Bloomberg reports on how German discounter Aldi continues to gain market share in the UK, "gaining market share from bigger rivals as millions of Britons search for cheaper bills on their weekly shop."
It is, the story suggests, "a repeat of the aftermath of the financial crisis when Aldi and its fellow German discounter Lidl stole shoppers from the likes of Tesco Plc and J Sainsbury Plc. This time, the British stalwarts have learned their lesson, bringing out more own-brand ranges and launching price matching campaigns against Aldi. The fight to maintain shopper loyalty is fiercer than ever."
But Aldi continues to grow: "In the three months to early September, Aldi gained about £64 million of sales from Tesco, £43 million from WM Morrison Supermarkets Plc, £41 million from Asda, £21 million from Sainsbury and £8 million from Lidl, according to Kantar data … An extra 1.5 million customers have visited Aldi over the past three months. When sales were up by at most the low single digits at most UK supermarkets, they rose 19% at Aldi and 20.9% at Lidl."
The keys, according to the story, is a limited assortment that is highly targeted in terms of its customers' priorities, and an approach to both low prices and value that seems in synch.
The story notes that "other supermarkets are reacting to the threat. Tesco price matches Aldi on more than 600 everyday items while Sainsbury does the same on over 200 products. Asda has its bright yellow Just Essentials range of own-brand products and even Marks & Spencer Group Plc is offering lower prices through its Remarksable value range including bread, milk and ground beef."
Expect no letup in these varied marketing approaches: "The squeeze on shoppers is showing little sign of easing," Bloomberg writes. "Grocery price inflation struck a record high of 12.4% in the last month, according to Kantar, and rising prices are still threatening to tip the UK into a recession."
- KC's View:
Read this as a cautionary note about that is likely to happen here in the US, especially if inflation persists and a recession kicks in. Companies like Aldi - I'd include on this list the likes of WinCo, Lidl, and Dollar General) are going to take advantage of the moment to build market share. They know that they probably won't keep all of that share when inflation subsides, but they'll come out with more customers and sales than they had going in.