Sainsbury's boss predicts discounters Aldi and Lidl will eat 15% of market share by 2022

Mike Coupe is the first boss of a major grocer to say how much damage Lidl and Aldi can inflict on the big four

Aldi and Lidl have outperformed Marks & Spencer for the first time in an annual supermarket satisfaction report (PA)

Sainsbury’s chief executive, Mike Coupe, has predicted discount supermarkets are set to gobble up nearly 15 per cent of the market by 2022. He is the first boss of a major grocer to tell the City how much damage he believes Lidl and Aldi can inflict on the big four.

Tesco, Asda, Morrisons and Sainsbury’s have been losing thousands of customers to the German discounters and the exodus continued as market analyst Kantar Worldpanel revealed a sales drop at all four in the past 12 weeks – for only the fifth time since records began in 1994.

Mr Coupe also called on whoever wins the election to tackle business rates reforms, calling the tax unfair to high-street retailers. Sainsbury’s revealed its first annual loss and fall in sales for a decade after a series of writedowns; it also slashed its dividend and warned that price deflation will last at least another year.

Management tried to paint a positive picture, but sales fell 0.7 per cent to £23.78bn in the year to 14 March and a pretax profit of £898m last year swung to a £72m loss – thanks to £753m of one-off costs, including a £628m property writedown.

Underlying profits, which exclude the one-off costs, were still down 14.7 per cent to £681m. John Rogers, chief finance officer, said: “Over the past five years we’ve had the challenge thrown at our feet of ‘what happens if Tesco gets its act together?’ or ‘what if Tesco does this or that’, and the reality is we’ve responded to all those challenges.…

“We’ve outperformed in sales terms, we’ve outperformed in profit terms.… This business has a fantastic, different and changing offering, and that’s what will stand us in good stead over the coming 12 months.”

Analysts have suggested that Tesco’s resurgence under Dave Lewis could threaten Sainsbury’s. However, its bosses said they would be offering more products and focusing on higher quality to win over customers.

Mr Coupe predicted that the discounters could go from controlling 9 per cent of the market today to 15 per cent in seven years. As a result, sales at large supermarket would drop from 70 per cent of total sales to 60 per cent by 2022.

Mr Coupe said he would be happy to work with any newly formed government: “The one specific issue we would want to be addressed… is business rates. We are the sixth largest taxpayer in the UK as a corporation mainly driven by business rates, and we are the 70th biggest company;… that just doesn’t feel fair and balanced.”