Aldi’s caviar plan to catch wealthy shoppers

28-Sep-2014 - Last updated on 29-Sep-2014 at 11:08 GMT

Aldi bosses Roman Heini (left) and Matthew Barnes (right) celebrate a 65% increase in profits

Aldi will attack the premium end of the food market by targeting wealthy consumers this Christmas, bosses have said, after announcing a 65% increase in its UK profits to £260.9M.

The German discounter’s sales rose by 36% to £5.3bn last year and pre-tax profits rocketed to £261M, according to its financial results for 2013 released today (September 29).

Aldi, which has its UK headquarters in Atherstone, Warwickshire, pledged to use low prices to further grow its market share, while boosting its premium range by more than a third to compete with the likes of Marks & Spencer and Waitrose.

Caviar, fresh crab and scallops

Caviar, fresh crab and fresh scallops will be used to lure wealthier shoppers who are also on the lookout for a bargain this Christmas, bosses said.

Any further price cutting from competitors Morrisons, Tesco, Sainsbury and Asda would be met with further discounts, said Matthew Barnes, Aldi’s UK joint md.

“Whatever our competitors plan to do, we know exactly what our response will be and our competitors do as well,” he added.

Discounting from the big four – Tesco, Asda, Morrisons and Sainsbury – had worked in Aldi’s favour as consumers were being encouraged to think more about what supermarkets charged, said Barnes.

Aldi’s business model was based on having a small range of 2,500 products, less than a tenth of what any of the big four offered.

It was also prepared to take a cut in profit margins to maintain its lead, said Roman Heidi, group md.

“We keep prices constantly low while keeping product quality consistently high, which is exactly what shoppers want.

‘Pay more for better products’

“They [shoppers] had become used to thinking you have to pay more for better products. We’ve shown them this doesn’t have to be the case,” he added.

Discounter pressure from the likes of Aldi and Lidl had proven troublesome for the big four so far this year, said Julie Palmer, retail expert at the business recovery specialist Begbies Traynor.

“With Aldi’s market share continuing to rise, it is evident that the big four supermarkets need more than just price cuts to regain their dominance.

“Consumers are getting savvier about their weekly shop and Aldi’s strategy of selling fewer product ranges, hence accruing less costs, coupled with clever marketing of its premium range, is clearly appealing to British shoppers,” she added.

Sainsbury was the latest of the big four to reveal new plans to take on the discounters and last week announced it would focus on consistent low pricing.

Sainsbury’s like-for-like sales would drop by 3.5%, predicted Shore Capital Analyst Darren Shirley ahead of the supermarket’s second quarter financial results.

The drop in sales was due to Sainsbury having higher prices to protect its profits, added Shirley.

Aldi stores in figures: