Big four retailers will never beat Aldi on price
Sainsbury, Tesco, Asda and Morrisons are fighting a losing battle when it comes to beating Aldi because its costs remain low as it stocks mostly own-label products, claimed Dr Heiner Evanschitzky, professor and chair of marketing at Aston Business School.
“This is a question of efficiency and meeting consumer demand without the frills,” she said.
“A typical Aldi stocks around 2,000 products, whilst a typical big four retailer stocks 10 times as many.
Never compete on price
“This bulky, outmoded style means that the big four struggle with an underlying cost-base and will never be able to compete on price.”
Aldi benefits from being a family-run business that does not have to answer to shareholders, allowing it to take a more long-term strategic view on the market, she added.
Its meteoric rise in Britain mirrors its success in its native Germany, where traditional retailers have tried – and failed – to fight Aldi on price for the past 20 years, Evanschitzky claimed.
“Instead of competing on price, retailers need to be more creative,” she suggested.
“Quality, convenience, location, store appearance and service are all vital to keep today’s shopper interested.
“The discount brands will always be there for the discount shopper, but a significant chunk of UK consumers value quality and service above just what’s on the price sticker.
“Don’t fight Aldi on their home turf, fight them on your turf – give shoppers more choice so everyone gets the supermarket experience they’re looking for.”
Aldi posted a whopping 65.2% rise in pre-tax profits to £260.9M for the year to December 31 2013. Its group turnover rose by over 35% to £5.27bn.
Profit rise
The profit rise comes as Aldi and fellow German discount chain Lidl took an ever-bigger market share from the big four retailers.
Morrisons launched its ‘Match & More’ scheme promising that if a comparable shop was cheaper at Aldi, Lidl, Tesco, Sainsbury or Asda, customers would receive the difference back in points, earlier this week.
Meanwhile, city analyst Shore Capital warned the discounters’ surge could be about to implode as the big four took action to tackle them.
