Couche-Tard Advances Takeover Talks With Owner Of 7-Eleven

Alimentation Couche-Tard has made a significant advance regarding Seven & i, owner of the 7-Eleven convenience store brand, following long-awaited access to critical financial data.

Couche-Tard, owner of Circle K, has entered into a non-disclosure agreement (NDA) with Seven & i to “progress transaction discussions, facilitate due diligence, and collaborate on plans to engage with regulators”.

Couche-Tard has publicly asked for this access since its unsolicited bid last year, saying enhanced visibility into Seven & i’s financials could justify an increased offer, approaching $50bn.

Privately, both parties have attributed delays in progress to the other’s lack of cooperation.

Seven & i confirmed today that the NDA includes a “standstill” clause, a standard provision in mergers and acquisitions that prevents a hostile bid while confidential data is being exchanged.

“We appreciate the special committee of Seven & i engaging in substantive discussions regarding our proposal and providing access to diligence,” said Alex Miller, Couche-Tard’s CEO. “We look forward to working collaboratively with Seven & i in the interests of all stakeholders.”

In late 2024, preliminary and limited discussions via respective advisors started and they signed NDAs (allows a search for potential buyers of US stores likely to be divested to address regulatory concerns if a deal went ahead).

Seven & i shares were up 3.5% in Tokyo today, but well below the offer price (investor scepticism).

Seven & i are “pursuing two parallel paths” to maximise value for shareholders and stakeholders, also also striving to enhance its standalone valuation by divesting non-core assets, planning a partial listing of its North American operations, and executing a share repurchase programme exceeding $13bn.

They recently appointed Stephen Dacus as Chief Executive Officer, who was previously the chair of their special committee evaluating Couche-Tard’s proposal.

In Tokyo last week, Dacus affirmed their focus on increasing US investments, strengthening supply chains, and expanding its fresh food offerings, but the ongoing acquisition talks could be a potential distraction.

“At some point, you’ve got to make a decision, one way or another,” he said. “There’s still a lot of hurdles to clear … I suspect it’s going to take a while still, because there’s still some really serious things that need to be worked out.”

NamNews Implications:

• In agreeing to an exchange of confidential financial information…
• …it could be said that both parties are taking the possibility of a takeover seriously.
• (Albeit within the protection of a ‘standstill’ position and NDA agreement)
• Therefore, if the price is right, all will proceed…
• Meanwhile, suppliers and retail rivals will benefit by treating this as a done deal…
• …and exploring options and acting accordingly.
• (unless they prefer to risk awaiting the inevitable…)

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Morrisons Testing Shelf-Scanning Robots

Morrisons is trialling robots that can check for out-of-stock items, pricing errors, and misplaced products.

According to trade magazine The Grocer, the supermarket is testing the ‘Tally’ robots from US tech company Simbe at three stores. They are claimed to be the world’s first autonomous inventory bot, which uses advanced AI and computer vision technology to collect comprehensive product data by roaming the aisles in stores.

The robots are being tested in Morrisons stores in Wetherby, Redcar and Stockton. Katherine Allanach, technology manager at the retailer, told The Grocer that they are being used to “check that the products on the shelves are being displayed correctly and are legally compliant.”

She added: “It is a crucial but time-consuming task, and so Tally aims to allow more time for colleagues to focus on customer service.”

The report stated that Morrisons is the first UK retailer to invest in Simbe’s Tally robot, which can capture 15,000 to 30,000 products an hour. It self-docks to a charging port when needed.

Morrisons noted that feedback from customers and staff had been positive, with a spokesperson saying: “They have been intrigued and curious but very positive and colleagues in particular can see how supportive Tally could be.”
The robots are currently being used by retailers around the world, including Carrefour, Albertsons, ShopRite and Kroger.

A spokesperson for Simbe told The Grocer that Morrisons’ adoption of Tally was a major step in its drive to expand its global footprint, but also “validation that retailers around the world are increasingly turning to autonomous solutions to gain unprecedented visibility and address key operational challenges.”

