Asda in crisis as its market share hits record low: Grocer hit by soaring interest rates

The crisis at Asda deepened yesterday as figures showed its slice of the grocery market has crashed to the lowest level on record.

Data from industry research group Kantar showed the private equity-owned supermarket now holds a 12.8 per cent share.

Asda has been flailing since the Issa brothers joined forces with private equity giant TDR Capital to buy it in a £6.8billion debt-fuelled deal three years ago.

Soaring interest rates have driven up the cost of borrowing while shoppers have flocked to rivals, including discounters Aldi and Lidl, as well as Tesco and Sainsbury’s.

Asda’s market share is the lowest it has been since Kantar started sharing the numbers in 2011. It is a dramatic fall from the 13.7 per cent it held a year ago.

Record low: Data from industry research group Kantar showed private equity-owned supermarket Asda now holds a 12.8% share of the UK grocery market.

The figures are a bruising setback after an earlier trading update raised hopes the supermarket could be at the start of a revival. In April, it posted a small return to profit for 2023.

Once Britain’s second biggest supermarket, the group has lost ground to traditional rivals Tesco and Sainsbury’s as well as discounters Aldi and Lidl.

According to Kantar, Asda sales in the 12 weeks to June 9 totalled £4.3billion – down 4 per cent on the same period a year earlier.

All its rivals saw sales rise with Lidl up 8.1 per cent, Sainsbury’s 4.9 per cent, Tesco 4.6 per cent, Morrisons 1.1 per cent and Aldi 0.8 per cent. 

Last week, Zuber Issa sold his shares in Asda to TDR. This means the London buyout company is Asda’s majority owner, while Mohsin Issa still holds 22.5 per cent.

The search for a chief executive continues with Asda having been without one since 2021.

Mohsin Issa said earlier this year he was carrying out a ‘reset’ of the company before hiring a boss. But retail experts say the supermarket will struggle to return to its former glory.

It is ‘inevitable’ that Aldi will become bigger in the next two years, Jonathan De Mello of the JDM Retail consultancy said. 

Aldi holds 10 per cent of the market. Lidl has boosted its share over the year from 7.7 per cent to 8.1 per cent.

Tesco hit its highest share since February 2022, growing 0.6 percentage points to 27.7 per cent. Sainsbury’s holds 15.2 per cent of the market, compared to 14.9 per cent last year. 

Morrisons, also owned by private equity, has performed poorly, too. It holds 8.7 per cent of the market compared to 8.8 per cent this time last year.

Hard to swallow: Mohsin Issa said earlier this year he was carrying out a ‘reset’ of Asda