Aldi has cut prices by an average 4% in the last six months, and 6% on its top-selling 100 products, as it battles to retain its discount credentials amid a bitter supermarket price war.
Matthew Barnes, who stepped up to become chief executive of the grocers’ UK and Irish business in April, told The Grocer trade journal that he was determined to maintain at least a 15% difference in price to mainstream supermarkets.
“They are taking us very seriously, because they are very concerned. And the price gap hasn’t narrowed, despite what they say. They try and fight us on price but they won’t win,” he said.
Barnes suggested that shoppers’ loss of trust in mainstream grocers’ prices had been one of the foundations of its success in the UK.
“Customers can trust us on pricing, we don’t wildly fluctuate and we don’t confuse them. It’s why millions of customers come through our doors, including half-a-million new customers this year, because they are fed up with the smoke and mirrors, and their lack of trust, in other retailers.”
Aldi is currently the fastest-growing grocer in the UK. Its sales rose 15% in the three months to 25 April when sales of the big four supermarkets - Tesco, Asda, Sainsbury’s and Morrisons - fell back.
The chain’s pace of growth has more than halved since a year ago, and is expected to fallto single digits by the end of this year as its most established stores reach their peak potential and price deflation continues.
However, Aldi and its fellow German discounter Lidl, are still expected to continue winning market share at a rapid rate. Aldi overtook Waitrose to become the UK’s sixth-largest grocer in March and Barnes made clear he expects to overtake the Co-op, to take fifth place, before long. “It’s well within our sights,” he told The Grocer.
Aldi plans to open more than 70 stores this year and a similar number next year, as the major grocers close stores and abandon plans for new outlets. It is also testing out small city centre stores, which couldenable it to expand in London, where it currently has few outlets.
A first such store in Kilburn, north-west London, is attracting 30,000 shoppers a week, with Barnes saying it was profitable and exceeding all expectations. “It’s been a struggle just to cope. I know it’s a lovely problem but it’s still a challenge to offer customers the in-store experience we want,” Barnes said.
He admitted that some customers were beginning to grumble about stores being too busy but said Aldi was “still the leanest, meanest, and most efficient out there”.
In a warning to mainstream supermarkets he said: “The market is changing and we will continue changing it. It’s similar to what we have seen in other countries, where the discounters weren’t taken seriously for years. That structural repositioning is beginning to happen here, although it’s by no means happened yet.”