NamNews Implications:

• This says it all:
• “Tally aims to allow more time for colleagues to focus on customer service”
• Which has to have a payoff in repeat shopper visits…
• …where items required are found on-shelf.
• Simple but difficult...
• A no-brainer…

Spending On Promotions In Supermarkets Hits Highest Level This Year

Latest Kantar: Take-home UK grocers sales up 6.5% (4 weeks to 20 April) - Easter later + uptick in promotions.

Sales rise because of 3.8% grocery price inflation vs recent low of 1.4%, Oct 2024.

Easter eggs spending up 11% vs 2024. Fraser McKevitt, head of retail and consumer insight at Kantar: “Chocolate confectionery prices rose by 17.4% this period, the fastest of any category, but that didn’t stop the British public treating themselves this Easter. The volume of chocolate eggs sold through supermarket tills still grew by 0.4% on last year, while at the dinner table, lamb was the most popular fresh meat joint, followed by beef and pork.”

Spending on promotion reached 29.7%, its highest level this year.

“The grocers have been sharpening their pricing strategies to stay competitive in the fight for footfall."

Price cuts were the main driver of promotional growth. Often linked to loyalty cards, spending on these deals up £347m. (Tesco and Sainsbury’s nearly 20% of items sold on price match, in 2/3 of baskets.)

“However, not just re price perceptions. Shoppers want quality too, particularly on special occasions, and we can track that, for example, in the rapid growth of premium own label in the latest four weeks at 23.2%.

"Retailers need to be seen to be offering great value, but it’s a fine tightrope to walk, particularly as they manage their own business costs.”

Lidl had fastest rise in footfall (12 weeks to 20 April) shoppers visits average of 8.8 times resulting in sales up 10.1%, to a 8.0% market share.

Aldi’s above-the-market sales growth of 5.9%, an 11.0% share.

Ocado was the fastest-growing retailer – held continuously for nearly a year – after its sales grew by 11.8%.

Spending on groceries at M&S grew by 14.4%.

Tesco’s sales increased by 6.0%, lifting its market share to 27.8%, while sales at Sainsbury’s rose by 4.4%.

Meanwhile, early signs that Asda’s price rollback campaign might be having an impact on its performance. Its sales still fell by 3.8%, but this is an improvement on the declines of over 5% reported in recent months.

NamNews Implications:

• Key standout has to be that Asda is the only retailer showing a fall in 12-week YOY sales…
• …indicating the scale of the challenge facing the retailer.
• A key problem is the quality of rivals by comparison…
• …along with the discounters now powering ahead amidst continuing market uncertainty.
• And a return to higher inflation, certain for further increases when additional taxes are fully reflected in the stats.
• The heavy investment in price cuts by rivals will add further pressure on Asda.
• Meanwhile, the rapid growth in premium own label poses a continuing challenge for the size of brand premia.
• Meaning consumers are less willing to accept ‘excess’ prices for brands vs their own label equivalents…

Lidl GB To Spend £500m Opening New Stores Over The Next Year

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Lidl GB has revealed that it will invest half a billion pounds in its expansion during its current financial year, with plans to open more than 40 new stores.

The announcement came as the discounter published its 2025 site requirements brochure, outlining hundreds of potential locations for new stores, including high streets, retail parks, and mixed-use town centre sites.

The updated list features locations across England, Scotland and Wales. It includes 200 places in London where it is seeking sites, including Mayfair, Chelsea, Kensington, Notting Hill, Angel, Soho and Covent Garden, as well as more suburban areas such as Finchley, Colindale and Uxbridge.

“This level of investment is a clear sign of our ambition. As we enter our fourth decade in Great Britain and hurtle towards a thousand stores, there are still so many parts of the country crying out for convenient access to a Lidl store,” said Richard Taylor, chief real estate officer at Lidl GB.

“That’s why we welcome the measures proposed in the Government’s Planning and Infrastructure Bill – they recognise the urgent need to remove barriers to development and support the kind of growth we at Lidl are working towards.”

