Lidl is on the verge of overtaking Morrisons as the UK’s fifth-largest supermarket, bolstered by a record market share gain this summer. According to recent industry figures, Lidl’s slice of the grocery market climbed to 8.3% in the three months ending mid-July, marking a significant increase from 7.8% a year earlier. This growth was driven by over half a million new customers turning to the discount retailer’s 960 stores, amid rising concerns over escalating grocery bills. The surge narrows the gap with Morrisons, whose market share has declined from 8.7% to 8.4% over the same period.

This shift in market positions reflects broader trends in the UK's supermarket sector, where price sensitivity among shoppers is intensifying. Nearly two-thirds of households surveyed expressed deep concern about the cost pressures on their grocery shopping, a factor that has been pivotal in Lidl's appeal. Price increases on key staples such as cocoa and beef have elevated competition among supermarkets striving to retain customers. Lidl’s strategy, which includes high-quality yet affordable produce alongside strong loyalty incentives like its Lidl Plus scheme, appears to be paying dividends. In fact, Lidl has not only excelled overall but also overtaken Tesco in the UK in-store bakery market, capturing an 18.2% share, a testament to its growing product appeal.

Meanwhile, Morrisons continues to face challenges that have constrained its market standing. The supermarket chain’s sales growth slowed to just 2.1% in the first quarter, down from 4.9%, partly due to a disruptive cyberattack on its technology provider Blue Yonder. This incident negatively impacted stock management systems, undermining inventory availability. Efforts to recover have included job cuts across various parts of the business and an ambitious £1 billion cost-saving target. However, Morrisons is contending with market pressures exacerbated by its private equity ownership and a £7 billion acquisition financed largely by debt. This financial backdrop, coupled with intense competition from discounters, has made the recovery a steep climb.

Asda, another major UK retailer also owned by private equity, is experiencing similar difficulties. Its market share has continued to erode, falling to 11.8% in the most recent period, alongside a 3% drop in sales. Despite executive chairman Allan Leighton's optimism about emerging signs of recovery, Asda recorded a pre-tax loss exceeding £100 million last year. The company's strategy to slash product prices and improve stock levels has yet to translate into regained market ground, especially as Lidl and Aldi continue to grow their presence.

At the larger end of the market, Tesco and Sainsbury’s maintain their dominance, with Tesco’s market share rising to 28.3%. Tesco’s sales growth, at 7.1% for the period, is the fastest since late 2023, underscoring the intense battle for grocery shoppers. Tesco’s chief executive, Ken Murphy, has cautioned that the company could face a hefty £400 million hit to profits this year as price competition intensifies. Sainsbury’s sales have also climbed by 5.3%, reinforcing its position as the UK’s second-largest grocer with a 15.1% market share.

Overall, the supermarket landscape in the UK is undergoing significant change. Discount retailers like Lidl and Aldi are leveraging price-sensitive consumer trends and targeted product strategies to chip away at the shares of established players. In contrast, Morrisons and Asda, burdened by debt and operational challenges, risk further decline unless they can rebound amid fierce competition. Lidl’s current momentum signals not only a shift in the power balance but also highlights the evolving priorities of UK shoppers in a cost-conscious market.