Discount growth is reshaping UK grocery. Discover how retailers can compete using their existing strengths and store networks.
The publication of IGD’s latest UK grocery channel forecasts highlighted the importance of discount to the market’s growth. The discount channel is forecast to add £8.7 billion in sales between 2026 and 2031, representing a compound annual growth rate of 3.6%.
Aldi and Lidl will account for 82% of discount channel sales by 2031, supported by plans to open between 80 and 100 stores a year combined.
This expansion will bring discount stores closer to more households. Competing retailers are unlikely to match this expansion through supermarket openings, as much of their new-store investment is focused on convenience sites.
The question, therefore, is not how established retailers can replicate Aldi and Lidl’s expansion. It is how they can use their existing stores, formats and capabilities to compete as discount coverage increases.
Aldi and Lidl are growing in separate ways
New space is important to both discounters, but its contribution differs.
Aldi’s UK and Ireland sales increased from £17.9 billion in 2023 to £18.1 billion in 2024. However, CEO Giles Hurley acknowledged that like-for-like sales declined during the year, partly reflecting lower prices. New stores therefore became crucial to Aldi’s overall growth, offsetting declining sales across its comparable estate.
Recent sales tracking from Worldpanel by Numerator indicates this pressure has continued. In the 12 weeks to 12 July 2026, Aldi’s total sales increased by 0.7%, compared with market growth of 3.3%. As these figures include sales from new stores, they indicate Aldi’s established estate remains under pressure.
Lidl’s sales increased by 8.6% over the same period, as the retailer combined new-store growth with stronger sales momentum. Lidl Plus provides a further source of growth, encouraging repeat visits through member prices, rewards and digital engagement.
Retailers should therefore assess the two discounters separately.
An Aldi opening introduces a proven value proposition into a new catchment. Lidl presents a similar property threat, reinforced by a loyalty platform that can help convert initial trial into more frequent visits.
Use the whole estate to retain shopper missions
IGD ShopperVista research shows top-up shopping is the most common grocery mission, undertaken by 45% of shoppers on their most recent journey. Food discount over-indexes most strongly for top-up shopping, followed by the convenience channel. Food discount also over-indexes for food-for-later and main-shop missions.
Aldi and Lidl’s expansion therefore threatens more than the weekly shop. Greater proximity will make their stores more practical for fresh top-ups, replacement essentials and short-term meal needs.
Established retailers can respond through their presence across multiple formats.
Supermarkets can protect main shops through choice, quality, fresh food and complete meal solutions. Convenience stores can retain top-up and food-for-now missions through speed, essential availability and appropriate pack sizes. Online can protect planned baskets, while quick commerce can capture urgent needs that might otherwise prompt a visit to a nearby discounter.
Success will depend on connecting these channels through loyalty schemes. Retailers can identify households reducing supermarket visits and respond with relevant offers, convenience incentives or quick-commerce support. The objective should be to retain total household spend across the group rather than protect every transaction within one store.
Build greater local relevance
Full-range retailers have more scope than the discounters to tailor assortments around local catchments.
Although Aldi and Lidl can adapt selected ranges locally, their smaller assortments depend on standardisation, purchasing scale and rapid stock movement. Significant local variation would introduce greater complexity into operating models designed to minimise it.
While retailers can use broader ranges to improve basket completion and give shoppers more reasons to retain supermarkets as their primary store. Additional products need to generate sufficient sales and reflect persistent local demand rather than add complexity, waste and availability challenges.
Give large stores a broader role
Retaining household spend through convenience and online may still leave exposed supermarkets with excess space and pressure on profitability. Retailers will need to make these assets work harder through additional food ranges, online fulfilment, non-food services and third-party partnerships.
Tesco’s health-zone trials, combining health and wellness products with pharmacy services, consultation rooms and external partners, point to one possible use. More broadly, grocery retailers are introducing concessions across foodservice, clothing, beauty and practical services to generate footfall and improve the productivity of space.
These capabilities provide reasons to visit that Aldi and Lidl’s more standardised formats cannot easily reproduce. The right solution will differ by catchment. Health services may suit one location, while foodservice, fulfilment or specialist ranges produce better returns elsewhere.
Store growth does not determine the outcome
Although retailers cannot prevent Aldi and Lidl moving closer to more shoppers, by focusing on the full range of capabilities available to them, they can influence how productive those stores become.
Success will depend on acting early in exposed catchments and competing across the full range of shopper missions. Range, loyalty, convenience, online capabilities and productive large-store space must operate as connected advantages, not separate initiatives.