Aldi doubles down on British suppliers following strong Christmas results

Following today’s release of Aldi figures for Christmas Trading FY2020;

Thomas Brereton, Senior Retail Analyst at GlobalData, a leading data and analytics company, comments:

“The first major grocer to release resultsAldi has set out a high bar for the festive period, with growth of 10.6% over the period. Aldi points to its online Wine and Specialbuy offers (up 75% year-on-year), demand for premium products and instore alcohol sales as the major sources of growth (heavily compounded by the shift of consumer spend from foodservice and pubs during lockdown restrictions). Aldi has also taken baby steps into the world of online, offering click & collect (a venture it had been reluctant to attempt before COVID-19) as well as joining forces with disruptor Deliveroo to offer an on-demand service.

“But moving forward, online is not a business that Aldi want to depend too heavily on. Profitability in online has long been an issue, a problem amplified when also considering the discounter pricing model. While it is unlikely Aldi will remove online services, the pace of development will almost certainly slow post-COVID-19, as it looks to continue with its physical store expansion (target of 1,200 by 2025 from just over 900 currently). As part of these plans, Aldi recently pledged to spend an additional £3.5bn a year with British suppliers by 2025, solidifying its credentials as a UK grocer and appealing to shoppers that want to both shop local and spend less.

“But Aldi have a problem – a Tesco-shaped thorn in its side. As Tesco attempts to protect the UK food mothership, the market leader has spent the last 10 months calling out Aldi directly, plastering Aldi price match over aisles and products in a bid to bring back price-focused shoppers – a tactic that is proving fruitful, according to Tesco. If Aldi cannot hold on its carefully cultivated image of the UK’s cheapest supermarket, it will need to think more carefully about differentiation through product or service – skills that its rivals have spent years honing.”

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