Aldi UK looks set to consolidate its place as the UK's fourth-biggest grocer this year, despite 2021 results that showed a hefty profit decline, a GlobalData analyst has said.
Amira Freyer-Elgendy, consumer analyst at GlobalData, was commenting following the publication of Aldi UK's full-year results for 2021, in which the discounter saw operating profit fall to £60.2 million (€66.8 million), down from £287.7 million (€319.4 million) the previous year.
Value Proposition
According to Freyer-Elgendy, despite these underwhelming numbers, shoppers are currently flocking to the discounter to take advantage of its value proposition amidst a cost-of-living crisis.
"Value players are at an advantage in downturns – 14.2% of UK grocery shoppers say they are switching to cheaper retailers because of rising prices [according to GlobalData’s Monthly Tracker – August]," she said.
"The retailer absorbing the biggest proportion of switchers is Aldi (37%), followed by Lidl (33%). Many of Aldi’s new customers were taken from Morrisons, which was abandoned by 12% of switchers."
Private-Label Power
One factor that is helping to attract customers is Aldi's Specially Selected range, which saw a 29% increase in sales, an indication that while shoppers are switching to Aldi for price reasons, they also want to invest in more premium-tier products from time to time.
"We expect Aldi will continue to add new products to its premium lines to cater to shoppers who want to save money overall, but who will still be tempted to trade up occasionally," said Freyer-Elgendy.
"Aldi is planning further store openings, but its rate of expansion had slowed. It expects to open 16 further stores by the end of the year, though, and it is clearly determined to become not only the affordable option, but also the convenient one.”
And as for Morrisons? According to the analyst, while the retailer is responding with price cuts on popular items, it still "has a way to go before shoppers will recognise it as price competitive with Aldi".
© 2022 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
