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Aldi overtakes Morrisons as UK’s fourth largest supermarket as food inflation soars

·Business Reporter, Yahoo Finance UK
·3-min read
COAL TOWNSHIP, PENNSYLVANIA, UNITED STATES - 2022/08/12: Shoppers are seen outside of an Aldi grocery store. (Photo by Paul Weaver/SOPA Images/LightRocket via Getty Images)
Aldi's market share reached 9.3%, the fourth largest in the UK, for the first time ever. Photo: Paul Weaver/SOPA Images/LightRocket via Getty

Aldi has overtaken Morrisons as Britain's fourth biggest supermarket as grocery inflation hit another record high.

According to the latest data from Kantar, the German discount chain saw its market share rise by 1.2 percentage points as its sales jumped almost 19% over the 12 weeks to 4 September 2022.

Its market share reached 9.3%, the fourth largest in the UK, for the first time ever.

Meanwhile, sales at its rival Lidl grew by 20.9%, and it also saw its market share increase by 7.1% over the period, as shoppers traded down to cheaper items.

Sales of the very cheapest value own-label products are up by a third compared to a year ago.

Of the other established chains, only Morrisons and Waitrose saw declines in the period.

Read more: UK unemployment falls to lowest rate since 1974 but pay lags behind inflation

It came as grocery inflation hit a fresh record of 12.4%, adding £571 to the average annual grocery bill which will go from £4,610 to £5,181.

Categories such as milk, butter and dog food are jumping up particularly fast at 31%, 25% and 29% respectively.

“It seems there’s no end in sight to grocery inflation as the rate at which food and drink prices are increasing continues to accelerate,” Fraser McKevitt at Kantar said.

“In what is a fiercely competitive sector, supermarkets are reacting to make sure they’re seen to acknowledge the challenges consumers are facing and offer best value, in particular by expanding their own-label ranges.”

The news sent shares in Tesco (TSCO.L) and Sainbury’s (SBRY.L) down by 3% and 2%, respectively.

McKevitt added: “Back at the start of the 2010s, Tesco, Sainsbury’s, Asda and Morrisons together accounted for over three quarters of the sector but that traditional big four is no more.

“The discounters have seen dramatic sales increases in recent months, bringing more and more customers through their doors.

“Aldi has done well to expand its shopper base, supported by consistent store openings, and with 14.2 million consumers visiting the grocer in the past three months. Meanwhile, for the fourth month in a row Lidl was the fastest growing grocer and recorded its strongest sales performance since October 2014.”

Read more: The Queen's death could tip UK into recession

Separately on Tuesday, online grocer Ocado (OCDO.L) said the average shopping basket came in at £116 ($136) in the 13 weeks to the end of August, a 6% fall from the £123 average in the previous quarter.

It warned that annual sales would be affected as customers turned to value products and are buying less overall, thanks to the sharpest cost of living crisis in a century.

The group also said that higher costs would hit profits for the full year, as the company's energy bills were soaring, and it expects electricity costs to triple.

Watch: How to save money on a low income