The continental hard discounters’ march on the UK was never going to make a major impact.
Our front page story this morning reveals how Aldi has struggled in UK since its 2008 peak, with a £93m pre-tax profit that year turning into a £54m loss last year. It’s an extraordinary reversal of fortune, and perhaps explains why the German company was so swift in dispensing with the services of not one but two managing directors during 2009.
Cast your mind back to 2008 and it seems as though Aldi and its rivals Lidl and Netto were seldom out of the papers. I’d like to think we didn’t get carried away with the hype in the way some of the nationals did, but there was no doubt they were growing their sales and capturing new shoppers as the banking crisis took hold. Tesco even felt forced to respond by launching its odd Discounter brands and adopting the slogan ‘Britain’s Biggest Discounter’.
However, a lot of the growth was mopping up the market share of the departed Kwik Save, and there wasn’t much sign that shoppers were sticking with the discounters once they tried them. The stores were really basic - in fairness to Aldi, theirs were much better than Netto and Lidl’s - they lacked key brands, and most importantly thing is they were barely any cheaper than Tesco or Asda for a weekly shop.
It did seem that the retailers themselves began to believe the hype. Aldi’s MD Paul Foley, who seemed like a very decent fellow, was out on the scene and in the papers a lot, which put him in a risky position as the company’s golden rule was always to keep out of the limelight.
The problem with replicating their success on the continent here was that UK shoppers are used to retailers which offer low prices also providing a decent environment and range, so why would they switch to shopping in a small store with a limited assortment and basic environment when they couldn’t even be sure they were going to save money?
it sounds as though Aldi’s new joint MDs Matthew Barnes and Roman Heini are addressing the shortcomings by investing in improving the stores, which makes sense. But they have a tough battle ahead. Netto has already thrown in the towel in the UK by selling out to Asda while Lidl has also made changes at the top. The discounters aren’t going away, but they aren’t going to change the face of UK grocery retailing.
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