Aldi moves in on Tesco and Asda

Aldi plans to open 250 stores in the UK and Ireland over the next five years, with potentially up to 1,500 stores, challenging the dominance of the Big Four - Tesco, Asda, Sainsbury's and Morrisons. Although increased store estate will help in grabbing a bigger share of the UK grocery market, stealing customers from the likes of Tesco and Asda will be an arduous task.

Aldi was the first international discounter to enter the UK in 1990, and although it gained “ first to market” advantage, it has been less aggressive in its physical expansion, compared to Lidl. In the quiet way, Aldi has built a sizeable business, and played a major role in initiating a change in previous negative consumer perceptions surrounding typical discounters' offerings.

The retailer has been at the forefront of the hard discounters in identifying consumer trends and adapting its proposition to meet demands for premium and organic food. Though it retains the mindset of a hard discounter, with retail disciplines such as service and store environments kept to a minimum, Aldi has stretched its price architecture in an attempt to attract a broader spectrum of shoppers.

Although consumers' perceptions are changing, Aldi is faced with a more competitive landscape. The leading grocers have greater flexibility in their business model, broader demographic appeal, a range of store formats and have so far withstood the threat of the discounters. Essentially it will be Aldi's ability to distance itself and stay one step ahead of rival discounters that will be its greatest opportunity.

(Source: Food Business Review)