He added: “Our latest site requirements brochure reinforces the scale of our ambition for the future. New Lidl stores mean new jobs, new opportunities for British suppliers, and continued investment into local economies. We’re proud to be one of the fastest-growing supermarkets in the country, and with this investment, we’re taking another big step in our journey.”

This year, Lidl will also complete the expansion of its Belvedere Regional Distribution Centre, which has more than doubled in size. The discounter is also set to start construction on a new distribution centre in Leeds later in the year to support its growth plans.

NamNews Implications:

• There you have it from Lidl: 40 new stores in most-needed locations.
• And little reason for Lidl to compromise on plans given £500m set aside.
• Time for rivals and suppliers to reassess their discounter/Lidl strategies?

Chinese Retail Giant Launches Online Supermarket JoyBuy In The UK

China’s largest retailer by revenue, JD.com, has begun testing a new e-commerce grocery site in the UK called Joybuy.

Initially taking orders from consumers in select London postcodes, the website offers an extensive range of ambient and frozen foods, household products, baby items, beverages, personal care, beauty, health, pet supplies, and nicotine products from major brands. Hundreds of Morrisons own-label lines are also available across several categories.

A spokesperson from JD.com told trade publication The Grocer that Joybuy was currently in a testing phase with plans for an official launch and wider rollout to other cities by the end of the year.

The UK Joybuy website says it offers same-day and next-day delivery, with a 30-day free return policy.

The report by The Grocer said the company has been quietly building a highly experienced team of UK grocery buyers and category execs in recent months.

This includes Matthew Nobbs, a former commercial director for rapid grocery player Gorillas, director of trading for Holland & Barrett, and senior buying director for Lidl UK. He was appointed JD.com UK chief merchandise officer in February and recently posted on LinkedIn: “Getting ready to rumble in the UK for one of China’s biggest success stories”.

Meanwhile, Richard Thorn, a former online trading manager at Sainsbury’s and Asda account lead for PepsiCo, was appointed senior category manager for food & beverage in January.

Buyers have also been recruited from Ocado Retail, Amazon and Tesco, with JD.com currently advertising for more than 40 London-based roles, including FMCG, baby, personal care and ambient category managers.

The report noted that, unlike other Chinese e-commerce companies such as Temu and Alibaba, which operate a marketplace model, JD.com functions as a retailer, holding stock in its own warehouses.

The company saw its turnover exceed $157bn last year and has been growing its presence outside of China in recent years. It has already established warehouses across Europe in the Netherlands, Poland, and France.

“JD.com’s operations in Europe are built on the same principles that define our success in China: delivering high-quality products at great prices, backed by fast and reliable delivery,” the company spokesperson told The Grocer.

NamNews Implications:

• JD.com is patently taking the UK market seriously.
• Staffing up.
• Starting in the UK’s biggest conurbation.
• Positioning: ‘delivering high-quality products at great prices, backed by fast and reliable delivery’.
• Categories: an extensive range of ambient and frozen foods, household products, baby items, beverages, personal care, beauty, health, pet supplies, and nicotine products from major brands.
• Hundreds of Morrisons own-label lines available across several categories.
• Need any more details?

Sainsbury’s Extends Aldi Price Match Offer To Biggest In The Market

Amid talk of an Asda-led price war in the grocery sector, Sainsbury’s has boosted its commitment to value with an expansion of its Aldi Price Match range.

The supermarket has added over 100 products, including more fridge and cupboard essentials, household products, and summer lines. The expansion means Sainsbury’s will now offer 800 products price-matched to Aldi, more than any other retailer.

New own-label products added to the scheme include kitchen towels, handwash, shower gel, sausages, feta, prosecco, champagne, wine, quiche, and houmous.

“With household costs going up, we’re working tirelessly to keep prices low for customers when doing their big shop at Sainsbury’s,” said Richard Crampton, Sainsbury’s Commercial Director – Fresh and Convenience.

“With the biggest ever Aldi Price Match, we’re introducing hot weather favourites such as dips, ice cubes and fizz, as well as family staples such as shower gel, cotton wool and period care, ensuring shoppers’ budgets can go even further this summer.”

