Multiples take the battle to the LADs

By Rick Pendrous

- Last updated on GMT

Aldi is in the sights of the multiples
Aldi is in the sights of the multiples
Aldi is beginning to face stiffer competition from fellow limited assortment discounter (LAD) Lidl and from the value-based multiples Tesco and Morrisons, according to city analysts.

The German discounter is popular with many shoppers and deserves considerable credit from a commercial perspective in identifying and meeting the needs of many households to cut their expenditure and save money, said Shore Capital’s Clive Black and Darren Shirley.

However, Black and Shirley said Lidl had “opened clear blue water”​ with Aldi through its fresh bread, premium wine and De Luxe higher category range.

At the same time, Tesco and Morrisons had identified where Aldi and Lidl had been most effective with British shoppers – notably in fresh and chilled food – and were starting to address price differentials, they claimed.

Venom in Aldi’s price messaging

“We note the venom in Aldi’s recent price messaging and in particular its referencing to Morrisons’ Price Crunch initiative,”​ said Black and Shirley. “Morrisons, under the leadership of David Potts, is trying to reconnect with disenfranchised customers, an exercise followed in intention and aspiration by Dave Lewis at Tesco and Andy Clarke at Asda.”

They added: “Potts is ploughing a more independent price furrow as part of his journey, one that is focused upon Morrisons’ customers and more effectively utilising the group’s own supply chain.”

Some of the problems facing the LADs related to own-label products, such as butter, where brand “mimicry​” was common, they claimed. Black and Shirley cited the example of Aldi’s price messaging that compared its Norpak butter with Arla’s “high value dairy product”​ Lurpak, sold by Morrisons, rather than cheaper Morrisons own-label butter products.

Farmers protesting                    

Black and Shirley called on the Advertising Standards Authority to “stamp out such false impressions”.​ They also questioned why UK farmers were not protesting against Aldi highlighting the virtues of its cheap imported butter.

The entrepreneurship of the LADs had transformed the British grocery trade and they were now firmly placed on the scene, with a market share of around 10%, Black and Shirley claimed.

“Their price focus can be expected to continue, but the reality is that the superstore groups have also commenced a journey where they are leaner, through central and store-based operating cost cuts,” ​they said.

Multiples were becoming more price competitive as these savings and gross margin investment helped them re-connect with customers, Black and Shirley added: “We would expect those LADs to sustain their pricing lead but for the differentials on fresh and chilled foods and proprietary brands to narrow.”

Related news

Show more

Follow us

Featured Jobs

View more

Webinars

Food Manufacture Podcast