Woolworths Group Ltd (ASX: WOW) shares and Coles Group Ltd (ASX: COL) shares have both outperformed the S&P/ASX 200 Index (ASX: XJO) in 2023.
Though not immune from the impacts of soaring inflation and interest rates squeezing household budgets, the consumer staples giants get much of their revenue from 'must have' items. At the end of the day, after all, everyone needs to eat.
Of the two big supermarket stocks, Woolworths shares are hands down the winners so far in 2023, gaining 18% since the opening bell on 3 January.
That compares to a 5% year-to-date gain for the ASX 200.
Coles shares certainly haven't been laggards though, with the retailer's stock up 10% so far this calendar year.
And on the dividend front, Coles edges out its larger rival, trading on a fully franked trailing yield of 3.6%. That compares to a trailing yield of 2.6% for Woolworths shares.
But with German food retailer Aldi gaining market share, which of the two ASX 200 supermarkets is most at risk of losing customers?
International competitor chipping away
For some greater insight into that answer, we turn to a survey of 37 supermarket suppliers, compiled by UBS (courtesy of The Australian Financial Review).
According to the survey, 41% of suppliers reported Woolworths had "a better last few months", covering April through the end of June. At the same time, 32% thought Coles had a better last few months.
However, Aldi was the real front-runner here. Some 66% of respondents said Aldi had "gained the most market share" in the first half of 2023, while 20% said Woolworths had gained the most market share.
According to UBS retail analysts Shaun Cousins and Jarrod Chisholm, Aldi's strong performance comes as it regains market share lost during the pandemic, along with "the opportunity for [the retailer] in a higher cost-of-living environment".
Which brings us back to our headline question, are Woolworths shares or Coles shares more at risk from Aldi?
According to Cousins and Chisholm:
Across Coles and Woolworths, Coles is more vulnerable to market share loss to Aldi given its focus on private label, and the superior store network, execution and online offer of Woolworths.
How have Woolworths shares been tracking longer-term?
Atop the regular dividends, Woolworths shares have been strong performers longer term, gaining 49% over five years.
The Coles share price is up 42% over that same time.
