Aldis Food Store

Asda sales hit by rival discount store chains

New market share figures show supermarket group Asda on the back foot as the UK food market polarises with discount chains Aldi and Lidl and upmarket grocer Waitrose sprinting ahead of the pack.

Asda was the biggest loser from the so-called "two nations" effect unearthed by the Kantar Worldpanel data. It shows food retailers at either end of the value spectrum doing well but those in the middle are struggling as shoppers juggle their household budgets to save money. Last week Tesco said sales of its premium Finest range were up 10% as shoppers opted for a cheaper treat than eating out.

Asda's market share dropped back from 16.7% to 16.3% in the 12 weeks to 13 June, putting it only a fraction ahead of Sainsbury's on 16.2%. This week the Walmart -owned grocer said its deputy chief executive, Simon King, had left the business after six months in the role.

Kantar analyst Edward Garner said the "two nations" effect showed that "not everybody is the same" and it was possible for the market to "go in two different directions at the same time". Analysts point to a twin track retail economy where households with mortgages are better off thanks to low interest rates but others are struggling as higher food and fuel prices erode their disposable income.

The market share figures coincided with the publication of Asda's monthly Income Tracker which showed families were £14 a week worse off in May than a year ago. The report said the average UK household had £165 for extras last month which was 8% lower than last year. Consumer price inflation is running at 4.5% in May which is double the average pay rise.

"The true cost of living is now beginning to take its toll," said Asda chief executive Andy Clarke. "Inflation is rising at twice the rate of earnings, petrol prices are at a record high and utilities bills are only getting steeper – adding up to a £14 a week hole in people's pockets."

The squeeze has been good news for Aldi and Lidl, which have been setting the pace for the "big four" Tesco, Asda, Sainsbury's and Morrisons over the last three months, with sales growing at 18% compared with an average of nearly 5%. Waitrose saw the next highest growth with sales up nearly 9%.

Garner said consumers walking rather than driving to the supermarket could have hit Asda as most of its stores are large, out-of-town sites. Analysts also said the Leeds-based grocer's "everyday low price" message was being "crowded out" as shoppers were confronted with up to 40% of products on special offer in rival stores. Last month Asda said like-for-likes were flat in the first quarter.

Free Money Finance: What Grocery Store Has the Best Prices?

Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. All posts are © 2005-2011, Free Money Finance. We shop at Aldi, Costco, and Meijer for groceries (we don't have a Super Walmart in our area -- so there are limited groceries). Most of our shopping is done at Meijer because it's a very nice (new) store, has everything we need (and more!), and is close to our house. We supplement what we get at Meijer with purchases from the other two as well as local stores. No matter where you shop, you can save money if you do it right: know regular prices so you can identify good deals (have a price book), shop sales with coupons, stock up on great deals, buy store brands, etc. This is generally how my wife shops -- getting good deals here and there for overall great savings.

So what do you think? What's your take on the best place to find low-cost groceries?

It depends. Costco has a limited selection, big quantities,low prices not to far for us to plan a trip(5 miles).(50% of grocery bill) Kroger, very close 1/2mile , wide selection,decent prices.(45% of grocery) Local grocery store Hillers,VERY close 2 block away, good selection for quick out of stock items, prices are higer but sale items equal, outsanding meat department. Old style butcher counter.(5% of grocery bill)

I would shop Hillers more because it is not the big chain store and I like to support the independents but price and savings have to be there.

I shop Aldi because of prices on pkg & can goods. I shop Albertsons and Safeway to cherry pick specials. I shop the dollar store for some items. I MOSTLY shop independent/ethnic stores that are in my area and/or on my routine travel routes.

As a single I do not find the Sam's/Costco stores work for me and Sam's is 1 mi east of where I live.

The survey was about perception of low price, rather than about actual price comparisons. How many shoppers do a good job really tracking how much items cost at various stores? Many of this sites readers probably do, however most of the general public does not.

It seems like Aldi has done a very good job of getting people to think they have the lowest prices. Maybe they do. From the list I only have Walmart and Costco near me. We also have Smith's which is related to Kroger.

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