Aldi overtakes Waitrose to become UK’s sixth-largest supermarket chain

German discounter increases market share to 5.3%, compared with the John Lewis-owned chain’s 5.1%, as sales in 12 weeks to 29 March jumps by almost 17%

 The Aldi supermarket sign in Worcester. The discount chain has grown rapidly in recent years as shoppers have keep a tight rein on their budgets. Photograph: Geoff Caddick/AFP/Getty

Sarah Butler

Aldi has overtaken Waitrose to become the UK’s sixth-largest supermarket chain by market share, continuing the discounter’s rapid push into mainstream grocery retailing.

The German chain increased sales by 16.8% in the 12 weeks to 29 March, according to the latest figures from Kantar Worldpanel. That took Aldi’s share of the market up to 5.3%, compared with 5.1% for Waitrose, which is owned by theJohn Lewis Partnership.

Waitrose’s sales rose 2.9%, a relatively strong performance in a market which expanded by just 1%. But that growth was not enough to prevent the upmarket grocer being overtaken by Aldi, whose pace of growth far outstripped a tough market in which grocery prices overall fell by 2%.

Sales fell at bigger rivals Asda and Morrisons and barely scraped into growth at Tesco and Sainsbury’s, rising by 0.3% and 0.2% respectively.

Aldi, which is celebrating its 25th anniversary in the UK, has considerably stepped up growth in recent years as shoppers have tried out new stores to save money.

Having leapfrogged Waitrose, it is now closing in on the Co-op – which is now less than one percentage point ahead in terms of market share.

If current trends continue, in a year Aldi could overtake the Co-op to become the UK’s fifth biggest grocer, according to Fraser McKevitt at Kantar Worldpanel. Morrisons, Sainsbury’s, Asda and Tesco are much further ahead, however.

Aldi’s fellow discounter Lidl also saw strong growth, with sales up 12.1%, taking its market share to 3.7%. The combined market share of the two German chains is 9%, up from 5.4% three years ago.

It puts the share of the market held by discounters at its highest level since 1999, when Kwik Save was still in existence and Danish discounter Netto had a bigger presence in Britain. At their peak, in the early 1990s, the discounters together controlled about 11% of the UK grocery market. McKevitt said the German chains were on track to considerably beat that.

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“Aldi and Lidl’s rates of growth will continue to come down but they are still ahead of the rest of the industry. We have had big discounters in the UK market before but what’s different about Aldi and Lidl is they are both massive international retailers and private companies investing in many more stores,” McKevitt said.

On Wednesday, Aldi confirmed plans to quadruple the number of its stores in London, with nine new outlets including a second trial of a convenience-style outlet in Tooting. The group has 560 stores in Britain and wants 1,000 by 2022.

A spokesman for Aldi said the supermarket was “committed to investing in the UK and Greater London is a key area of growth for the business”.

Some commentators believe discounters could in future control as much as 20% of the UK market. In Germany, Aldi and Lidl account for almost 40% of food and grocery sales.

Many believe the two chains will continue to gain share in the UK even as consumers’ disposable income improves because frugal shopping habits have become entrenched after years of falling living standards.

The German chains’ international scale also means they can offer a much more sophisticated experience than outfits such as Kwik Save did in the past, enabling them to appeal to middle-class shoppers as well as those on a tight budget.

“When you go to a discounter, you don’t feel like you are a loser,” said Patrick O’Brien of the retail analysis firm Verdict Retail. “You don’t necessarily feel that if you had a bit more money you would be shopping elsewhere.”

Cultural change has been fuelled by the internet, he said, with websites such as Money Saving Expert helping make savvy shopping fashionable. It is the same trend that has enabled the rise of Primark, Poundland and B&M.

“There is now a more confrontational attitude between retailers and consumers,” said O’Brien. “It’s something that has evolved. There is a danger that attitude will move back out of fashion but I’m not sure that is a key driver.”

Supermarket sector by market share

Tesco 29.4%
Asda 17.1%
Sainsbury’s 16.4%
Morrisons 10.9%
The Co-op 6.0%
Aldi 5.3%
Waitrose 5.1%
Lidl 3.7%