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Aldi muscles in on UK supermarket Big Four

05 April 2019

Estelle Alley, Retail Trade Marketing Specialist, GB Market, Bord Bia – Irish Food Board

 

The discounter Aldi has been making headline news in the UK Grocery sector in the past two weeks, as it opens a new ‘Local’ store format. Aldi continues to outperform in the UK grocery market. It is the fastest growing retailer and is fast approaching the number four position in the market.

 

Aldi has launched a new smaller format ‘sub brand’ called Aldi 'Local' in Balham, London. The discounter’s new format is less than half the size of a typical store, around 600 sq. meters, and has a reduced range. There are around 1,500 SKUs, compared to the 1,800 in a standard store. In order to tailor the 'Local' branch to its city location, ‘Special Buys’ and larger pack sizes have been removed from the range. It has been designed to offer a more convenient shopping experience in the city environment.

 

This is not Aldi’s first move into convenience, as it has four other small footprint stores in London, but it’s significant that it decided to badge this new opening under a sub-brand. It has been suggested therefore, that Aldi is confident it can take this format forward and will be looking for new locations.

 

Research by trade magazine The Grocer, found that a basket of 20 everyday products being sold at the first Local outlet in Balham was just 3% more expensive than a standard Aldi branch. Nine of the items were slightly more expensive, including a large whole chicken, a Specially Selected cottage pie, and Snackrite tortilla chips.(Hawthorne, 2019)

 

Price continues to be the big focus in UK Grocery, especially among Tesco, Sainsbury’s, Asda and Morrisons. This particular new Aldi Local Store is around the corner from a full sized Sainsbury’s store. If Aldi can keep their price differential to this level or below compared to their bigger stores, Aldi Local poises a new and significant threat to Sainsbury’s and the other Top 4, as well as other convenience stores, as the price differential will be even more marked.

 

In terms of overall performance in the UK Market, the discounters continue to grab market share from the Top Four. During the 12 weeks to 24 March 2019, overall supermarket sales grew 1.4% year-on-year (IGD, 2019). According to Kantar, Aldi remains the fastest growing retailer at 10.6%, reaching a record market share of 8%, and fast approaching Morrisons’ share at 10.3%. Lidl also continues to grow, at 5.8%. This means the two discounters’ overall market share is now 13.6%. Tesco performed well, being the fastest growing of the Big Four at 0.5%, with Sainsbury’s in contrast, continuing to struggle at -1.8%.

Aldi muscles in on UK supermarket Big Four

Aldi muscles in on UK supermarket Big Four

 

References

Hawthorne, E. (2019). Aldi Local 3% more expensive than regular Aldi store. Retrieved from https://www.thegrocer.co.uk/aldi/aldi-local-3-more-expensive-than-regular-aldi-store/591892.article

IGD. (2019). Kantar: GB market shares. IGD.