Wednesday, 1 October 2014

Budget shopping leads the way

Interesting times in our supermarkets at the moment.

Tesco is under fire for overstating it's half year profits by £250 million.  This has apparently affected their share price - apparently the only thing that matters.

Meanwhile, the "budget" supermarket Aldi has reported a rise in profits of over 60%.

The rise in Aldi's profits is being attributed to people wanting to spend less on their weekly shop in the current financial climate, but there's more to it than that.

I live very near to an Aldi supermarket, and we often buy bits and bobs from there - I can attest that not only are the prices low, but the quality is excellent.

The "big four" supermarkets - Asda, Tesco, Sainsbury's and Morrisons - have responded by lowering their prices, however, as was pointed out on the news, they cannot lower their prices too much, as they have to deliver large profits to their shareholders.  Aldi is not beholden to any shareholders, so is able to keep prices consistently low.  More and more people are discovering that they can get good quality, fresh food at a fraction of the cost, and as more people discover this, Aldi's market share will increase, whilst the "big four" will see their market share, and therefore their profits, decrease.

How long before they realise that they cannot stay in business by pandering to shareholders, and change their business models to benefit the customers?

The times they are a-changin'

1 comment:

  1. I've been shopping at Lidl recently and I find the quality excellent and SO much cheaper! I got 2 lovely salmon fillets for £2.69. In my local coop, they cost £4 at the cheapest! The veg is SIGNIFICANTLY cheaper and a vegetable is a vegetable!!!
    I also like the non-grocery products too- got some brilliant aqua shoes for Croatia, far superior in quality to my husband's and cheaper than he paid! I almost bought a sewing machine the other day as I have been wanting to get into sewing for ages and it seemed a good opportunity! I didn't in the end but wished I had!

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