retail news in context, analysis with attitude

In the UK, the Mirror reports that discount grocer Aldi’s operations have suffered from a major reversal, moving from the equivalent of a $148 million (US) profit in 2008 to an $86 million (US) loss in 2009. The paper quoted experts as saying that the swing reflects the fact that “recession-hit customers who had flocked to budget supermarkets are now returning to upmarket rivals like Sainsbury's and Waitrose.”

However, a spokesman for Aldi addressed the question by saying, “We are confident our continuing investment will lead to increased turnover and profitability.”
KC's View:
This could be an aberration. But it also might not be.

The circumstances are different and the companies are different, but when I first saw this story I thought about some of the moves they’ve been making over at Supervalu, where new top management has been putting a greater emphasis on the Save-A-Lot brand. At the very least, one has to wonder if the Aldi/UK numbers indicate that there could be a strategic flaw in this approach.