How Aldi became Britain’s fifth largest supermarket

Aldi
Aldi has signed up the Brownlee brothers to push its ‘Get Set to Eat Fresh’ programme

Aldi has overtaken the Co-operative to become the fifth largest supermarket in Britain for the first time.

According to figures from Kantar Worldpanel, sales at Aldi were up 12.4% year on year in the 12 weeks ending 29 January. That increase helped buoy its market share by 0.6 percentage points, giving it a 6.2% market share and putting it just ahead of the Co-op on 6%.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, says: “Just a decade ago Aldi was the UK’s 10th largest food retailer, accounting for less than 2% of the grocery market.  Since then the grocer has grown rapidly, climbing the rankings by an impressive five places.

“Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year.”

Much of Aldi’s success has come down to its simple proposition. The retailer recently topped Siegel+Gale’s Global Brand Simplicity Index for the fourth year in a row and marketing director Adam Zavalis puts its success down to a focus on simplicity that helps customers save time, as well as money.

READ MORE: Consumers will spend more on simple brand experiences

“We source the very best quality products, understand what size variants the customer wants and then offer the options they really need,” he says. “In this ever-evolving world with the time pressures we’re all under, we don’t believe that customers want to have to choose between multiple varieties of olive oil, for example.”

That focus has led to big shifts in how the big four supermarkets do business. Almost all have moved away from multibuys and discounting, instead opting for everyday low pricing in a bid to mirror the simpler proposition of Aldi and its discount rival Lidl. They have also reduced ranges, with Tesco cutting its SKUs by almost a third.

Matthew Barnes, CEO at Aldi UK and Ireland, says: “Aldi customers get products of comparable quality to the leading brands at prices that are significantly cheaper than any of our competitors. This unique offering is resonating with British shoppers and we are opening 70 new stores this year to help keep up with customer demand.”

Aldi’s marketing has also played a big role. Previously seen as cheap and cheerful, it has pushed its quality and sourcing in recent campaigns and that has had a big impact on consumer perceptions of the brand.

According to YouGov BrandIndex, Aldi’s Index score (which measures a range of metrics including reputation, quality and value) is up by a statistically significant 2.1 points over the past year, putting it third in a list of 26 supermarket brands behind just Marks & Spencer and Sainsbury’s.

Its quality and value rankings are also up over the past year, again by statistically significant amounts.

Aldi is also keen to position its brand as more than just a supermarket. It signed a deal with Team GB in 2015 to push its fresh fruit and vegetables.

And more recently it has signed up Olympic triathletes Alistair and Jonny Brownlee to give some high-profile support to its ‘Get Set to Eat Fresh’ programme that aims to reach 1.2 million young people in the UK by 2020 and “tangibly improve” the eating habits of three out of four of them.

Barnes explains: “At Aldi, we want to encourage the nation to eat fresh, healthy, quality produce and Get Set to Eat Fresh has allowed us to promote this message to families throughout Britain.”

Aldi’s growth has come at the expense of many of the top four grocers. While Tesco, Morrisons and Sainsbury’s have returned to sales growth, according to Kantar Worldpanel, their market shares continue to falter. This period marked the first time since July 2015 that Morrisons has seen its market share rise while Tesco and Sainsbury’s both declined.

Grocer % change in sales Market share
Tesco 0.3% 28.1%
Sainsbury’s 0.0% 16.5%
Asda -1.9% 15.6%
Morrisons 1.9% 10.9%
Aldi 12.4% 6.2%
Co-op 2.0% 6.0%
Waitrose 3.4% 5.3%
Lidl 9.4% 4.5%
Iceland 8.6% 2.3%

Despite being overtaken by Aldi, Co-op is also growing market share, with a 2% sales increase continuing a run of growth that stretches back to July 2015. The overall grocery market has returned to growth this year after years of deflation in part caused by aggressive cost cutting by the four major supermarkets in an attempt to see off the threat of Aldi and Lidl.

Total sales in the grocery sector were up 1.7% year on year, with eight of the nine major retailer seeing positive sales growth. The one outlier was Asda, which saw sales drop 1.9% although this was a slowdown from previous falls.

The post How Aldi became Britain’s fifth largest supermarket appeared first on Marketing Week.


Source: Marketing Week
How Aldi became Britain’s fifth largest supermarket

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