Last week, Sainsbury’s said it expects its earnings to flatline this year in order to remain competitive. The statement came days after Tesco forecast lower profits to give it the flexibility to reduce prices in response to Asda’s efforts to win back shoppers.

After posting robust annual results, Sainsbury’s Chief Executive Simon Roberts stressed the group was committed to sustaining its “strong competitive position” and ensuring customers get “great value”.

The pledge came weeks after Asda’s Chairman Allan Leighton said that his business was prepared to take a significant hit to its profit to finance a shift to a new ‘Asda Price’ that is 5% to 10% lower than its rivals in a bid to recover lost market share.

NamNews Implications:

• If 800, why not 1,000…?
• In fact, always a puzzle why the UK mults did not respond to the arrival of discounters with a couple of ‘Aldi-aisles’ offering a replication of the discounter’s then limited range offering…
• …and possibly halting them in their tracks…
• …or at least slowing their progress maybe?

Number Of Firms Preparing Offers For Poundland

Alteri, a private equity investor that owns Bensons for Beds, is reportedly among a pack of suitors circling struggling discount chain Poundland.

According to Sky News, Alteri, which recently missed out on a deal to buy the high street operation of WH Smith, is preparing to submit an offer for Poundland in the coming weeks. It is expected to be among a number of bidders for the 825-strong chain.

Last month, Pepco Group confirmed that it was evaluating all strategic options to separate off its UK business, including a sale. Its Chief Executive, Stephan Borchert, revealed at the time that it had already received interest from potential buyers.

He declined to comment on the type of interest, what stage talks had reached, or what Poundland was worth, but said he was confident its future would be decided by September this year.

Advisory firm Teneo has been appointed to oversee the process, with analysts suggesting that a deal could put scores of stores at risk of closure.

Despite efforts to return Poundland to its core £1 offering, the business suffered a slump in sales last year. Last month, Pepco highlighted that Poundland was operating in an increasingly challenging UK retail landscape that would intensify due to tax hikes, adding further pressure to the discounter’s cost base and impacting profitability.

Alteri, which is backed by the investment giant Apollo Global Management, has not commented on the Sky News report.

NamNews Implications:

• Key facts:
• Poundland is up for sale.
• Any attempt to return Poundland to its core £1 offering has been diluted via inflation (£1 at launch is now £3+).
• Anyone buying Poundland has to:
• Close unprofitable shops
• Sell remaining sites to the ‘highest bidder’
• Possibly optimise any residual brand value via online
• And that’s it, nice while it lasted!

Sainsbury’s Joins Tesco In Warning Price War Could Impact Profits But Ramping Up Store Expansion Programme

Days after Tesco forecast lower profits to give it the flexibility to reduce prices in response to Asda’s Rollback, Sainsbury’s expects its earnings to flatline in 2025.

Following today's robust annual results, they expected £1bn retail operating profit this fiscal, far below the Tesco's potential £400m hit.

CEO Simon Roberts stressed it will sustain its “strong competitive position” and ensure customers get “great value”.

The pledge comes weeks after Asda’s Chairman Allan Leighton said that his business was prepared to take a significant hit to its profit to finance a shift to a new ‘Asda Price’ that is 5% to 10% lower than its rivals to recover lost market share.

Richard Hunter, head of markets at Interactive Investor: “In market share, Sainsbury’s and Asda are more closely linked with numbers of 15% and 12.5% i.e. Sainsbury’s rather than Tesco who could be under most pressure."

In 12 months to 1 March 2025, Sainsbury’s group retail underlying operating profit was up 7.2% to £1.04bn, with double-digit grocery growth diluted by lower profits at Argos. Pre-tax profit up from £277m to £384m.

Total full-year retail sales up 3.1% to £31.56bn, like-for-like growth of 3.2% vs Q4 up 3.7% vs 2.8% Q3

Total grocery annual sales up 4.2% after Q4 up 4.1%.

Argos, annual sales down 2.7% vs Q4 1.9% rise.

Sainsbury’s price drops via Aldi Price Match and Nectar Prices, record levels of customer satisfaction re availability.

