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The supermarket chain Morrisons was the first the cut diesel prices to below £1 a litre on Sunday and the other three big supermarkets also dropped prices on Monday.

Petrol, which is usually cheaper than diesel, was reduced below £1 a litre in the weeks before Christmas and these cuts show the further falls in the price of oil. Asda currently has 277 filling stations and said that it was the first supermarket to cut the price of petrol to below £1 a litre in November. Morrisons also stated this.

The price of oil is at its lowest for 11 years and Morrisons’ cuts were its cheapest since 2009. UK Brent crude oil is trading at just below $38, which is £26 per barrel. This means it lost 35% over the year.

About 75% of the price of UK fuel goes to the Treasury in duty and VAT and the remainder goes on refinery costs, distribution and the fuel retailers’ profit margins.

According to the motorists’ organisation, the forecourt price should have been cut earlier seeing as the wholesale price of diesel has been 2p lower than the wholesale price of petrol. This started a couple of weeks before Christmas and the organisation stated that more miles were driven in the UK on diesel than petrol.

Sainsbury’s is charging slightly more at 99.9p per litre whereas Morrisons, Asda and Tesco are charging 99.7p.

The discounter supermarkets Aldi and Lidl have taken another step towards victory as their joint grocery market share now stands at 10%.

Analysts Kantar Worldpanel said that Aldi’s market share was 5.6% in the 12 weeks to 8 November and Lidl’s 4.4%, showing that their joint market share has doubled in the last three years.

The discounters are on the rise but Sainsbury’s has now taken the second spot below Tesco, meaning it has had an increase in sales and is now ahead of Asda.

Sainsbury’s owns 16.6% of the UK grocery markets but Tesco still remains the UK’s largest supermarket with 27.9%.

Asda has taken a tumble as sales fell 3.5% in the latest quarter from the year before, which is more than any of its main competition. The supermarket has 16.4% of the market share.

Due to the continuous growth from the discount chains, the big four supermarkets have resulted in a price war against each other.

It could be difficult for supermarkets to compete with Aldi, whose sales rose 16.5% in the latest quarter compared to the year before, and Lidl whose sales increased 19%.

Tesco’s sales declined 2.5% from the year before while sales at Morrisons fell by 1.7% but sales at Waitrose and the Co-operative have increased.

Sainsbury’s has reported a fall in half-year profits due to price wars and the challenges from discounted supermarkets.

For the 28 weeks to 26 September, underlying pre-tax profits fell by 17.9% to £308 million and the company also reported it seventh consecutive quarter of falling underlying sales at the end of September.

This result is lower than last year as the figure then was £375 million but the result is also its lowest first-half profit since 2010 however, the good news is that it was still a better result than analysts expected.

Sainsbury’s is doing well on the clothes front, showing a sales increase of almost 10%, while food sales declined by nearly 1%. The business said that retail sales, which does not include fuel, were down 0.1% and like-for-like sales fell by 1.6%.

Although the supermarkets have declines slightly, convenience stores have had sales growth of nearly 11% and online grocery orders showed sales growth of 7%.

The constant battle between both the big four supermarkets and the discounters means that the competition is heating up even more, especially with Christmas drawing in.

 

Many customers will walk into shops and wonder why Christmas stock is out already, especially considering that Halloween hasn’t come and gone yet. Cards, jumpers, advent calendars, you name it and it is likely that somewhere it’s already being sold 3 months ahead.

There will be many struggles over Christmas for customers such as busy periods and not being able to shop with ease, not knowing what to buy someone else or even trying to find the right priced shops can be difficult. The main realisation over Christmas however, may not be the problems customers face but instead, it’ll be the supermarkets.

The German discounter supermarkets such as Aldi and Lidl are already on the rise and with Christmas coming, who knows how much profit they will make compared to the big four. It is safe to say that Tesco, Asda, Sainsbury’s and Morrisons may have been in the lead once and still are but they are also gradually losing sales growth.

Aldi and Lidl provide much cheaper alternatives and it is getting much more difficult for the bigger supermarkets to compete with low prices. Christmas especially will be a time when people want to stock up, buy presents and get more for their money and the discounter supermarkets will be the place to get better value. Lidl has already started selling advent calendars and boxes of Quality Streets and if anything, they will be cheaper even if it is by a few pence.

The discounters are not just beneficial for the customers but also for employees. Recently it was announced that from October, Lidl would be the first UK supermarket to pay the minimum wage as recommended by the Living Wage Foundation. Employees would earn a minimum of £8.20 per hour across England, Scotland and Wales. However, in London they would earn £9.35 per hour. To add to that, Lidl also said that if the Living Wage Foundation were to change this in its annual announcement in November, it would adjust the minimum wage again.

There will always be room for the more expensive supermarkets such as Waitrose because not everyone goes for the cheapest price. However, the majority wants quality and if the discounters can provide that, there is no reason why they wouldn’t come out on top.

The UK’s fourth largest supermarket Morrisons is cutting its prices of 200 items by up to a third. The firm has said that many everyday products will be cut in price and this is an attempt to fight the battle between the big four supermarkets and discounter stores such as Aldi and Lidl.

Aldi and Lidl has become a main supermarket for many and Morrisons, Tesco, Sainsbury’s and Asda are paying the price for not only the rise of these discounted supermarkets, but also the rise of online shopping. Morrisons has been hit particularly hard and plans to cut the price of four pints of semi-skimmed milk by 11%, pricing it at 89p whilst also lowering the price of some bread brands by around 21%.

2014 was a bad year for Morrisons as its profits halved, which meant that this was their lowest level for eight years. Despite this, the supermarket said it would commit a billion pounds over the next three years to lowering prices, which should make consumers happy. This was a move that rival firm Asda also made, as it committed £300 million to lowering prices in the first three months of the year. Not only this, but Sainsbury’s continues to invest £150 million to reduce the cost of 1,000 products and Tesco is dropping prices on 2,500 products as well.

Compared with 2014, a typical basket of day-to-day items is now 2.1% cheaper and all the major retailers offer cheaper like-for-like goods, according to analyst Kantar Worldpanel.

Although the big four supermarkets are doing all that they can to stay in power and compete in an ever-growing market, Aldi and Lidl are gradually gaining more of the market share. Lidl has captured 3.9% of the market share, which is a new record high for the company and Aldi has increased its share to 5.4%, according to Kantar figures up to 24th May.

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.

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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.

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