Christmas trading and the Aldi effect

Aldi is setting the agenda for UK supermarkets as its discount approach continues to drive sales, with Christmas trading statements telling the story.

Why it matters

Last September Aldi became the fourth biggest supermarket in the country, behind Tesco, Sainsbury’s and Asda. One of the responses of the market leaders has been to price-match products in their own stores and on their own websites to compete with Aldi. 

Over the last couple of years this has become a selling point for Tesco and Sainsbury’s, reinforcing their value-for-money argument while offering a less crowded shopping environment than in the discounters’ smaller stores.

But the constant repetition of ‘Aldi price match’ arguably does more for Aldi than it does for Tesco or Sainsbury’s – a form of free marketing that may also suggest prices for non-price-matched products are higher.

“To have the two biggest players directly calling Aldi out as a price benchmark in a cost-of-living crisis is going to be a marketing case study in years to come,” one media buyer told the Grocer. 

The Christmas numbers

• Aldi reported sales up 26% year on year in December, thanks partly to new store openings across the year; its market share is now 9.1%, up from 7.7% a year ago.
• UK like-for-like sales at Tesco were up 7.2% over the six-week Chrisrmas trading period, with market share maintained at 27.5%
• Sainsbury’s reported Christmas sales up 7.1% and Christmas quarter underlying sales up 5.9%.

The price-match numbers

• Tesco’s Aldi Price Match now applies to over 600 key products.
• Sainsbury’s recently increased the number of such price-matched products by a third to 310, according to the Grocer; nearly half of its top 50 lines by volume sales are now price-matched.

Key quote

“We understand money will be exceptionally tight this year, particularly as many people wait for Christmas bills to land” – Simon Roberts, Chief Executive of J Sainsbury plc.

Sourced from The Grocer, Tesco, Sainsbury’s, Aldi , Reuters, Guardian