It would be all too easy for rivals to dismiss the presence of lobster tails on Aldi’s burgeoning product list as a PR gimmick.
It would be all too easy for rivals to dismiss the presence of lobster tails on Aldi’s burgeoning product list as a PR gimmick if it wasn’t so indicative of a retail strategy that has added 1 million customers from larger competitors in the
Aldi UK this week reported a 40.6% increase in sales for the year ended December 31, 2012, and pre-tax profits more than doubled to £157.9m. It’s a success that has come at the expense of all four of the country’s biggest grocers with the apparent exception of Sainsbury’s.
Like much of the rest of the discount sector, Aldi has been the beneficiary of tightening belts during the economic downturn as shoppers sought to cut costs. But it was received wisdom in many corners that as confidence returned, Aldi’s no-frills model would be exposed.
However, while it is still unable to compete in terms of choice or service with its larger rivals - points of difference leaders such as Tesco and Asda will surely attempt to leverage further - Aldi’s performance as the economy has stabilised tells another story.
Discount shopping became ingrained during the downturn - Aldi’s average basket size now sits only slightly below grocers such as Sainsbury’s and Morrisons - and few believe consumer behaviour is set to change once growth returns in earnest.
Moreover, this attitude is increasingly mainstream among more affluent shoppers as well as Aldi’s traditional heartland.
And here it is not alone, with a fifth of Poundland’s sales now estimated to come from the AB socio-economic group.
The geographic mix of Aldi’s store expansion plans is evidence of this broadening appeal. But the value grocer’s great trick has been to adapt its proposition over the last two years to tap into the trends.
It has widened its product mix, understanding that “value” can be as appealing to those whose shopping lists include Serrano ham and the headline-grabbing lobster tails, as those who still want to just shop for grocery basics.
This evolution not only allows it to strengthen its new-found relationship with the UK’s middle-class but will help ensure the grocer is not left behind as the pressure on its customers’ wallets eases.