Commentary

UK's Discount Grocers' Sales Growth Moderates, But Market Share Gains Entrenched

Consumers

Summary

The UK's discount grocers experienced a considerable benefit from the challenging post-pandemic macroeconomic environment, which strained consumer purchasing power.

-- The UK's discount grocers, namely Aldi and Lidl, significantly outperformed their conventional peers through the post-pandemic environment and took a notable bite out of their market share.
-- While Aldi's and Lidl's sales growth has moderated, the duo has been able to hold on to their market share gains.
-- We believe at least some consumer behaviours have been permanently altered.
-- This should help Aldi and Lidl to defend most of their market share gains structurally over the longer term.

Moritz Steinbauer, Senior Vice President, Team Lead, Corporate Ratings, Diversified Industries said, "Given the extent and duration of the economic pressure on consumers, some shoppers will have come to prefer some private-label products over branded offerings or a discount grocer over a conventional grocer. This should help Aldi and Lidl to defend most of their market share gains structurally over the longer term, especially when considering existing longer-term growth trends and their investments into new stores."