Consumers win in UK supermarket wars as discounters continue to expand

By Erin Smith

Published: 12 November, 2014

Consumers are coming out ahead as the UK supermarket wars rage on and another discounter commits to expansion in the UK's highly competitive retail market.

Aldi's expands in the UK AldiAldi announced its plans to double the number of UK stores and create 35,000 new jobs

Consumers are coming out ahead as the UK supermarket wars rage on and another discounter commits to expansion in the UK's highly competitive retail market.

The biggest and most immediate effect of the current price wars is that consumers are saving money across the board due to the lower prices being offered by retailers.

According to the most recent report by Fraser McKevitt, consumer insight consultant at Kantar Worldpanel: "For the the first first time in our recorded data shoppers are paying on average less for a typical like-for-like basket than they did a year ago."

With plans for more discount outlets to open across the UK before the end of the year, there is little sign of the price wars coming to an end in the near future.

Earlier this week Aldi promised to expand its UK presence, saying it will invest £600 million to grow its estate by 550 stores within the next eight years. By 2022, this could translate to 35,000 new jobs within the UK.

Matthew Barnes, group managing director of Aldi UK, said: "Our expansion plans mean that we can accommodate growing shopper numbers, while ensuring that there is an Aldi store only a short drive away from people, no matter where they live in the country."

In June this year Lidl, a German-based discounter, announced it would be investing £220 million this year alone to open another 20 stores in the UK by the end of the year. Lidl currently has just over 600 stores and eventually hopes to build up an army of 1,500 stores across the UK.

According to the Kantar Worldpanel figures covering 12 weeks ending on 12 October, 2014, Aldi and Lidl were still demonstrating large growth within the sector.

McKevitt said: "Aldi, up 27%, and Lidi, up 18%, continues to grow. Attracting new shoppers and persuading existing customer to reward them with a greater proportion of their weekly shopping."

Though Aldi and Lidl have both been successful, the environment is still tough, even for discounters. "It has been the fifth month in a row that their combined growth has declined. But with combined sales up 23% that won't provide much comfort to their competitors," said McKevitt.

Aldi and Lidl have taken the UK supermarket sector by storm within the last year, despite a still relatively low market share compared to other supermarket behemoths like Tesco and ASDA. According to Kantar figures, Aldi's market share is 4.8% and Lidl's market share is 3.5%.

Sainsbury's chief executive Mike Coupe, speaking as the group's announced its half-yearly results with underlying profits down 6.3%, said: "It is an incredibly challenging environment. The market conditions are the most challenging I have seen in my 30 years in the industry. We have a perfect storm of things happening around us."

Coupe agrees that the supermarket price wars are far from over. He said: "The next 18 months to two years will continue to be challenging. We don't expect that the current environment will change that much."

Sir Richard Broadbent, Tesco's chairman who handed in his resignation last month but has not yet set a departure date, said at the time: "Tesco has been and indeed still is a company in transition. It is a very, very substantial transition. It reflects a radically changing external market."

Broadbent added: "The business continues to face difficult challenges and intense competition."

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