Plans for its biggest store opening programme “in over a decade”. They bought 14 new supermarket sites last fiscal Homebase and Co-op.

Including organic store openings, they plan 15 supermarkets in 2025/26, i.e. over 400,000 sq. ft. new space, plus 25 new convenience stores in 2026/27.

Roberts: “We’ve transformed our business in 4 years, a winning combination of value, quality and service that customers love, investing £1bn in lowering our prices.

“...Sainsbury’s as their main grocery shop, highest market share gains in over 10 years. We are committed, above all else, to sustaining our strong competitive position we have built and we expect to continue to outperform the market.

“...our largest investment in expanding our store space in over a decade via new supermarkets in key new locations and extend food space...”

NamNews Implications:

• The added uncertainties of Trump tariffs…
• …gives retailers the ’excuse’ to wait and see outcomes.
• i.e. postpone any plunge into a UK price war.
• But also manage stock market expectations, should Asda take an extra plunge.
• (Besides, whilst Asda management may have permission to make threats…
• …this may not include the funding of a prolonged price war)
• Meanwhile, retailers like Sainsbury’s and Tesco with strong balance sheets and considerable momentum…
• …may now want to preserve their ‘wealth’ following Trump’s announcements.
• And await an Asda blink…

B&M Taking Steps To Boost Performance After Another Tough Quarter

Discounter B&M is forecasting that its annual profit will now come in above the midpoint of its £605m-£625m guidance range, buoyed by sales from new stores and robust French operations, with cost cuts also helping it mitigate cautious demand from customers in the UK.

The retailer’s share price spiked as much as 7.5% in early trading as investors took solace in the upgrade after it cut its profit forecast in February, having already narrowed the range previously. B&M shares have plummeted over the last year after a series of profit warnings.

In a brief trading statement today, B&M revealed that its group revenues over the 12 months to 29th March had risen 3.7% to £5.6bn after a slightly stronger performance in the final weeks of the year.

In the fourth quarter, like-for-like sales at B&M UK fell 1.8% when the distorting effect from the Easter weekend falling in the final week of the previous year is removed. This was an improvement on the 2.8% decline recorded over the Christmas period.

The group noted that UK general merchandise sales values and unit volumes in the quarter increased on both a like-for-like and total basis, driven by garden, toys, paint and stationery. However, FMCG delivered negative like-for-likes with “actions” underway to improve performance.

B&M stated that gross margin was “robust” in the UK, helped by total volume growth and relatively stronger trading in general merchandise categories.

Operating costs increased by around 6% but were partly mitigated by productivity gains.

B&M opened 45 gross new stores in the UK during the year, driving the chain’s total annual revenues up 3.8% to £4.48bn. The group is planning 45 more openings in the year ahead.

At B&M France, fourth quarter like-for-like sales rose 3.2%, with total revenues across the year growing 7.8% to £543m after the addition of 11 new stores.

At Heron Foods, total sales rose 1.5% in the final quarter but were down 0.6% across the year despite the opening of 14 new stores.

Meanwhile, B&M stated that it was making progress on finding a new Chief Executive to replace Alex Russo, who will retire at the end of this month. An announcement is expected in the coming weeks, with David Potts, the former CEO of Morrisons, reported to be one of the frontrunners.

NamNews Implications:

• Given that market expectations will have been factored into its share price, today’s uptick patently reflects shareholder satisfaction with performance.
• The key will be B&M’s ability to maintain this momentum…
• …especially the like-for-like element.
• Opportunities for suppliers to help lift new store performance…
• …by better-than-average sales levels.

Booths Introducing Loyalty Pricing

Upmarket northern grocer Booths is set to become the latest retailer to introduce loyalty pricing.

According to trade publication The Grocer, members of the Booths rewards scheme will have access to discounted prices on around 300 of the chain’s own-label lines. Cardholders will also get access to “permanent” promotions and offers, including its ‘Three for £15’ meat deal and 10% off when purchasing four bottles of wine.

Booths’ Managing Director Nigel Murray told The Grocer that it had decided to introduce the “fairly fundamental changes” as it wanted to do more to reward its most loyal shoppers. Currently, cardholders are rewarded with 5% back on the purchase of selected items in the form of paper vouchers, which they can then redeem in stores.

