Aldi’s record haul at The Grocer’s Own Label Food & Drink Awards this week will make uncomfortable reading for supermarkets, as the discounter walked off with a record 16 gold medals and 10 silvers - far more than nearest rival Tesco, let alone The Co-operative Group, whose solitary silver reflects a wider malaise.
As we explain in our analysis of the results, Aldi’s success is no fluke: astonishingly, consumers in particular now believe Aldi’s quality to be better than the major mults on almost every conceivable measure.
Now, more than ever, the question in supermarket boardrooms is: what to do? It’s taken a long time for supermarkets to wake up to the danger posed by the discounters, and Aldi in particular. After an early skirmish at the onset of the recession - when Tesco and Asda responded to the so-called ‘Aldi effect’ by repositioning themselves as ‘Britain’s Biggest Discounter’ and ‘Britain’s Biggest Pound Shop’ - retailers took their eye off the ball as Aldi’s form dipped through successive changes of heart, nerve and senior management. But for three years now, Aldi has been pinching share from the big four - worst affected in relative terms has been Morrisons - despite no website or convenience stores.
“Astonishingly, consumers now believe Aldi’s quality to be better than the major mults on almost every conceivable measure”
Adam Leyland, Editor
Sir Terry Leahy always took the discounters, and Aldi in particular, very seriously. In 2007, delegates at the World Retail Congress audibly gasped as he declared Aldi the retailer he most admired. But as Tesco’s marketing director when Aldi opened here in the early 1990s, he launched Tesco’s first Value range, precisely to counter the Aldi threat - “wrong-footing Aldi, possibly for the first time,” he noted in his memoirs.
Tesco also sought, in that recession, to “play Aldi at their own game - but even better… slowly driving greater efficiency into every part of [Tesco’s] business.” Initially successful, Philip Clarke has spent the past two years unravelling this no-frills approach. But the bigger irony is that Aldi has returned the compliment. Instead of promising record low prices on low-grade products, it’s upped its game, with a killer one-two of stunning quality… at knockout prices. Boom boom.