At least, that’s what one Asda boss told a recent Westminster Food and Nutrition Forum, where he claimed supermarkets were footing the bill. But that will come as news to the many suppliers that are having to become even leaner to continue doing business with their demanding customers.
The trend of reducing prices in response to the discounters doesn’t show any signs of slowing – both in the UK and overseas. Tesco has improved its results by cutting prices. And the French supermarket giant Carrefour has slashed its prices even more than the UK's major multiples to win back shoppers from Aldi and Lidl.
Easier to deal with
But all this change may be beneficial for suppliers after all. At Food Manufacture’s Business Leaders’ Forum in January, most bosses said the discounters were easier to deal with than the big four. Perhaps it's just as well, as Aldi’s and Lidl’s presence in the UK is set to grow further. The pair will create 1,000 jobs when they each open new distribution centres.
And, if you think the rise of the discounter is isolated to Europe, you’re wrong. Aldi’s performance in Australia has won it 10% of the market on the eastern seaboard. In the US, Aldi will grow its store offering by 650 to 2,460 this year.
Yet, retailers in less developed countries shouldn’t fear. Aldi and Lidl seek only markets where grocery returns are higher than the global average.
With that in mind, the UK can expect to see Aldi and Lidl focus on doing better here; the US should prepare for Lidl’s entrance; and UK suppliers should get into bed with the pair while they’re still growing.