Aldi promises to keep prices low despite falling profits
Aldi has vowed to keep UK prices low as the cost of living crisis deepens, despite an 86.5% drop in pre-tax profit for its 2021 financial year.
Although sales rose 0.9% to £13.6bn, Aldi UK made a pre-tax profit of £35.7m in 2021, from £264.8m in 2020 According to the private discounter’s annual trading report, operating profit fell 79% from £287.7m to £60.2m.
UK and Ireland CEO Giles Hurley said preserving Aldi’s price rebate “will always be more important” to the company than “short-term profit”, adding that ” Being privately owned means we can deliver on our promises even when times get tough.”
He explains: “The cost of living crisis is deepening and it is being felt by millions of homes across the UK. It is at times like these that our customers rely on us the most, which is why we are focused on continuing our long-standing price promise by offering the lowest possible prices in Britain, each day.
The supermarket says it will do “whatever it takes” to maintain its discount over rivals, adds Hurley. The company says its purchasing teams are working “tirelessly” to counter the impact of inflation.
According to a price comparison analysis for August, conducted by consumer group Which?, Aldi is currently the UK’s cheapest grocer on a basket of 47 everyday items, with an average price difference of £13.53 compared to Tesco, Asda, Morrisons and Sainsbury’s.
Preserving our price discount and rewarding our employees will always be more important to us than short-term profit.
Gilles Hurley, Aldi
Although sales growth in the UK and Ireland has slowed in 2021, trade has accelerated “rapidly” over the past six months as pandemic restrictions have been lifted and the rising cost of living has affected shopping habits, explains Aldi.
The discounter has won an additional 1.5 million customers over the past 12 weeks, bringing its total customer base to 14.2 million. The company says more of its existing customers are consolidating their grocery spending and are now using Aldi as their only supermarket.
Meanwhile, sales of the grocer’s premium Specially Selected range are up 29% over the past 12 weeks.
With more than 970 existing stores already, Aldi plans to open 16 more before the end of 2022. Its ongoing investment commitment of £1.3 billion over two years will also include the expansion or relocation of ” dozens” of existing stores and the development of its network of distribution centers. and a technology infrastructure to support growth. Cost of living crisis helps Aldi bounce back into BrandZ top 100
Morrisons rivalry intensifies
Earlier this month, Aldi officially became the UK’s fourth largest supermarket, taking over from Morrisons for the first time. The discounter increased its sales by 18.7% in the 12 weeks to September 4, according to the latest data from Kantar, which means it now has a market share of 9.3%.
Morrisons, meanwhile, saw its sales over the same period fall by 4.1%, which pushed its share down to 9.1%.
As it scrambles to claw back share, Morrisons today (September 26) announced a price cut on 150 of its most popular products, covering almost 6% of the supermarket’s total sales volume. Lower prices represent an investment of more than £100 million per year.
Among the cheapest items are basic necessities, fresh and frozen foods, and basic necessities such as toilet paper and cleaning supplies. For example, Morrisons original thick bleach two-litre bottle will now cost 95p, up from £1.35. The price of 1kg of Morrisons Easy Cook Long Grain Rice has been reduced from £1.49 to 95p, and 500g of Morrisons 5% Fat British Steak Hash has been reduced from £3.69 at £2.89. seems to become “more competitive”
According to the grocer, these cuts will offer customers an average savings of 14% on their store.
“The cost of living crisis continues to place a huge financial burden on our customers and we want to play our part in helping them with the cost of groceries,” said Morrisons CEO David Potts.
“These price cuts are for the products they buy day in and day out and will have a noticeable impact on their budgets and demonstrate our commitment to delivering the best possible value.”
Morrisons will communicate its price reductions to customers through print, radio, digital, online and in-store advertisements.