Aldi faced a barrage of criticism this week for running a new advert which compares its prices with Morrisons and claims to be almost 40 per cent cheaper.
The newspaper advert was a direct response to the launch of Morrisons’ ‘Price Crunch’ initiative.
Morrisons retaliated by pointing out that Aldi is comparing well-known brands such as Heinz Tomato Ketchup and Tropicana fruit juice with Aldi’s own label brands.
A spokesman for Morrisons told Blackfriar: “No-one will be fooled by the way they have picked a handful of premium branded products such as Tropicana and compared them to their own-label products such as ‘Del Rivo’.”
An Aldi spokesman responded: “We believe the comparison is fair and our products are comparable to brands in terms of quality. Last year we won over 350 product awards and were second only to Waitrose in terms of the number of Which? Best Buys we were awarded. Customers wouldn’t be coming to us in their droves if the product quality wasn’t comparable. Our commitment is simple, on brand or own label, we won’t be beaten on price.”
Respected analysts and retail experts have taken Morrisons’ side in the argument.
Retail Week editor George MacDonald said: “For the first time in a long time Aldi appears to have stumbled, in PR terms at least. The question is whether such an unaccustomed trip-up is a sign that the retailer, in its headlong rush for growth, might end up sprawling flat on its face or regain the poise it has more typically shown?
“Aldi’s comparison was widely seen as one between the proverbial apples and pears or, in this case, branded and own-label lines. The picture it painted was partial, to say the least.”
Analysts claim that Morrisons is now matching Aldi on price for the brands it has “crunched” and Aldi must be seriously rattled.
Bruno Monteyne at Bernstein said: “Where is the CMA (Competition and Markets Authority) when you need it?
“This week there have been reports of the CMA investigating BOGOF (buy one get one free) offers at the major supermarkets as being potentially misleading. Aldi’s new advert compares its own label prices with brands, far more misleading surely?
“If you look at those products that Morrisons identify as being ‘crunched’ the price gap to Aldi is now indeed zero – so much for Aldi’s ‘widening price gap’.”
Mr Monteyne believes that like-for-like sales at Aldi’s mature stores are close to flat and its stellar growth is down to store openings. Aldi plans to open a record 80 supermarkets in 2016.
Analyst Clive Black at Shore Capital said: “Aldi appears to be rattled. We note the venom in Aldi’s recent price messaging and in particular its referencing to Morrisons’ ‘Price Crunch’ initiative.
“Morrisons, under the leadership of David Potts, is trying to reconnect with disenfranchised customers, an exercise followed in intention and aspiration by Dave Lewis at Tesco and Andy Clarke at Asda.
“Mr Potts is ploughing a more independent price furrow as part of his journey, one that is focused upon Morrisons customers and more effectively utilising the group’s own supply chain.
“That Aldi is shouting loud about ‘Price Crunch‘ suggests to us that Morrisons may just be commencing its long journey on the right path.“
Mr Monteyne added: “Although Aldi certainly retains price leadership overall, its recent actions – misleading advert, not undercutting Morrisons, removing branded items – are signs that times are changing. Perhaps there will be some breathing room for the UK supermarkets?”
Mr MacDonald agreed: “It seems as if the empire, in the form of the big four, is striking back.”
After years of misleading deals designed to bamboozle shoppers, it appears the big four are finally getting their act together.
There will always be a place for the discounters, but the fact that Morrisons is making real, significant price cuts will be noticed and welcomed by its loyal Yorkshire shoppers.