Tesco is a large U.K grocery firm and retailer whose main competitors are ASDA, Sainsbury’s and Morrison’s, which are often called the Big Four in the United Kingdom. Waitrose is another large chain that trails the Big Four in footprint. In recent years, German grocers Aldi and Lidl have also become strong competitors in the U.K. grocery market.

Tesco also competes with convenience stores, which are gaining popularity as consumer tastes shift toward more trips for fewer items. The convenience store market is highly fragmented. As of August 2015, Tesco is the U.K. grocery market leader with 28.4% market share, followed by ASDA and Sainsbury's, each of which has just under 17% market share. Over the past two years, Aldi and Lidl have taken market share from the large incumbents.

ASDA

ASDA is a wholly-owned subsidiary of Walmart following its 1999 acquisition. The company has a total of 604 retail locations, 196 of which are supermarkets. ASDA also operates larger format superstores, which sell items such as clothing and furnishings in addition to groceries. ASDA's competitive strategy prioritizes maintaining the lowest prices of the so-called Big Four U.K. grocers. The company is also improving its store layouts and online sales channel to reflect evolving shopper habits. ASDA is also working to improve the nutritional value of private-label products.

Sainsbury’s

Sainsbury’s is the third-largest grocery chain in the United Kingdom, with 1,304 locations. These locations are split roughly in half between supermarket and convenience formats. According to customer surveys and reports on brand strength, Sainsbury's is regarded as the highest-quality grocer among its peers. This allows the company to charge a premium for grocery products, though price reduction has been an important element of its recent competitive strategy. To increase customer engagement, Sainsbury's is experimenting with different store layouts, expanding its offering to general merchandise categories and promoting its in-store banking services. The convenience format is a priority in upcoming store count expansion plans.

Morrison's

Morrison's operates 514 supermarkets and 150 convenience stores. The company also participates significantly in food production, being the second-largest producer in the U.K. Morrison's operates a number of food manufacturing facilities and engages farmers to source poultry, meat and produce. Morrison's is working to drive efficiency improvements along with its vertically integrated structure while reducing everyday prices. Creating a more balanced approach to promotional pricing is also an important element of the strategic price review. Morrison's has adopted a strict capital expenditure budget, and most of the new stores opening are in the smaller convenience format.

Aldi

Aldi, which is headquartered in Germany, operates over 10,000 stores in 18 different countries. Aldi fills the discount grocer niche, offering low-priced items with a disproportionately high private label offering. The company generally does not accept credit cards, frequently places a maximum of two units per item for each customer and typically does not accept manufacturer coupons. In addition to discount groceries, Aldi holds weekly specials on general merchandise products.

Lidl

Lidl operates over 10,000 stores in 28 countries and is headquartered in Germany. Like Aldi, Lidl is a discount grocer that does not prioritize shopper experience or presentation. Staffing is kept to a minimum as part of the expense reduction effort. Lidl maintains less of a focus on private brands than Aldi, opting instead to source many low-priced foods from the country where the store is located. Lidl also has a revolving weekly special stock of general merchandise.

Waitrose

British grocer Waitrose operates 338 locations, most of which are supermarkets. Waitrose is considered a premium grocer, emphasizing the quality of staff members and production practices. In an attempt to overcome its reputation as an expensive food provider, the company has pursued several price-matching campaigns in which it matches Tesco's prices on select items. Some stores include restaurants that serve hot foods, while certain locations specialize in general merchandise in addition to food.