In the Which? October cost comparison survey, Aldi was the cheapest overall in a shop consisting of 48 popular groceries, costing £75.79, on average, beating rival discounter Lidl by £1.89.
Aldi was the cheapest overall in a shop consisting of 48 popular groceries, costing £75.79
The same shop at Waitrose was £25.38 more expensive. Since arriving in the UK, the two have taken a significant chunk of the market share from Tescos, Sainsburys, Morrisons and Asda, with the supermarket giants losing 170£ million in sales to the two German retailers in the last 3 months. Aldi even overtook Morrisons to become Britain’s fourth biggest retailer last month.
They keep their prices lower than competitors by being thrifty, essentially. The chains maintain low operating costs through a minimal customer experience and cost effective design principles like shoppers having to bag their own goods and pay for trolleys. They have smaller location sizes on average than the other supermarkets, meaning smaller inventories, lower property costs, and a higher return on investment. Employees are required to be both cashier, shelf-stocker and store stock. They also shun brand owned products; over 90% of their goods are private brands, which minimises marketing and distribution costs. On top of that, they stock a much more limited number of products than traditional supermarkets.
Lower costs on goods, combined with a smart marketing, and corporate responsibility programme appeals to both low and mid-range market, as well as Gen Z and millennial customers. I would think the discount chains, and perhaps their frugal business model, are likely to go through a strong period of growth in sales and popularity as the energy crisis raises the cost of goods further this year and next.
