Recent reports have speculated that discount retailer Aldi is considering a move into selling online in the UK, as well as elsewhere in Europe. With online grocery set to be the fastest growing area of the market, Keith Anderson discusses the implications Aldi’s move to eCommerce would have on UK competition – both online and offline.
The latest data from Kantar Worldpanel for the 12 weeks ending 1 March 2015 shows that Aldi continues to grow well ahead of the UK grocery market with sales up 19.3 per cent year-on-year – taking it to a new record market share of 5%.
But whilst discounters Aldi and Lidl continue to grab market share from the big four supermarkets, the biggest growth area and opportunity in the £175 billion-a-year UK grocery market is the online channel – expected to double in value to £17 billion by 2019 according to IGD.
With Aldi reportedly considering a move into online grocery selling in the UK, Profitero’s VP Strategy & Insights Keith Anderson assesses the implications such a move would have on the UK grocery market:
“Online grocery is already the fastest-growing distribution channel (by rate of growth), and the entry of one or both of the leading discounters could accelerate that and change the economics of online grocery retailing.
“With an assortment of primarily own-label products and relentlessly efficient operations, the discounters have redefined the value equation in brick-and-mortar retailing. While a full-scale online grocery play seems improbable in the immediate future given Aldi’s comments on the rumors, the retailer has previously invested modestly in online capabilities (with an online liquor service in Australia).
“As technology continues to redefine shoppers’ preferences for value and convenience, continued experimentation and investment in online grocery– including from discounters like Aldi–is likely.”
In its predictions for the next five years, Kantar Retail has forecast that the discounters will inevitably move to online, calling it a “a transformational approach to eCommerce“. It remains to be seen if and when Aldi (and Lidl) will make a full-scale switch to eCommerce but one thing that is for certain – the fierce battle to maintain market share is set to continue.
As the channel shift towards online grocery shopping continues at pace, CPG brand manufacturers require deeper insights and analytics to optimize their brands’ online performance and win both consumers’ mindshare and share of wallet.
Download a recent presentation given at the UK Category Management Conference in which Keith Anderson looks at how CPG brands can maximize impact to win on the digital shelf through better optimizing their Product and Assortment Strategy, Pricing and Promotion, Product Content, and Search & Category Ranking.