Discounter Aldi is on track to displace Asda as the UK's third largest grocer within the next five years, according to GlobalData.
“Asda must redefine itself with a clear differentiation from discounters to secure its position in the UK food and grocery market," commented Eleanor Simpson-Gould, senior retail analyst at GlobalData. "The grocer must focus on its online capabilities this year to reestablish itself as a dominant player in the market and set itself apart from Aldi.
"Without immediate action, it risks dropping out of the coveted 'big three' position even sooner.”
Market Share
GlobalData suggests that Aldi will 'approach' Asda's market share by 2027, and could overtake it by the following year. According to the most recent market share data from Kantar, Asda holds 12.6% of the market, with Aldi on 10.0%.
According to GlobalData, Asda is currently at a 'critical juncture', with a shrinking market share, labour disputes, and questions over the retailer's management affecting its performance.
Internal Tensions
Recently, calls for majority shareholder Mohsin Issa to step back from running Asda have 'exacerbated internal tensions' at the grocer, which 'have already reached boiling point', GlobalData said.
“Such leadership disputes will do little to restore employee morale, already under such strain that colleagues have chosen to strike this year," Simpson-Gould added. "Despite emergency plans to spend £30 million (€35.2 million) to ensure staff is on checkouts at the weekend, stores are replenished during the day, and improvements are made to in-store cleanliness, Asda’s enhancements to the customer experience feel more like the bare minimum to persuade remaining customers not to shift to discounters.
“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.”
