Retail Analyst at GlobalData, underscored the need for ASDA to redefine its value proposition to distinguish itself from discount competitors like Aldi. She stated, “ASDA must redefine itself with a clear differentiation from discounters to secure its position in the UK food & grocery market.” She further emphasised the importance of focusing on its online capabilities this year to reestablish itself as a market leader and differentiate from Aldi.
Meanwhile, internal tensions at ASDA have been inflamed by disappointing sales performance, leading to public criticism of chairman Lord Rose and calls for majority shareholder Mohsin Issa to step back from managing the business. These leadership disputes, coupled with strained employee morale and recent strikes, have further complicated ASDA’s path forward.
In response to the mounting pressures, ASDA has implemented emergency measures, including a £30 million investment to ensure adequate staffing at checkouts during weekends, better replenishment of stores during the day, and improvements in in-store cleanliness. However, these efforts are perceived by some as insufficient to compete with discount giants like Aldi and Lidl.
Simpson-Gould stressed that ASDA needs to offer a compelling reason for shoppers to choose its stores over competitors. She noted, “For ASDA to truly resonate with consumers, it must provide a compelling reason for shoppers to spend money.” An intensified focus on price and expanding its core range of grocery products will be crucial.
As Aldi continues to gain ground, ASDA’s ability to adapt and innovate will be crucial in maintaining its standing in the UK’s fiercely competitive grocery market.
ASDA risks being overtaken by Aldi as the UK’s third-largest grocer by 2028 unless it can overcome its current challenges and adapt to the evolving market conditions.