Aldi - Dilution in the ranges?

24 February 2017

A quick note on Aldi; who continue to progress nicely - no signs of a slowdown despite more ranges and a confusing mission in some areas.

But Aldi clearly feel that they can add further range and push on even more, newer stores have more space which = more space for the expanding ranges too.

It's interesting that the Aldi website notes that their layouts are the same in every store, no matter where you are. Not necessarily true any longer - the newer stores have a slightly different layout, opening with Produce rather than Cereals, Tea and Coffee.....

In terms of other things not necessarily true any longer of Aldi, as they adapt / chase down new customers, it seems that they've expanded their own label ranges to an 'everyday' tier(?)

So 'everyday' lines then? What does it all mean?

They're larger pack sizes for a start and the price is lower than the equivalent branded line. So Magnum 'everyday' is £2.49 for 50 tablets, with their core Finish equivalent (Magnum) is £3.49 for 40 tablets.

The Tesco equivalent own label is £4 for example, so it's not as though they've got parity on price. There is still a discernible gap here, the larger pack / better value line appears to be sited to offer a lower cost item in the Dishwasher category.

Washing up liquid (Magnum) was also badged as 'everyday' and a 'great value bottle' which seems odd to flag. Aldi are really keen on value anyway, everything is the great value, that's the point?

It's unclear given the range carries the Magnum branding whether it's any less of a product in terms of formulation and / or quality.

However the numbers can't possibly stack up to sell 50 for £2.49 when the main product is a 40pk for £3.49... Something has to give.

It therefore seems odd for any duplicate range to carry the private brand if it is a 'value' product rather than one that takes on the brand...

However versus using their value tier, it is perhaps understandable..... Big packs = better value etc.

But versus their own award winners, it does have the potential to confuse....

Maybe it's a defensive mechanism against the likes of B&M and Home Bargains who trade on brands, sometimes bought on the grey market, ex promotional stock and increasingly - their own buys given the volumes they're now trading with.

One of this channels key strengths is Household, alongside Health/Beauty (big growth in Aldi in terms of SKU count) and also impulse / confectionery where again, we have seen Aldi start to add branded ranges in particular here.

Added in to the mix is the distinct possibility of the discounter stores trading opposite, adjacent, nearby a B&M / Home Bargains given their preference for retail park sites. Indeed we have a Home Bargains / Aldi joint site in Bradford on the site of the ex Dunnes.... Are they losing to variety operators?

Interesting Aldi feel they need to do this, do they lose that much share away to these retailers? Or is it just once again, Aldi needing to accept that people won't get everything they can at Aldi and like to go off elsewhere sometimes.

Similarly people move from Aldi and go to shop at Asda for example, it isn't because Aldi have jacked their prices up. Sometimes there are numerous reasons for it... It seems odd to adjust the model (again) for this reason, unless they are losing a fair bit of share.

Price may play a part too, Brexit, inflation and a depressed currency (try looking at the USD / GBP) mean customers are acutely aware of pricing at the minute too.....

Continues to be intriguing in UK food!

They do get it right though,what a great piece of work from Aldi on the 'Pressd' brand. Great line and I had to pick it up to read if it was an Aldi own, or a brand that they'd listed.

Pricing and Brexit brings uncertainty, but there's always certainty with reduced special buys in Aldi!

From the Grocery Insight newsletter archive, first sent to subscribers on 24 February 2017. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.