The boss of supermarket chain Aldi has claimed that the cost-of-living crisis has changed shopping habits for good.
According to The BBC:
Giles Hurley says shoppers are buying more own label products than ever before and he expects this to stick.
Cheaper supermarket own label ranges are enjoying a boom as shoppers try to save money.
Aldi overtook Morrisons last year to become the UK’s fourth-biggest supermarket. Alongside rival Lidl it has been the fastest growing this year.
Products that are sold under a supermarket’s own name now make up more than half of everything shoppers buy, by value.
“If you look in volume terms that figure is much bigger and at the moment own label products are growing at twice the rate of branded goods,” says Mr Hurley. “Why would [shoppers] go back?”
The vast majority of the products Aldi and Lidl sell are own label.
He says Aldi has added nearly a million more customers in the past 12 months and two thirds of UK households are now shopping with the chain.
Aldi has now released its financial results for the year to the end of December 2022.
UK sales were up by nearly £2bn to £15.5bn. Operating profit also increased to £178.7m, almost triple the amount it made the year before.
Other big supermarkets have reported a drop in profits. Lidl made an annual loss.
Aldi said the increase was due to an exceptional prior year when its profit margin fell to an 11 year low of 0.4% after significant Covid related costs.
“It’s really important to stress that margins in retail are extremely tight and we are no exception,” said Mr Hurley.
Its profit margin, the measure of how much money a company makes on its products after costs and expenses, was 1.2% last year.
“That’s just over a penny in every pound spent in an Aldi store,” Mr Hurley points out….
Competition in the supermarket aisles is as intense as ever with Tesco and Sainsbury’s running Aldi price matching schemes.
Food price inflation is now easing but remains stubbornly high, rising 13.6% in the year to August, according to the Office for National Statistics.
Supermarkets have been cutting prices on a wide range of products over the last few months.
