Britain’s leading supermarket chains are dramatically stepping up promotional spending in an increasingly competitive grocery market, amid ongoing cost-of-living pressures and mounting inflation. Recent figures from market research consultancy Kantar reveal that almost 30% of all supermarket spending during the four weeks to 20 April was on offers and discounts—a notable increase that translated into £347 million in promotional price cuts.
Much of the discounting activity is tied to loyalty card schemes, with customers of mainstream retailers such as Tesco and Sainsbury’s seeing the biggest impact. According to Kantar’s head of retail and consumer insight, Fraser McKevitt, UK grocers “have been offering big price cuts to stay competitive,” with these measures forming the bedrock of promotional growth across the sector. Indeed, price-match schemes now account for almost one-fifth of items sold in stores like Tesco and Sainsbury’s, and appear in nearly two-thirds of customer baskets, suggesting shoppers are actively seeking out ways to reduce food bills.
The push toward lower pricing reflects a deeper shake-up in the UK grocery sector, as supermarket groups seek to protect market share despite squeezed margins. In March, Asda issued a profit warning and pledged to aggressively cut prices—a move that rattled investors and knocked around £4 billion off the combined market capitalisation of listed rivals Tesco, Sainsbury’s and Marks & Spencer. Following its announcement, Asda slashed prices on 1,500 products ranging from everyday essentials such as Cathedral City cheddar to household brands like Head & Shoulders. The supermarket also claimed it has reduced prices across nearly 10,000 items since the beginning of the year.
However, the deep discounting has yet to yield growth for Asda. Over the last three months, it has been the only one of the ‘big four’ to record a fall in sales on a year-on-year basis.
Meanwhile, grocery inflation remains a stubborn concern for consumers. Despite intensified promotional activity, food price inflation rose to 3.8% in the four weeks to 20 April—the highest level in more than a year, and sharply higher than the 1.4% registered in October 2024. The Bank of England has cited persistent food inflation as one of the factors complicating its path to lowering interest rates, though cooling shop price inflation overall could ease pressure on monetary policymakers later this year. As of early May, the UK’s base interest rate remains at 5.25%, its highest level since 2008, although City economists increasingly expect rate cuts to begin later in 2024.
The recent Easter holiday did provide a temporary boost to retailers, with supermarket sales rising 11% in the lead-up to Easter compared to a year earlier. Demand remained strong despite chocolate prices having jumped 17.4% year-on-year, driven by global cocoa shortages and record-high trading prices. Nonetheless, Kantar reported that sales volumes of chocolate eggs actually increased by 0.4%, suggesting that consumers were willing to indulge over the holidays. Fairer weather during the same period also played a role, contributing to a 31% surge in burger sales as households took advantage of sunny days and turned to barbecues.
In terms of market leadership, Tesco remains the country’s clear front runner, holding 27.8% of grocery market share, followed by Sainsbury’s at 15.3% and Asda at 12.3%. Aldi, which overtook Morrisons to become the UK’s fourth-largest grocer in 2022, now holds 11% of the market. Online grocery specialist Ocado continues to grow rapidly, with annual sales up 11.8%, although its overall market share remains relatively modest at just 1.9%.
In a climate where consumer spending remains under strain and economic uncertainty persists, competition among supermarkets is expected to intensify further. As families continue to look for ways to stretch household budgets, market leaders and challenger brands alike are investing more heavily in promotions and pricing strategies to secure customer loyalty.