He noted that the new mechanism would be more relevant to the millions of visitors to the Lake District who use its two stores in Windermere and Keswick.

“They are not frequent customers, but they are regular customers as they come to us every time they come to the Lake District,” he said. “So how do we reward those people instantly when they come to store?”

Murray highlighted that running a paper-based voucher system was also very expensive.

He told The Grocer that the loyalty pricing would be rolled out to Booths’ 26 stores “imminently”.

During its last financial year, Booths delivered improved results after recovering from the impact of high inflation and the cost of living crisis.

NamNews Implications:

• The key is ‘instant rewards’.
• (key to loyalty-data optimisation)
• Not because rivals are doing so…
• …but because customers respond to a felt need.
• With evidence in repeat purchase.

Tesco’s Whoosh Service Seeing Rapid Growth While Marketplace Expanding

After Tesco released strong annual results yesterday, its Chief Executive Ken Murphy noted that its rapid delivery venture Whoosh was a “real success story”, with basket sizes and sales soaring.

The group’s total online sales in the UK grew by 10.2% to £6.8bn last year, including a c.3ppts contribution from Whoosh. Overall sales growth was primarily driven by an increase in average online orders per week, which rose 10.8% to 1.3 million, with basket size (excluding Whoosh) up 3.6% to £109.

Meanwhile, Whoosh saw sales almost double in the year, with a further improvement in customer satisfaction and growth in average basket size as it expanded the depth of the product range. After launching in 2021, the rapid delivery service is now available in over 1,500 Tesco stores, including 42 large outlets, with active customers up 48%.

“What we’re seeing in our larger stores is that instead of 3,000 products, customers have access to nearly 15,000 products. We’re seeing bigger basket sizes, and I think it’s quite a valuable service for our customers,” Murphy explained.

It was revealed yesterday that Tesco Whoosh had become the first partner of Deliveroo Express, a new white label solution that enables grocers and other retailers to offer on-demand delivery directly through their own online channels.

Initially operating out of three stores in Ireland, the supermarket is leveraging Deliveroo’s infrastructure and network of around 2,500 riders to provide the on-demand service in the country.

Meanwhile, Tesco highlighted the progress it was making with its new Marketplace, which offers a broad range of non-food products online through third-party sellers.

Having launched in June last year, the operation now offers over 400,000 products, with more sellers and category launches planned for later this year. “We are encouraged with customer satisfaction scores, and trading through Black Friday was particularly successful,” Tesco said.

“Our priority has been laying the foundations for growth, adding, for instance, the capability to offer customers Clubcard Prices when they shop on Tesco Marketplace.”

NamNews Implications:

• ‘Online basket size (excluding Whoosh) up 3.6% to £109’…
• …is the way to make online fulfilment profitable…
• …at which point, all systems go.
• With Whoosh the icing on the online-cake!

Asda Names Creative And Media Agency Partners

 

Asda has appointed Lucky Generals and Spark Foundry as its creative and media agency partners following a pitch process.

Advertising firm Lucky Generals will be Asda’s new creative agency partner for both its supermarkets and its George fashion & home brand.

The struggling grocer noted that it had been impressed by the agency’s ideas to show how Asda can deliver on its key mission of “delivering uncompromised value for hard-working families”. Lucky Generals will begin transitioning into the role in May.

Meanwhile, Asda is retaining Spark Foundry as its media agency, continuing an eight-year partnership.
“We set off on this journey to ensure we have the right partners in place to support Asda’s objectives to offer uncompromising value to our customers and with a key focus on the ‘Asda DNA’ that really resonates with our customers,” said Adam Zavalis, VP of Marketing at Asda.

“We are really pleased to have identified Lucky Generals as our new creative partner whilst retaining Spark as our media partner and look forward to working together to bring Asda’s personality to life for our customers.”

Cressida Homes-Smith, the CEO at Lucky Generals, added: “This is a pivotal moment for two of Britain’s greatest consumer champion brands – brands that deserve to be right in the heart of the nation at a time when things in Britain are genuinely tough.

