Tesco and Sainsbury holding their ground against Asda counter-offensive
Last updated: 16:00 28 Apr 2025 BST, First published: 15:52 28 Apr 2025 BST
Shoppers may be feeling the squeeze, but Britain’s supermarket giants are holding their ground.
According to a new note from RBC Capital Markets, Tesco PLC (LSE:TSCO) and J Sainsbury PLC (LSE:SBRY) remain the best bets among the traditional “Big Four” grocers, despite fierce competition from discounters Aldi and Lidl.
Analysts say both Tesco and Sainsbury’s have responded smartly to Asda’s recent price cuts by tweaking their own offers, while maintaining stronger store standards, better online services and wider loyalty schemes.
Tesco, the UK's biggest grocer, stands out for having the most competitive prices on key value items (the basics that fill up a weekly shopping basket), with Sainsbury’s close behind.
Asda’s push to lower prices has helped a little, but RBC warns that real shifts in customer habits usually take years, not months. Meanwhile, Morrisons continues to trail its rivals, hampered by weaker store investment and patchy digital presence.
It is not just about price, RBC stresses. Consumers want value, yes, but they also expect convenience, availability and a good online experience.
Tesco and Sainsbury’s are better positioned here, according to the note, with Marks & Spencer also tipped to benefit from its focus on premium food ranges, which have been outperforming.
Despite high inflation, the banks expect UK food retail to offer attractive long-term shareholder returns. Both Tesco and Sainsbury’s trade on relatively modest valuations, and RBC sees room for further market share gains.
Still, the competitive pressure from Aldi and Lidl is not going away. For the Big Four, being cheapest is not enough anymore – they will need to keep investing to stay ahead.
