Tesco v Aldi - Another shot fired
16 July 2019
Good morning,
We know the Aldi vs. Tesco turf war has been raging on with value brands by Tesco imitating the Aldi mid tier and potentially throwing a spanner in the value mechanics employed by Aldi. Seeing some pretty furious price changing and recently, Aldi redesigning their value tier 'everyday essentials' range to make it more appealing and highlight this range to customers too.
In terms of the Tesco range of value brands; these appear to have gone well and have been featured on gondola ends, highlighting the price points of staple lines to customers.
Equally the products to make a meal have also been highlighted with the low cost of c£4, a metric that is beloved by discount of course. There is no doubt that Tesco are sharper in the value / entry tier but the wider value mechanics have been stronger, partly via their 100 years of great value event.
The Tesco plan on value centred around farm brands and those categories that were a huge reason for customers switching to discounters. However as time has passed, further categories have benefitted from the increase in value tier products (cooked meats notably, albeit perhaps quickening the Deli's decline) and Frozen too has seen a sizeable increase.
Of course it's risky for Tesco; but there are ways to recover margins. Particularly with Finest and prominent trade up displays were applicable, enticing the customer to spend a little more as they're saving everywhere else. Aldi and Lidl do the same with their expansion in premium tier for example.
The noteworthy element about this latest salvo from Aldi is that they've imitated packaging that is essentially the Tesco own label. Which means they're essentially openly comparing their own mid tier to that of Tesco.
Which is a move that is inherently strange.
Given that typically the mid tier imitates brands or indeed has its own identity. To compare with Tesco is strange; presumably they're highlighting the lower price given the expansion of value tier in the frozen categories....
Perhaps it's actually genius.
The Tesco value imitator line is here; Butcher's Choice which is the entry tier product. Aldi didn't have a value tier in Burgers but they have Everyday Essentials value in Frozen for Sausages e.g.
However they have their own brand equivalent packaging, or did. Lidl are the same; they have brand equivalent packaging for Burgers. However Aldi do not have this style of packaging now, they have imitated Tesco.
Tesco core Burgers; 2 for £4 no less. Note the standard packaging that Tesco now use; very standardised and clear for customers, this identity has been relentlessly used across all own label across the business near enough.
Whilst the boxes are on the opposite side of the packaging; the reality is that there can be no mistaking that this is the intention here (Tesco); between customers around mid tier Tesco and mid tier Aldi with the latter at a lower price.
The reverse of what Tesco have tried to achieve with their value brands imitating the Aldi mid tier, bringing the value perception towards Tesco value vs. Aldi mid tier.
The Everyday essentials value tier has also been rebadged as noted previously, a good presence in the aisles for it - notably in Frozen where Tesco have been strong.
It's a bit One Stop in itself is this range.
But what an interesting strategy from Aldi; imitating the Tesco own label (mid tier) to try and neutralise any price gap / perception of gap opened up via value brands versus Aldi mid tier.
Another fascinating twist in this saga. One thing is for sure, it seems Aldi have felt pain via the work from Tesco, their modular plan of farm brands, value brands, own label tightening and more recently, Fresh Five produce cuts being introduced.....
More to come surely!
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From the Grocery Insight newsletter archive, first sent to subscribers on 16 July 2019. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.