Lidl is on the verge of leapfrogging Morrisons to become Britain’s fifth-largest supermarket, as new market share data highlights the growing dominance of German-owned discounters in a still-inflationary environment.
According to Worldpanel (formerly Kantar), Lidl’s sales rose 10.7% in the 12 weeks to 11 August, more than twice the pace of the UK grocery market’s 4.5% growth. That performance lifted Lidl’s market share to 8.3%, just 0.1 percentage points shy of Morrisons’ 8.4%. By contrast, Morrisons managed sales growth of only 0.9%, reflecting the strain of its £7 billion debt-laden takeover by Clayton, Dubilier & Rice in 2021.
Lidl and Aldi Reshape the UK Grocery Market
Lidl’s rapid advance is mirrored by Aldi, which grew sales by 4.8%, extending its market share to 10.8%. Aldi now trails Asda by just one point, raising the prospect that the UK’s traditional “big four” – Tesco, Sainsbury’s, Asda and Morrisons – could soon become the “big two plus two discounters.”
Both Aldi and Lidl continue to expand their store estates aggressively. In the past year, Lidl opened 25 new sites, while Aldi has decided to invest £1.4 billion in new stores and refurbishments through 2025. This move helps them to cement the share gains and also pressure the other major supermarkets to cut costs and reframe value messaging.
For context, Tesco remains the clear leader with 28.4% share and sales growth of 7.4%, while Sainsbury’s is holding second place at 15% share on 5.2% sales growth. Asda remains the weakest of the majors: sales fell 2.6%, marking a fifteenth consecutive monthly decline despite the return of Allan Leighton as chair.
Grocery Inflation Cools, but Shopper Habits Stay Defensive
Headline grocery inflation eased slightly in August to 5%, down from 5.2% in July, Worldpanel reported. Lower prices in categories such as dog food, confectionery and sparkling wine contributed to the slowdown. But Fraser McKevitt, Worldpanel’s head of retail and consumer insight, cautioned that inflation remains at levels that significantly alter shopper behaviour.
“Even with this marginal easing, we’re still well past the point at which price rises really start to bite,” McKevitt said. “Consumers are adapting their shopping habits to make ends meet.”
That adaptation includes reducing discretionary spend outside the home. Visits to casual dining and fast-food outlets were down 6% year-on-year in the three months to mid-July, according to Worldpanel. Coffee shops, however, bucked the trend with rising sales – suggesting affordable indulgence is still resilient.
Branded Goods See Revival as Premium Ranges Outperform
Interestingly, branded FMCG lines outpaced private label for the first time this year. Branded sales rose 6.1%, compared with 4.1% growth for own-label. Premium private label – including Tesco’s Finest and Sainsbury’s Taste the Difference – grew fastest of all at 11.5%.
This signals a pivot from purely defensive shopping to selective trading-up, as consumers redirect savings from eating out into higher-quality food and drink at home. For suppliers, the rebound in branded demand provides welcome relief after months of shoppers defaulting to cheaper alternatives.
GSN analysis
- The big four may be structurally broken. With Aldi and Lidl now firmly mainstream, Morrisons and Asda face an existential battle to avoid permanent relegation.
- Inflation is no longer the only story. Shopper psychology is shifting from survival to “value + treat,” favouring retailers who balance price with quality cues.
- Private equity ownership complicates recovery. Morrisons’ high leverage post-CD&R buyout restricts its ability to invest aggressively in price or format innovation, unlike the cash-rich discounters.
Outlook: A Pre-Christmas Power Shift?
The next quarter could prove decisive. If Lidl continues to outpace the market at current rates, it may overtake Morrisons before the critical Christmas trading cycle. Aldi, meanwhile, could surpass Asda within a year, reshaping decades-old league tables.
For shoppers, this means continued pressure on the big four to respond with sharper promotions, expanded premium ranges, and loyalty-driven pricing. For suppliers, discounters’ ascent raises tough questions on margins, pricing strategies, and long-term volume growth.
The balance of power in the UK grocery is shifting – not gradually, but decisively.
