Photo courtesy of Aldi

Aldi’s move into Big Four shows power of discounting, inflation

Produce Business report

Although Aldi’s rise into the Big Four of UK supermarkets ahead of Morrisons was not a surprise given its surge in the past two years, it nonetheless showed the power of discount chains in a budget-crunched sector for consumers.

With inflation soaring to 12.4%, Aldi pulled down a 9.3% share to leap ahead of Morrisons by just two percentage points in the week ending 4 September, but there may be no turning back now for the retailer that again was hailed as the cheapest supermarket to shop in the UK. Tesco continued to be the far-and-away overall leader at 26.9%, with rivals Sainsbury’s (14.61%) and Asda (14.1) chugging relatively far behind. But don’t overlook the strides made by Lidl, either as it moved up to 7.1%. Co-op has secure a 6.5% share, ahead of Waitrose (4.7%).

With consumers more discerning about their spending but still increasing their tabs at grocery stores nationwide, Kantar notes that they are poised to outlay an additional £571 this year to more than £5,000 because of rising costs. It makes sense that Aldi, given its low, low prices would make this leap now, and that those like Tesco would continue to try to price-match or offer other measures to try to keep their customers coming back. One of them is turning to own label.

“In what is a fiercely competitive sector, supermarkets are reacting to make sure they’re seen to acknowledge the challenges consumers are facing and offer best value, in particular by expanding their own-label ranges,” said Fraser McKevitt, head of retail and consumer insight for Kantar’s Worldpanel Division in the UK. “Their efforts seem to be well received by consumers with sales of the very cheapest value own-label products up by 33% this period versus a year ago and nearly one in four baskets containing one of these lines.”

The good news is that shoppers are willing to spend, says McKevitt, highlighting that sales have increased for three straight cycles and recovering well from the COVID-19 pandemic with a 3.8% increase over the past 12 weeks.

Aldi has been one of the biggest drivers. In that span leading up to Sept. 4, Aldi saw its sales jump by more than 18%.

“We know that so many families across the UK are feeling the pinch, with many unsure of what the future holds,” said Julie Ashfield, managing director of buying. “At Aldi, we’re dedicated to keeping costs low for our customers, without compromising on the high quality they’ve come to expect from us. We’re so happy to be named the UK’s cheapest supermarket yet again and are thrilled that our commitment to the lowest prices continues to be recognised.”  

Not to be outdone, Lidl’s numbers were even better at nearly +21%.

“Aldi has done well to expand its shopper base, supported by consistent store openings, and with 14.2 million consumers visiting the grocer in the past three months,” McKevitt noted. “Meanwhile, for the fourth month in a row Lidl was the fastest growing grocer and recorded its strongest sales performance since October 2014.”

It’ll be interesting to see whether the trends will continue. After all, the run up to schools opening probably led to additional spending. Across the board, UK supermarkets did well during the past 12 weeks, although not as well as the discounters. Iceland’s numbers jumped 5.8%, Co-Op leaps 2.7%, Asda rose 2.2% and Tesco was up 1.9%.



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