The UK grocery business, for so many years dominated by the same small group of supermarket chains is now being disrupted by both discounters and ecommerce. According to data released this week by Kantar Worldpanel, discounter Aldo has now overtaken Co-Op to become the nation’s fifth largest grocery retailer. The top 10 UK grocery retailers by market share are as follows:
- Tesco – 27.6%
- Sainsburys – 16.1%
- Asda – 15.7%
- Morrisons – 10.4%
- Aldi – 6.8%
- Co-Op – 6.1%
- Waitrose – 5.1%
- Lidl – 4.9%
- Other Outlets – 3.2%
- Iceland – 2.2%
- Symbols / Independent – 2%
Source: Kantar WorldPanel
As well as the significant market share gain by Aldi that has shifted it into the top five UK grocery retailers, fellow discounter Lidl has also seen a significant increase in market share and is now the UK’s 8th most popular grocery retailer.
The Rise Of Ecommerce In The UK Grocery Market
However, perhaps more worryingly for the longer established traditional grocery retailers is the AmazonFresh which is gradually increasing the pressure on the sector’s major players. 2016 saw its launch, initially in 69 postcodes across east and central London. AmazonFresh promised that orders received before 1pm would be delivered the same day before 11pm and also gave people one hour time slots, something its more traditional retail grocery rivals could not compete with. The service from Amazon is done in conjunction with Morrisons to supply its own branded products to compete with other supermarket chains discounted own label items, but the majority of the items on offer are well known branded goods.
Whilst at the moment (thanks to the limited rollout) AmazonFresh only has a 0.7% share of the UK grocery market, this looks set to grow. Not only would rolling out to more areas of the UK facilitate this, according to Profitero, the leading ecommerce analytics company, the prices charged by AmazonFresh are significantly below its rivals. Using a price snapshot on March 27 2017, Asda’s prices were 14% higher and Ocado and Waitrose were more than 28% higher.
AmazonFresh increasing market share in the UK (and other ecommerce grocery providers) has led to IGD Retail Analysis to predict big growth for ecommerce grocery sales in the next five years. Whilst growth is predicted across all UK grocery channels, ecommerce is expected to be by far the largest.
- Supermarkets from £86.6 billion to £87.3 billion representing a 0.8% increase.
- Convenience from £37.5 billion to £41.9 billion representing a 11.7% increase.
- Discounters from £17.9 billion to £24.9 billion representing a 39.5% increase.
- Hypermarkets from £16.5 billion to £16.6 billion representing a 0.2% increase.
- Online from £10.5 billion to £17.9 billion representing a 68.3% increase.
The future could be looking bleak for the traditional supermarket chains if they do not adapt to the ever growing influence of discount chains and ecommerce providers in the UK grocery market.