‘As Asda flounders and Aldi’s sales slow, the battle for this year’s Christmas table will dictate grocery success’

Grocers are about to commence the annual contest to be shoppers’ first choice for the seasonal turkey – and all the other party food, drinks and treats indulged in over the whole 12 days of Christmas.

Tesco showed off its range this week, and Sainsbury’s follows later in the month. They, and some of the other big Christmas dinner destinations – such as Marks & Spencer, where food boss Alex Freudmann seems to have fitted comfortably into predecessor Stuart Machin’s shoes – should do well, as they have all year.

The seasonal showdown may be particularly interesting this year at the value end of the market, where changing dynamics are evident.

“Asda, once so famous for its price competitiveness, should have been up there with Aldi and Lidl over the last few years”

Aldi, king of the discounters and the disruptor that overtook Morrisons two years ago to become one of the big four, is looking a bit middle-aged rather than like the young gun that has consistently stolen consumers’ hearts over recent years.

Chief executive Giles Hurley was confident about Christmas as he unveiled impressive full-year results this week. However, he acknowledged that Aldi’s sales growth is slowing, and Kantar grocery market data published after the results showed further loss of market share – it edged down to just below 10%.

Hurley said that Aldi still has plenty to go for and is clearly setting his sights on strong peak trading as he opens more shops in the run-up. He also bigged up Aldi’s “biggest and best-ever seasonal range, including hundreds of premium range products”.

Seasonal cheer

While growth at Aldi may be moderating, fellow value grocer Lidl is continuing to grow rapidly. Lidl’s sales were up 9.1% year on year, according to the latest Kantar data. This was far ahead of any other grocer with stores (online-only player Ocado’s sales rose most across the whole market). Lidl has won market share every month since April 2021, and it has now reached 8%.

The continued growth of the pair of discounters came as Asda suffered a further decline in performance. Year on year its market share has slid from 13.8% to 12.6%. In stark contrast to all its peers, Asda’s sales dropped 5.6% in the 12-week period covered by the latest Kantar data. It’s not too hard to envisage it losing its third-place position among the big four.

“Every grocer will be angling for whatever extra spend they can. Those who manage to gain may not just define Christmas but set the tone for the year to come”

Asda, once so famous for its price competitiveness, should have been up there with Aldi and Lidl over the last few years as the cost-of-living crisis hit customers. Instead, it’s become a corporate soap opera as issues such as its ownership and lack of a chief executive take up attention that should be devoted to serving customers better.

But Christmas represents a massive opportunity for Asda just as much as for any other food retailer. After so long a period of lacklustre performance, Christmas brings a chance to woo customers again and, if it impresses with value and quality, create a springboard to bounce back and draw more spend in the new year.

Consumers have shown in the past that even when life is tough they want to enjoy the best Christmas they can. Seasonal cheer should also be filtering through as a result of easing pressure on consumers’ purses as inflation falls. Aldi flagged increased take-up by shoppers of more premium lines, and that is likely across the board.

Every grocer will be angling for whatever extra spend they can. But as Asda flounders and Aldi’s sales slow, those who manage to gain may not just define Christmas but set the tone for the year to come.