Aldi and Lidl predicted to overtake Tesco by 2027

Former Lidl UK boss Ronny Gottschlich has predicted that German retailers Aldi and Lidl will overtake Tesco – currently the UK’s largest supermarket – within the next five years.

Gottschlich, who ran Lidl’s British operation for six years until 2016, said that between them, Aldi and Lidl would “overtake Tesco by 2027 at the latest”. He also believes they will “grow their combined market share – currently at 16% – to 20% within the next year and a half.”

His statement follows on from last week’s Kantar market share data which revealed that Aldi had overtaken Morrisons to claim its place in the Big Four, as its share of the UK market grew to 9.2%, overtaking Morrisons 9%.

Between them, Lidl and Aldi have gained £2.3 billion of British grocery sales over the past year, representing a significant shift in spending towards the relative newcomers to the UK market.

It was also recently revealed that Lidl and Aldi are currently second only to Tesco for UK market share, with a combined share of 16.1%.

READ MORE: Aldi vs Morrisons: How the Big 4 shake-up will change the UK grocery landscape

As market leader, Tesco currently has 26.9% of the UK market share, while the next largest, Sainsbury’s, has 14.8% of the sector, placing the discounters’ combined efforts firmly in second spot.

Gottschlich also suggested that the new private equity owners of both Asda and Morrisons will be able to hold their own in the competitive sector, with significant debts standing in the way of any expected returns on their investments.

Asda was bought last year by the Issa brothers and buyout firm TDR Capital for £6.8 billion, while Morrisons was taken over by US private equity group Clayton Dubilier & Rice for £10 billion earlier this

According to reports in the Daily Mail, Gottschlich said it would be difficult for the private equity owners to make the kind of profits they would have initially been expecting, which would require margins of 4 to 5%.

He pointed out that Lidl’s owners, the Schwarz family, make a margin of just 2% – worth a total of £2.4 billion a year. “As a family you cannot spend that amount of money”, he said.

A Morrisons spokesman said: ‘Customers don’t really care about market share statistics. They care about value, quality, provenance and service and that is where our focus is going to remain.’

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