What’s more, the two discounters are still growing quickly – opening an average of one new store every week, often in more affluent towns.īy sucking in shoppers and, as former Aldi UK CEO Paul Foley puts it, “sucking the profitability out of the industry” – profit margins of 2-3% are now the norm – the two German-owned companies have forced the “big four” supermarkets to take drastic measures. In 2017, Aldi overtook the Co-op to become the UK’s fifth largest retailer today it has a 7.5% market share, closing in on fourth-place Morrisons, with 10.6%. Nearly two-thirds of households now visit an Aldi or Lidl branch at least once every 12 weeks, according to the research firm Kantar Worldpanel. While the major supermarkets dozed, convinced that many people would not be seen dead in a discount store, the German chains quietly turned the sector on its head. By 2009 – after nearly two decades – Aldi’s market share was just 2%, similar to that of Lidl, its German rival and imitator, which had launched in Britain soon after Aldi.īut today, the boasts of Tesco and Sainsbury’s read like a classic example of business hubris. German shoppers, notoriously, took this to extremes: one of the country’s biggest electronics retailers, Saturn, even adopted “Thriftiness is sexy” as a marketing slogan. In 1999, when Walmart bought Asda, the UK’s third biggest grocery chain, the Financial Times noted that Aldi had made “little impact in Britain” because customers were not as price-sensitive as Americans or continental Europeans. “We can live quite happily in our part of the market and they can live in theirs.”įor a long time it looked like he was correct. “We welcome the advent of Aldi and others to come,” said Tesco managing director David Malpas. Sainsbury’s remarked on the absence of service, which was important to British customers. The British supermarket giants, whose 7% profit margins were the world’s highest, were even more dismissive. “One looks in vain for avocados or kiwi fruit.” When a reporter from the Times visited an Aldi store in Birmingham the following year, he thought it represented the “anonymous, slightly alarming face of 1990s grocery shopping”, without any pretence of sophistication. The Albrechts had an extremely popular chain of bleak discount stories in Germany: the brothers had divided the country into separate fiefs, with each controlling the market in one half of the territory.īut most people were confident they would fail in Britain, where there was a discernible snobbery about discount stores. Most news reports noted merely that the company belonged to a frugal and spectacularly rich pair of German brothers, Karl and Theo Albrecht, who had both fought in the second world war and whose desire for privacy had reached extremes after Theo’s high-profile kidnapping for ransom in 1970s. Information on Aldi’s owners was as limited as the decor. Customers seeking itemised receipts left disappointed. The store accepted cash but not cheques or cards. The checkout assistants, who had been trained to memorise the price of every item in the store, were so fast that shoppers experienced what some would come to call “Aldi panic” – the fear that you cannot pack your goods quickly enough. A £1 deposit allowed you to borrow a trolley but there were no baskets. Strip lights illuminated the 185 sq metre store, and from the ceiling hung banners listing prices for the goods stacked on wooden pallets or displayed in torn-open cardboard boxes on metal shelves. The managers of this new shop, which was called Aldi, had not bothered to place a single advert announcing its arrival – not even an “Opening soon” sign outside the store. To shoppers accustomed to the abundance of Tesco and Sainsbury’s, which dominated the British grocery sector with thousands of products and brands, delicatessens, vast fridges and aisles piled high with fresh fruit and vegetables, the range would have seemed dismal. For many products, including butter, tea and ketchup, only a single, usually unfamiliar brand was offered. It only stocked 600 basic items – fewer than you might find in your local corner shop today – all at very low prices. O n a Thursday morning in April 1990, in the suburb of Stechford in Birmingham, a strange grocery chain started trading in the UK.
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