It’s been a big year for Aldi. Buoyed by the cost of living crisis, its market share has grown in bounds not seen since before the pandemic, culminating in it recently replacing Morrisons as the UK’s fourth-biggest supermarket.

The end of the big four? Aldi UK & Ireland CEO Giles Hurley doesn’t see it that way.

“I think there is still very much a big four,” he said as Aldi announced its 2021 financial results this morning. “Big shop floors, big brands and big prices frankly. That’s a club we will never, ever be part of and that’s why shoppers are switching shopping habits in their droves and coming to Aldi.”

Nevertheless, Aldi attracted more than 1.5 million new customers in the 12 weeks to 4 September based on Kantar data, and behind those headline numbers it was seeing further “unprecedented” changes in shopping behaviour, Hurley said.

So what are the biggest shifts the discounter is witnessing?

Switching

Hurley cited figures today showing Aldi benefited from £252.7m in spend switch from other supermarkets in Kantar’s latest 12 weeks. As we’ve previously reported, the biggest damage was inflicted on Tesco, which saw £63.6m disappear, but even Lidl was not immune to the shopper exodus, losing £8.1m in spend to its arch-rival.

Lidl appears to have suffered availability issues in recent months, with its Twitter team fending off regular complaints from shoppers in recent months about empty shelves.

Hurley said: “The partnership we enjoy with our suppliers is critical to our success,” pointing to Aldi’s recent first-placed ranking in the Groceries Code Adjudicator’s annual survey for the eighth year in a row.

“We fundamentally believe these relationships should be based on fairness, trust and longevity, providing certainty and security now more than ever. And even during this challenging period of managing the impact of inflation, we will continue to build long-term relationships with suppliers, and pay them a fair price, while helping customers with the cost of their food shop.”

The decline of brands

But the most significant switch is by product type. “There is an unprecedented move within the grocery market, where shoppers are moving from brands to own label,” said Hurley. “That is the most significant shift we’re seeing.”

As a retailer for whom own label comprises 90% of sales, it meant Aldi was “seeing growth in every category and every tier,” he said.

“Since the start of the year, grocery branded sales across the market have fallen by 11%, while own label sales now account for more than half of total grocery sales,” he said.

“Right across our exclusive Aldi brands, we are seeing significant volume growth.

“For example, volume sales of our Mamia baby brand are up 20%, compared to a 1.3% decline in the overall baby category.

“It’s a similar story for health & beauty brand Lecura and our fresh and cooked meat and poultry brand Ashfields.

“Sales volumes of our Specially Selected range are up 29% in the last 12 weeks, as customers switch from the most expensive supermarkets in search of more affordable premium quality food.

“And we think this shift from brands to own label will accelerate because of the savings that can be made.”

Bigger baskets

As a whole, the end of the pandemic has seen a reduction in basket sizes, as shoppers get out more. Not so at Aldi. Hurley said an Aldi shopping basket had grown to “almost 20 items”, making it “the largest basket of all the supermarkets”, worth about £26, though he didn’t put a number on its size last year or before the pandemic.

“What I can tell you is that our basket now is bigger than it was before the pandemic, demonstrating our existing shoppers are consolidating their shop at our store. They’re spending more, they’re buying more and they’re using us as a first-stop shop.”

The consolidated Aldi shopping trend was evidenced by the areas with greatest growth, Hurley said. “In areas that form part of a main meal – areas like fresh meat, fresh beef, fresh chicken – we’re seeing particular growth, and I guess what that signals to us is that customers are choosing us as their main shop or their first-stop shop.”

At the same time, Aldi was seeing “more price checking” by customers, “more fixed budgets, and many people only buying what they need for now”.

“In this new reality, value has replaced convenience as the number one consideration when choosing where to shop.”

Indeed, Aldi took £3.2m in spend from Tesco’s convenience operation in Kantar’s latest 12 weeks, and £2.3m from Sainsbury’s c-stores, he added. 

The online slowdown

As reported by The Grocer last week, Aldi is also taking spend from other supermarkets’ online operations. Online accounted for 19.4% of Tesco’s losses to Aldi in Kantar’s latest 12 weeks, 28.4% of Asda’s, 18% of Morrisons and 15.2% of Sainsbury’s.

Nevertheless, Aldi was pursuing its trial of click & collect in 200 stores and views online as a significant part of the market, Hurley said.

“It’s worth noting that online penetration is still well above where it was before the pandemic,” he said. “Pre-pandemic it was around 8% market share. It’s now around 11%.

“It has dropped off but it’s still a significant part of the market and through our trial in 200 stores we’re continuing to learn and develop our business and we’ve always said that we want to try and serve customers wherever their needs are.”

That’s really the only thing holding Aldi back right now: it cannot guarantee to be wherever its shoppers want it to be, with construction and planning issues, and a shortage of suitable sites meaning it is set to miss its historic target of 1,000 stores by 2022. That 1,000 figure will not now be reached till some time in 2023 and with all the delays means they will need to open stores at the rate of 100 a year (double its pre-pandemic rate) to hit its 2025 target of 1,200. 

So Aldi isn’t getting it all its own way. But the wind is back in its sails.  

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