Monday, 29 September 2014

Aldi and the UK price war in groceries

The UK supermarket price wars are intensifying as Tesco struggles with problems that range from hugely incorrect accounting to overambitious international growth.

Meanwhile, the discount grocer Aldi has been profiting from the latest round of price wars with the major grocery chains. Aldi's managing director says: 'The price cuts have encouraged consumers to think more about what supermarkets charge and have really shown that our everyday low prices can't be beaten'.

Everyday low prices, plus 'special buys' (announced via mobile app) that bring selected prices even lower, are helping to increase Aldi's market share week by week. Aldi is prepared to slash prices even further if necessary to attract new customers during the winter holiday shopping season.

In 2013, Aldi expanded by 42 new stores. In 2014, it is adding 54 new stores--and in 2015, more than 60 new stores. This runs counter to the current trend of retail chains slowing their store openings to focus on increasing revenues from existing stores.

However, Aldi has a definite growth strategy based on its competitive advantage of everyday low prices--and it will keep that advantage in the public eye no matter what competitors do. As its managing director says:
Whatever our competitors plan to do we know exactly what our response will be and our competitors do as well. We will not let them compete on price. We will not let them close the gap.