But today, the boasts of Tesco and Sainsbury’s read like a classic example of business hubris. While the major supermarkets dozed, convinced that many people would not be seen dead in a discount store, the German chains quietly turned the sector on its head. Nearly two-thirds of households now visit an Aldi or Lidl branch at least once every 12 weeks, according to the research firm Kantar Worldpanel.
In 2017, Aldi overtook the Co-op to become the UK’s fifth largest retailer; today it has a 7.5% market share, closing in on fourth-place Morrisons, with 10.6%. Lidl has 5.3%, more than Waitrose. What’s more, the two discounters are still growing quickly – opening an average of one new store every week, often in more affluent towns.
By sucking in shoppers and, as former Aldi UK CEO Paul Foley puts it, “sucking the profitability out of the industry” – profit margins of 2-3% are now the norm – the two German-owned companies have forced the “big four” supermarkets to take drastic measures. Morrisons has closed stores and laid off workers, while Sainsbury’s and Asda, desperate to cut costs and stop losing market share, announced a proposed £13bn merger in May, which the UK competition watchdog now appears likely to block. Tesco, meanwhile, has slashed its product range and bought the discount wholesaler Booker. In September, in a belated acknowledgement that the major threat to its business comes from Aldi and Lidl, Tesco launched its own discount chain, called Jack’s.
These industry shifts often lead the news, because supermarkets are so important to the economy: with more than 300,000 staff, Tesco is the UK’s biggest private-sector employer and the biggest retailer of any sort. But we also follow these stories closely for a more sentimental reason: grocery shopping is an intimate part of our lives. We don’t need to buy books or fancy trainers, but we do need to eat.