Is Aldi’s ‘record-breaking’ Christmas really that impressive?

In a familiar narrative for this time of year, Aldi this morning boasted of its “best Christmas ever”.

Sales were up 3.4% in the four weeks to Christmas Eve, according to the discounter’s trading update, which hailed a record 350,000 fresh British turkeys sold, along with more than 400 tonnes of British beef and almost three million British brussels sprouts.

But how impressive is it, really?

Conveniently, Aldi’s trading updates do not include volumes or like-for-like sales from continuously trading stores. It is thought to have opened about 30 stores in 2024, which could account for most of that 3.4% Christmas sales growth. The rest could be accounted for by wider grocery inflation, which was 2.6% in November, according to Kantar.

“Including new space, noting maturing stores from the prior year, it would suggest a flattish like-for-like sales performance,” says Shore Capital’s Clive Black.

“Maybe Aldi inflated a little behind the pack. It says it cut hundreds of prices but does not say how many went up – but even 1%-2% inflation would imply falling same-store volumes year-on-year.

“We would expect Sainsbury’s and Tesco, with virtually no new or maturing space, to be doing better than this performance.”

The 3.4% is also Aldi’s slowest Christmas growth since 2021, when the numbers were skewed by unusually high grocery spending the year before, thanks to national lockdown and the temporary closure of bars and restaurants.

Aldi vs Lidl: the discounter battle

In today’s results, Aldi said Christmas 2024 “capped another astonishing year for Aldi as it overtook Asda to become the country’s second-largest supermarket by shopper numbers”.

It was also a year that revealed how anything that provides Aldi or Lidl with a new and meaningful point of difference over the other can have an apparently dramatic impact.

Aldi’s year-on-year sales growth slowed to as little as 0.3% in July according to Kantar, before recovering to 2.1% by November.

Lidl’s sales growth slowed throughout the course of the year too, but not to nearly the same extent. It has been named as the fastest-growing bricks and mortar supermarket in Kantar’s monthly market update for 16 months in a row.

According to Lidl’s own Christmas trading update last week, its sales growth in the four weeks to 24 December was 7%, more than double that of Aldi’s. The update also said membership of its loyalty scheme – something Aldi doesn’t offer – was up by more than a quarter year-on-year, with 75% more customers taking advantage of its weekly discounts.

This is unlikely to be a coincidence. Lidl ran an advent calendar event in its loyalty app, which saw more than one million customers engage daily for surprises and promotions, driving loyalty and excitement throughout the season, it said.

Based on Lidl’s reported 7% total sales growth, it “probably hit between 3.5% and 4.0% like-for-like sales, with say 2% same-store volume growth”, according to Shore Capital’s Black.

A premium Christmas

Market share for both discounters has historically tended to dip slightly at Christmas as shoppers trade up to traditional supermarkets for the big occasion. A fuller picture of whether either has managed to buck this trend will emerge with Kantar’s Christmas grocery sales update tomorrow.

Certainly, Aldi has been trying. It “responded to evolving consumer preferences” by expanding its premium Specially Selected range to include less “traditional meats like goose and duck and seafood dishes like lobster and salmon”, says GlobalData retail analyst Aliyah Siddika.

The Specially Selected range saw 12% growth in the four weeks, according to Aldi’s trading update, while seasonal Christmas product sales rose by 10%.

This means that, despite being outpaced by Lidl, Aldi’s performance “remains impressive” thanks to it “successfully retaining its appeal among shoppers and encouraging them to trade up to its premium ranges rather than switch to mid-market players”, argues Siddika.

Aldi can also expect its year-on-year sales growth figures to benefit this year from the “weak comparatives” of its slow growth in 2024, says Black. Lidl’s will be tougher.

But there are no signs yet that Aldi plans to change its strategy of promising the same everyday low prices for all shoppers, without the complexity of a loyalty scheme.

“As we look ahead to the new year, which for many will mean the prospect of living costs rising again, many families will be nervous about what 2025 holds,” said Aldi UK CEO Giles Hurley in the trading update.

“Against this background, our mission remains clear: we will not only remain the UK’s lowest-priced supermarket, but we will ensure the price gap between ourselves and the traditional full-price supermarkets is as big as ever.

“Because with so much uncertainty, what our customers want to know is that whatever they need, they will make significant savings, week in, week out, by shopping at Aldi.”

Can Aldi rely on consumer nervousness to give it another boost, as it did in 2023, when its sales were consistently soaring and its market share broke double digits for the first time?

Black argues: “The narrative on price is more of the same, but it cannot get away from Aldi price matching [by the traditional big four].

“The reality is that the UK has gone through ‘peak Aldi’ in momentum and disruption terms.”