Big four supermarkets will keep getting squeezed says Moody’s
The leading big four supermarkets are expected to lose another four per cent of their market share by 2020 to discounters Aldi and Lidl, as competition in the grocery retail market intensifies.
A report published today by credit rating agency Moody’s predicts Aldi and Lidl’s combined market share will reach 12-15 per cent by 2020, up from 9.3 per cent, fuelled by their aggressive store opening plans.
Aldi wants to open 70 more UK stores and recruit almost 5,000 staff, taking its total estate past 600 stores. Meanwhile Lidl invested £220m last year in its expansion, taking its portfolio to 620 shops.
Sven Reinke, Moody’s vice president and senior analyst, said that Tesco, Morrisons, Asda and Sainsbury’s margins are unlikely to recover over the next 12 to 18 months due to further price cuts and like-for-like sales declines.
“However, the UK’s economic growth, rising real wages and improving consumer sentiment could support the Big Four’s gradual recovery from fiscal 2016-17,” Reinke said.
Moody’s forecast comes as Sainsbury’s insisted yesterday that it was seeing “encouraging signs” that its strategy is working, despite posting its sixth straight quarter of falling like-for-like sales.
“We’re seeing underlying volume growth and underlying transaction growth, both of which are encouraging signs, given the deflationary environment,” said chief executive Mike Coupe.