All our older clients – and plenty that are not so old – will remember a time when high street banking in the UK was dominated by the ‘big four’: Barclays, NatWest, Lloyds and Midland (or HSBC as it later became). Many of us knew the apocryphal stat: you were more likely to change your spouse than change your bank.
Now? The high cost of operating branches and mobile phone technology has completely changed the retail banking landscape. We have seen the rise and rise of the ‘challenger banks’: Monzo, Atom Bank, Starling, Revolut… The list goes on – and there are now towns that no longer have any ‘traditional’ bank branches.
So could the same happen to the UK’s long-standing supermarket chains?
The idea initially seems fanciful: ‘people will always need to eat’. They will: but whether they’ll buy enough from the long-established ‘big four’ – Tesco, Sainsbury’s, Asda and Morrisons – to make all their supermarkets economically viable is increasingly being questioned.
After all, the ‘big four’ are no longer the ‘big four’.
The German company Aldi opened its first store in the UK in April 1990. Its fellow discounter Lidl followed four years later. Both companies have consistently increased their number of stores, with the latest figures giving Aldi 960 stores in the UK. Between them Aldi and Lidl now have more than 1,900 shops and a market share of 16.4% – meaning they take £1 of every £6 spent in the sector.
Most significantly, September saw Aldi overtake Morrisons to become the UK’s fourth largest supermarket. Aldi boss Giles Hurley said that the discounter had gained 1.5m customers in 12 weeks as shoppers switched to Aldi and Lidl “in their droves”.
At the beginning of October, Tesco unsurprisingly revealed falling half-year profits and warned that profits for the full year will be ‘at the lower end of expectations’. The reason is simple: customers are trading down due to the cost of living crisis. As Tesco admitted, shoppers are ‘counting every penny’. With food inflation at an all-time high, that trend is not going to be reversed any time soon.
We are living in times of unprecedented change. As the ‘big four’ banks have amply demonstrated, ‘don’t think it can’t happen, because it can’.
If you want another example, look at Tesla. The company was founded in July 2003. Just seventeen years later, it became the world’s most valuable car company, as an increase in its share price took its value to $209bn (£188bn). A month later, its value was four times the combined value of General Motors and Ford.
Every industry is undergoing change, and the UK’s supermarkets will be no exception. Amazon have changed the face of UK shopping: it was revealed last year that they now have plans to open 260 supermarkets across the UK in the next four years. The very serious worry for the traditional ‘big four’ is that they get squeezed between the discounters, the delivery services and the more upmarket chains like Waitrose, and also that Amazon are waiting to pick up the pieces.
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