“We love the palpable sense of energy, enthusiasm and determination the Asda and George bring, and there has been a natural and positive relationship between us since the very first meeting. We’re genuinely grateful for the honour and opportunity and can’t wait to get our sleeves rolled up and put these brands back where they belong.”

NamNews Implications:

• Asda now needs to hit media hard & fast…
• …in what will hopefully be a ‘re-education’ of its public…
• …given that a ‘new-education’ message would probably take longer than Asda has available.
• Fingers crossed…

Aldi Surpasses Asda in Food And Drink Sales Amidst Turnaround Challenges

Asda’s turnaround has suffered a blow after new figures show that Aldi has overtaken the struggling supermarket in terms of food and drink sales.

Kantar data seen by The Telegraph shows Aldi accounted for 10.6% of food and drink sales across all supermarkets in the 12 weeks to 23 March – beating Asda’s market share, which slipped from 10.5% to 10.4%. Aldi had a 10.1% market share in the previous period, with its gains in recent weeks driven by higher sales of fresh poultry, fish, eggs and fruit.

The figures, which the newspaper said are distributed privately to supermarkets, do not include sales of alcohol, toiletries, household goods, and beauty items. Including these, Asda is still the third-largest grocer, with a share of 12.5%. However, this is down from the 14.8% share it held when it was acquired by TDR Capital and the Issa brothers in 2021.

Meanwhile, supported by its store expansion programme, Aldi has continued to make gains, with its overall share recently hitting 11.0% for the first time after growing at its fastest rate in over a year.

Aldi overtook Morrisons as the fourth-largest grocer in September 2022. In the unpublished figures from Kantar, The Telegraph noted that Morrisons had slipped further down the rankings on food and drink sales. It sold less food and drink than Lidl in the period, with the fast-growing discounter holding a 7.7% share compared to Morrisons’ 7.6%.

In March, Asda’s Allan Leighton: .. Asda prepared to take a significant hit to its profit to finance a shift to a new low ‘Asda Price’ by the end of 2026 in a bid to recover lost market share. Shares in Tesco, Sainsbury’s and M&S tumbled on fears of a major supermarket price war.

Leighton said Asda had a lot of ground to make up, i.e. turnaround efforts would take years.

Re share share data, an Asda spokesperson said the Kantar data was “highly selective and does not include key grocery categories such as alcoholic drinks, pet food, laundry, household products and toiletries”.

“We have a clear plan to deliver outstanding value for our customers, and since relaunching Rollback at the end of January, we have reduced prices on a third of our entire range.

“This focus on lowering prices for hard-working families is reflected in the latest and most widely followed Kantar data, as Asda inflated behind the discounters and clearly maintained its position as the third-largest supermarket in the UK.”

NamNews Implications:

• Aldi achieving a No.3 position in any part of the UK trade is a pivotal moment.
• And doing so in food & drinks makes it top-of-mind.
• These food & drinks stats present a dilemma for Asda:
• Fight it out with the discounters on food & drink.
• Or do battle where Asda are ahead: alcohol, toiletries, household goods, and beauty items. Morrisons’ slippage will not go unnoticed either…
• As always, suppliers will have to take a stance re where these changes are heading…
• …and adjust their trade strategies accordingly.

Tesco Expected To Post Strong Annual Results And Address Asda Price War Challenge

Tesco is set to reveal strong sales and profit figures when it releases its annual results on Thursday, with investors keen to hear how the UK’s leading grocer plans to respond to Asda’s drive to slash prices to become 5% to 10% cheaper than its rivals.

Last month, Asda’s Chairman Allan Leighton said that the business was prepared to take a significant hit to its profit to finance a shift to a new low ‘Asda Price’ by the end of 2026 in a bid to recover lost market share. The statement led to shares in Tesco, Sainsbury’s and M&S tumbling on fears of a major supermarket price war.

However, most analysts think that scenario is unlikely, noting the increasing cost pressures retailers and their suppliers face. Recent industry data from Kantar shows that grocery price inflation in the UK rose slightly to 3.5% last month, with shoppers turning to promotions to save money.

