Monitoring Desk
LONDON: Britain’s big supermarkets have said that they have never been more competitive on price, yet their customers are flocking to German-owned discount stores like Aldi and Lidl.
And the discounters’ supermarket sweep still has a long way to run, industry executives say, with Aldi UK CEO Giles Hurley pledging Britain’s lowest prices “no matter what”.
That is forcing Britain’s major players – market leader Tesco, Sainsbury’s Asda, and Morrisons – to cut more costs so they can keep a lid on prices and cling on to shoppers who have been hit by a cost-of-living crisis.
“Over the Christmas period, shoppers switched 58 million pounds of purchases to Lidl from Tesco, and Sainsbury’s,” Lidl GB CEO Ryan McDonnell told Reuters. “This is not just from customers visiting new stores.”
The discounters proved the winners over the festive period, luring shoppers from all the traditional groups, with Aldi and Lidl’s December sales rising 26 percent and 25 percent, respectively.
The German duo already grabbed more than 16 percent of the British market between them, but analysts, academics, and grocery executives expect to double within a decade as they spend hundreds of millions of pounds to expand.
Aldi is targeting 1,200 UK stores by 2025 from its current 990, and Lidl is aiming for 1,100 from more than 950.
Britain’s incumbents were struggling to compete in part due to the scale of the two relative newcomers, which between them are present in more than 30 countries, including the United States (U.S), where Aldi, in particular, is thriving.
The discounters’ size guarantees better terms when talking supplier deals, and they are able to take a longer-term view on profit because they are privately owned and don’t have to worry about shareholder returns or stock prices.
Supermarket sector in different nations
The discounters hold more than a third of the supermarket sector in nations such as Germany, Denmark, Poland, and Norway, and the British shopping landscape is likely to follow suit.
“The UK would model to what several of the European nations have,” Leigh Sparks, professor of retail studies at the University of Stirling in Scotland, told Reuters.
Aldi United Kingdom, owned by Aldi Sud, is now Britain’s fourth largest grocer with a market share of 9.2 percent, according to `researcher Kantar; Lidl, part of the Schwarz Group, is the sixth biggest with 7.1 percent.
