Hastings has welcomed a new Aldi store recently in Ore which is one of 60 that are part of the new expansion plans in the UK. As the rising supermarket celebrates its 25th anniversary in the UK, they are getting ready to take over the grocery market share and up their game against the established supermarket giants.
The rise of discounter supermarkets such as Aldi and Lidl has changed the way consumers buy their food because every customer, no matter the demographic, is now looking not just for a cheaper alternative but a more transparent and simpler shopping experience.
The “big four” which includes Sainsbury’s, Tesco, ASDA and Morrisons have been showing a slump in sales and as a result have had to close stores to compensate for their damaged balance sheets.
Aldi’s plans are ambitious as they hope to open a further 1.02m sq ft of shop space by 2022, which equates to around 1000 stores.
The German discounter store has now become the sixth biggest supermarket in the UK after knocking the long-established business Waitrose, who is in partnership with John Lewis, off their post. Aldi now takes 5.3% of the market share whereas Waitrose has 5.1%.
The main four supermarkets are being squeezed from both ends, seeing their profits fall from high-end supermarkets such as Waitrose and Marks & Spencer attacking from the top and Aldi and Lidl from the bottom.
Aldi has gained growth as shoppers have tried out new stores to save money due to prices rising at other supermarkets.
As part of the fightback, the popular supermarket chains now offer price comparison to keep customers returning. Tesco call theirs the ‘Price Promise’ and compare against all three big supermarkets, Sainsbury’s one is ‘Brand Match’ where they only compare with ASDA who in turn call theirs the ‘Price Guarantee’ and they compare with Waitrose as well as the other three main stores. Morrisons use a ‘Match and More’ card which not only compares with the three big supermarkets, but also Aldi and Lidl.
Customers will receive coupons or money off their next shop if they could have saved money at another store.
This system only works with the top four supermarkets comparing against each other, excluding Morrisons, and this could be why customers choose the cheaper option, as they know they are guaranteed a cheaper shop.
Consumers now use Aldi and Lidl for their main weekly shop but still buy products from the larger supermarkets if the cheaper chains do not stock them.
ASDA is owned by the global discounted store Wal-Mart, who is the biggest company in the world by value, which means that the business is able to lower prices to attract customers away from Tesco and Sainsbury’s.
ASDA currently has 17.1% of the market share, still behind Tesco at 28.4% but with Tesco’s recent problems of falling profits and extra store closures, ASDA could sneak in up to top if the German discounters do not beat them to it.
Whichever way you look at it, the market is definitely changing and it’s doing so rapidly as more consumers vote with their wallets.