One of the by-products of our data rich age, is that more data is available ever more frequently. Our attention spans have collapsed and if we don’t get a weekly, daily or hourly update then we begin to panic. And then having got that immediate fix we eagerly await the next one; the next high. All the while our ability to act is diminished and we cease to function strategically.
So this post is using ‘slow data’. As I have published before, for over two decades I have been using the Kantar July UK market share data to consider the longer-term trends in the UK grocery market. This is not difficult or flashy and it has required now almost a quarter of century of data points. But it makes a pretty graph and does allow us to pose some questions.
If you look at the graph above, and then compare it to the one I did last year (here) then the obvious conclusion is that nothing much has happened – and after all, there is only one more data point. And that at one level is right. But think more deeply and the graph illuminates two of the major stories of the last year. The ‘not in your lifetimes – copyright CMA’ merger of Asda-Sainsbury is readily explained by the 15+ year stagnation of market share in both; the graph measures the failure of the leadership of both and helps explain their firm belief that 1 + 1 always equals 2 (it does not always in retailing). Secondly the recent further trimmings of the store estate and operations by Tesco point to their continuing worry over the now thirteen year decline in market share. How can this be halted or even reversed?
For each negative there is of course a positive and in this graph, as before, it is the relentless march of Aldi and Lidl. They continue to gain market share and still have huge expansion plans. Both are bigger than Waitrose and at present growth rates Aldi will overtake Morrisons in the next two to three years. Put Aldi and Lidl together and by next year their combined market share will be bigger than Asda and almost as big as Sainsbury.
To put this in further context, and as shown in the graph below, the CR3 ratio (the market share taken by the largest three market shares) in 1997 was 55%, a figure that grew in a decade to 2007 to peak at 64.3%. By 2014 it was down to 62.5% and this year its decline has accelerated further to 57.4%. There is a good chance CR3 will dip below its 1997 level in the next two years. This is becoming significant.
So, to conclude with some questions:
- What next for Sainsbury and Asda? The powers that hold sway in each must be very disappointed and seem to lack a Plan B.
- How much more cutting and trimming can Tesco do before they look just like anyone else?
- Can Morrisons figure out a way to stop being caught in the middle?
- Do Aldi and Lidl have the momentum to sweep up for years to come or is there a ‘natural’ limit?
- What will the M&S and Ocado tie up bring?
- Is the groundswell of local food stores and offers hitting any of the major players yet?
If you really need a new data fix then the big 3 all lost market share in the recently published August data.