Aldi has launched an attack on Morrisons’ Price Crunch initiative as part of a new ad campaign.
The ad compares a basket of five branded products and one own label product purchased at Morrisons with a basket of six Aldi own-label equivalents.
Aldi says the Morrisons basket costs £18.19 and its own basket costs £11.42, or 37% cheaper. It reads: “When it comes to the crunch, Aldi win every time. Other supermarkets go up, down, all over the place. But Aldi have ‘everyday low prices’, so you know where you stand.”
Morrisons launched its Price Crunch campaign on 2 February. CEO David Potts said he was “cutting every penny we can” to reduce prices on over 1,000 products.
It also comes a month after Asda CEO Andy Clarke said he was taking “radical action” by spending another £500m on cutting prices, on top of the £1bn it announced it would spend over a five year period in 2013.
Speaking to The Grocer, Aldi CEO Matthew Barnes insisted Aldi’s new campaign was not a sign he was worried by his rival’s moves to get closer to him on price. “We felt it was the right time to set the record straight and cut through a lot of the baseless claims that are being made suggesting the price gap is being closed,” he said. “We simply will not let that happen. As the pressure is mounting on the competition, their rhetoric is being dialled up to convince their customers that the price gap is closing when it simply isn’t. Price Crunch was a big campaign for Morisons so we are responding in kind by reducing some prices to make sure the price gap is not eroded.”
Aldi also released data from Kantar Worldpanel this morning that said it was actually getting cheaper than rivals. Kantar said in January 2015 the average item at Aldi was 26% cheaper compared with the average price at eight rivals, including the big four, Waitrose, Iceland, Lidl and the Co-op. For the 12 weeks to 3rd January, Kantar said it was 29% cheaper.
“Our own internal analysis proves that, but we felt it was time to echo that with independent data from Kantar Worldpanel,” said Barnes. “We can say all we like to the public about the price gap, but this independent analysis emphatically proves it. Whatever the smoke and mirrors out in the market we are happy to let the independent data do the talking.”
Asked whether Asda could keep on investing millions in prices, Barnes said that was a “question for them, but we can keep going and we will do whatever it takes. We have invested huge margin over the last few years to keep our prices the sharpest and the best value and we will continue.”
As for how much of an impact Aldi’s own price cuts were having on that margin, Barnes refused to reveal a figure, but said it was “not immune to that. We are the most efficient business model but there have been stronger attempts by competitors to reduce the price gap. But our private ownership and efficient business model enables us to take a unique position and take a long term strategy.”
Barnes also insisted the price comparison made in the ad was fair, despite five of the six products in the Morrisons basket being brands while Aldi’s are all own-label. “Across the board there are several more examples,” he said. “And we do sell brands, they are just exclusive to us. And we will hold up our products against any brands in terms of quality. We won over 350 products awards last year, only second to Waitrose for best buys by Which?, and customers wouldn’t be coming to us in their droves us our product quality wasn’t comparable. So we believe it is fair.”
But a spokesman for Morrisons hit back, saying: “No one will be fooled by the way they have picked a handful of premium branded products such as Tropicana and compared them to their own-label products such as ‘Del Rivo’.”
Aldi also added it will open more than 80 new stores in 2016, taking its portfolio to over 700. The discounter says they will generate over £1bn in additional sales when opened.
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