In a renewed push to win over budget-conscious shoppers, UK supermarkets are investing hundreds of millions of pounds in promotional deals, intensifying the ongoing grocery price war across the country.
Market research from Kantar revealed that nearly 30% of spending by Britain’s top grocers in the four weeks leading up to 20 April was tied to special offers and discounts.
Fraser McKevitt, head of retail and consumer insight at Kantar, said the aggressive pricing strategy is aimed at staying competitive. “They’ve invested in price cuts which were the main driver of promotional growth,” he explained. Much of this is driven by loyalty card schemes, with spending on such offers rising by £347 million. At Tesco and Sainsbury’s, nearly 20% of items sold are on price match deals, contributing to around two-thirds of all baskets.
Price Competition Heats Up as Profits Tighten
The push for lower prices comes at a time when supermarket profit margins are under pressure due to the cost of living crisis and increasing sector-wide competition. Last month, Asda warned of significantly lower profits for the year and announced a major investment in price reductions.
Allan Leighton, chair of Asda’s parent group, clarified that the announcement was “an investment warning, not a profit warning”. The statement caused a sharp drop in the market value of its rivals—Tesco, Sainsbury’s, and Marks & Spencer—by around £4 billion.
Following this, Asda slashed prices on 1,500 items, including Cathedral City cheddar and Head & Shoulders shampoo. Since January, the chain has lowered prices on nearly 10,000 products. However, it remains the only major supermarket to record a decline in year-on-year sales over the past three months.
Promotions Rise Despite Inflation in Grocery Prices
Despite ramped-up discounts, overall grocery inflation rose to 3.8% in the same four-week period—the highest in over a year, significantly above the 1.4% recorded in October 2024. Still, shopper activity remained strong over Easter, with total spending up 11% compared to the same pre-Easter period in 2024, even as chocolate prices surged by 17.4%.
According to Kantar, sales of chocolate eggs still increased by 0.4%, while lamb led Easter dinner tables as the most popular fresh meat, followed by beef and pork. With warmer weather arriving, burger sales soared by 31% as households turned to outdoor barbecues.
Market Leaders and Fastest-Growing Supermarkets
Tesco continues to dominate the market with a 27.8% share, followed by Sainsbury’s at 15.3% and Asda at 12.3%. Online grocer Ocado remains the fastest-growing retailer, posting an 11.8% increase in sales year-on-year, although it holds a smaller 1.9% market share.
Aldi, which overtook Morrisons in 2022, is now the fourth-largest supermarket in the UK with an 11% share.
