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​Aldi’s biggest price cuts add more drama in retailers’ battle to the bottom

Published in The Grocer

Aldi’s biggest round of price cuts this year, with 55 fruit and veg lines chopped, are fuel for the fire as retailers continue to make bold moves to chop into each other’s margins.It is therefore easy to overlook the significance of these cuts, considering all retailers are announcing discounts left, right and centre.But Aldi’s latest price cuts are substantial, and the numbers support that.Analysis of Assosia data by The Grocer shows the average price cut across 51 products available on click & collect was 12p, or 10% of the original price. For fruit and veg lines, notorious for tight margins, these are significant cuts, particularly across such a large range of products – one-third of its produce range.

And Aldi is competing heavily with the big four mults. There are 21 Tesco products matching those in Aldi’s deal, yet Aldi’s prices are cheaper.

In Sainsbury’s and Asda, there are nine like-for-like products, in Morrisons 17 – again, Aldi is cheaper.

Lidl cheaper than Aldi on two

Lidl plays a stronger hand, though. However, only seven of Aldi’s price cut lines are similar to Lidl products to make a direct comparison. Of these, Lidl was cheaper on two and Aldi was cheaper on five.

But with so few product comparisons between the two discounters, it’s hard to tell which retailer offers the best deal on the range in question.

Aldi is also competing well against itself. On 41 products, the new price is cheaper than the product has been in the last two months – a clear sign of true and hard price cuts, not just a rehashing of old promotions.

The verdict is clear: Aldi’s cuts are serious value for shoppers, and will prove vital for buttressing the retailer’s position in the current climate.

Across the board, price cut announcements – as ever – speak to supermarkets’ acknowledgement of the need to demonstrate their value credentials to shoppers in the face of rampant inflation.

Just this week, Waitrose announced cuts to 250 lines, including potatoes, whole chicken and red leicester cheese – the third set of price cuts in a year for the retailer.

The big supermarkets have cut prices

Tesco, Sainsbury’s, Asda, Morrisons, Lidl and M&S have all announced price cuts this year in the battle to be seen as good value.

The dominating price cut theme has also manifested through loyalty: Tesco’s Clubcard and Sainsbury’s Nectar prices (and with lower prominence, Morrisons More and Asda Rewards) shout value from the shelves at price-focused customers.

Of course, it’s not necessarily a win for all. It’s been well documented suppliers are struggling (and long before the cost of living crisis). As the costs of producing fruit and veg have risen, retailers have been routinely criticised for very low prices that do not reflect the costs facing their suppliers.

The issue came to a head this summer when poor weather caused a shortage of fruit and vegetables across Europe, followed by empty supermarket shelves. Commentators at the time argued supermarkets’ inability to acquire the product was due to the low prices they brokered, as low costs made it difficult for suppliers to fulfil orders.

No doubt price cuts, such as Aldi’s, will leave a bitter taste in the mouths of many farmers and suppliers who were barely breaking even with pre-cut prices.

Aldi’s move may also cause more of an impact as other retailers attempt to compete. Tesco and Sainsbury’s have made prominent displays of their Aldi Price Match schemes. Whether they will follow in light of this week’s news is yet to be seen