Aldi: ‘Price cuts by big four benefit us’
Aldi claims that price cuts by the big four supermarkets have helped boost its growth, with sales in the first half of this year stronger than in 2013 as its average basket size continues to increase.
By Sarah Vizard
Group managing director Matthew Barnes claims that the decision by Tesco, Morrisons and Sainsbury’s to reduce price has encouraged consumers to “think more” about price and shown that its prices can’t be beaten. It cites data from Nielsen that shows it now has the second largest basket size of any supermarket at 17 items, behind just Asda on 18.8 items.
Aldi says sales increased 36 per cent to £5.3bn in the year to December 2013 while pre-tax profit increased 65 per cent to £261m. However, that profit rise is slower than 2012, when it was 124 per cent, as the grocer has had to react to price cuts by the big four, impacting margin.
Sainsbury’s is the latest supermarket to focus its marketing on price cuts, highlighting drops across 1,200 products. Morrisons, Tesco and Asda have already announced multimillion pound investments in price and marketing campaigns to communicate that.
Barnes says Aldi remains confident that its average basket is between £6 and £7 cheaper and that its prices are 30 per cent to 50 per cent lower than at the supermarkets.
“This adds up to big savings for our customers on their weekly shop. We have actually seen stronger growth in the first half of 2014 as the price cuts have encouraged consumers to think more about what supermarkets charge,” he adds.
Aldi claims this pick-up in sales is down not just to price but also to increasing shopper satisfaction. The brand came top in Which?’s customer satisfaction survey for the first time this year, scoring highly in price, fresh product quality, customer service and store environment and was first in YouGov’s mid-year list of the top 10 brands.
The grocer cites figures from Nielsen that show it attracted 1 million more customers in August this year compared to 2013 as a sign of consumers’ “satisfaction” with shopping at the discounter. Data from Kantar Worldpanel shows Aldi’s market share reached a record 4.8 per cent in the 12 weeks ending 14 September.
UK managing director Roman Heini says: “Aldi is not no-frills shopping. No-frills suggests that shoppers have to make a compromise and that they are less satisfied with their shopping. This is not the case at Aldi. People can get what they want and need in our stores and they are delighted by our overall offer.
“It is this level of satisfaction that is both changing how people are grocery shopping in the UK and propelling our growth.”
Aldi is planning to build on this growth with a nationwide expansion programme that will see it open 54 new stores this year and a further 60 next year, taking its total number to more than 600. The discounter plans to have in excess of 1,000 stores by 2022.