Market watchers have also questioned whether Asda has the financial firepower for a sustained price war, given that its majority owner, private equity group TDR Capital, is not putting additional equity into the business.

Meanwhile, Tesco and Sainsbury’s have stronger balance sheets than Asda.

Tesco’s results “will be an important staging post to test the mood music of the market leader on such matters, we sense a mature, resolute and professional approach will ensue,” said renowned Shore Capital analyst Clive Black.

Analysts at Bernstein looked at over 500 own-label products that Tesco price matches with Aldi and compared them with Asda. “Tesco and Aldi do not massively need to react. They are winning on price perception,” it found.

Tesco has guided for an annual retail adjusted operating profit of around £2.9bn, up from £2.76bn last year, supported by robust sales growth in its core business.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Growth in the UK and Europe helped to offset declines in its wholesale business, Booker. It’s a competitive space, but its improving proposition saw Tesco record its highest market share since 2016. Investors will be keen to see this trend continue when it reports full-year results.”

Analysts expect Tesco to flag further profit growth in next 12 months despite costs (higher national insurance contributions, national minimum wage, new packaging levy.

NamNews Implications:

• The added uncertainties of Trump tariffs…
• …gives retailers the ’excuse’ to wait and see outcomes.
• i.e. postpone any plunge into a UK price war, if intended.
• Besides, whilst Asda management may have permission to make threats…
• …this may not include the funding of a prolonged price war.
• Meanwhile, retailers with strong balance sheets may now want to preserve their ‘wealth’ following Trump’s announcements.
• This says a lot: “Tesco and Aldi do not massively need to react. They are winning on price perception”.

Rival Supermarkets Could Be Given Permission To Challenge Plans For New Aldi And Lidl Stores

The traditional supermarket multiples could be granted fresh powers to open more stores in areas dominated by Aldi and Lidl.

The Telegraph: The Competition and Markets Authority (CMA) is reviewing the rules that restrict major supermarkets from blocking their rivals from opening stores nearby.

To protect competition for shoppers, the regulator’s restrictive land clauses mean supermarkets must allow rival stores to open nearby without opposition.

However, this order only applies to Tesco, Sainsbury’s, Morrisons, Asda, Waitrose, Marks & Spencer and Co-op. Aldi and Lidl are exempt, meaning they have been able to grow their number of stores without having to comply with the rule.

Under the regs, the 7 UK supermarkets are blocked from having contractual clauses in their store deals, blocking rivals having stores in the same area. All of them have been forced to review contracts to comply with the order, which the CMA said is designed so that “shoppers have more choice and so benefit from a wider range of groceries and access to cheaper prices”.

Supermarket bosses have become increasingly frustrated over what they claim is an unfair playing field with Aldi and Lidl, not subject to the same restrictions based on 2010 legislation

Discounters hold nearly 20% of UK grocery market and both plan hundreds more stores.

The report said that Aldi and Lidl have been using the same restrictive clauses to block competitors from opening stores near them in retail parks.

Richard Walker, the Executive Chairman of Iceland, said last year that the discounters were using “legal tricks” to prevent rivals from moving into out-of-town shopping parks.

Officials have been asked to consider whether the rules should now include Aldi and Lidl or whether they should remove the bans for all supermarkets.

Supermarket insiders told the newspaper that they were hopeful that the competition regulator would decide to axe the restrictions altogether, given Labour’s push to cut red tape.

A CMA spokesperson is quoted as saying: “The Groceries Market Investigation (Controlled Land) Order plays an important role in maintaining competition between supermarkets, which is crucial to the finances of families across the country.

“We are aware of concerns that the Order should cover more supermarkets due to changes in the groceries sector, and we always keep this under review to ensure a level playing field.”

NamNews Implications:

• Inevitable that the government/legislation trails behind market realities.
• Inevitable that discounters’ growth in market share would reach this point.
• Inevitable that this planning clause includes discounter contracts…
• …to avoid the free-for-all that would inevitably result from removing the bans for all supermarkets.