ASDA is at a critical juncture, facing a leadership challenge alongside labour disputes and a shrinking market share in an increasingly competitive retail landscape. Third-placed ASDA is under threat, as the grocer’s value proposition fails to resonate with consumers. ALDI is set to approach ASDA’s market share by 2027 and could overtake it by 2028, according to leading data and analytics company GlobalData.
The current state of affairs at ASDA is the result of a long shadow cast by the sale of the grocer by the previous owner Walmart in 2009. Fifteen years later, ASDA is still grappling to separate its IT systems from Walmart, at a cost of £800m since 2021.
GlobalData Senior Retail Analyst Eleanor Simpson-Gould says: “ASDA must redefine itself with a clear differentiation from discounters to secure its position in the UK food and grocery market.
“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.”
The chairman, Lord Rose’s public embarrassment over recent sales performance and calls for majority shareholder Mohsin Issa to step back from running ASDA will no doubt exacerbate internal tensions, which have already reached boiling point.
“Such leadership disputes will do little to restore employee morale, already under such strain that colleagues have chosen to strike this year. Despite emergency plans to spend £30 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,” Ms Simpson-Gould said.
“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.”