Aldi threat to big four may not have that great an impact

Discount retailer Aldi​ is to launch an online service early next year selling wines by the case, followed by non-food ‘Specialbuys’ in the spring.

Specialbuys have proved popular in Aldi stores and focus on bulkier, seasonal items, such as ‘Back to school’ uniforms, camping gear, cycling clothes and Halloween outfits, but they have tended to sell out very quickly prompting criticism that they are a marketing gimmick to get people into stores.

Aldi said it will increase production to make sure this doesn’t happen with its new internet offering.

There are no plans to launch grocery home delivery as Aldi said British supermarkets have struggled to make money from online food sales.

Meanwhile, US retail giant Amazon has started selling chilled and frozen food products online amid speculation it is to launch a full-scale assault on the grocery market.

The firm is selling a range of 60 branded products to customers in London and Birmingham using its ultra-fast Prime Now service which allows items to be ordered for delivery within 60 minutes. Among the products are Cathedral City cheddar, Chicago Town pizzas, Ben & Jerry ice creams and Bird’s Eye fish fingers.

Amazon declined to comment on a report in Retail Week that it is gearing up for a full grocery launch early next year.

Whatever happens, neither Amazon or Aldi will ever be able to offer the breadth that the big four grocers offer.

Sainsbury’s CEO Mike Coupe said: “In the end the announcements are relatively small in the overall scheme. We have a very significant breadth of offer, probably 100 times greater than these two competitors.”

Shore Capital retail analyst Clive Black said: “Amazon Fresh seems to excite and indeed inject fear into some commentators, but Mr Coupe calmly and sensibly pointed out the practical but also competitive challenges of online grocery and the competitive excellence of the leading UK players. As such, whilst not complacent to any degree, we sense that Sainsbury’s believes that the market needs to be balanced in its appraisal of the potential for Amazon Fresh to disrupt.”

Indeed, Amazon may be hot on brands, but who buys a supermarket online shop with no own-label? Customers trust their chosen supermarket to provide them with own label products that complement the Kellogg’s, Heinz and Marmite they can’t live without.

Behind the scenes the big four are quietly confident that neither will pose a real threat and there are even murmurings that Aldi is taking its eye off the ball by broadening its offer.

Aldi has led the “pile it high and sell it cheap” ethos, but its store expansion plans and the decision to increase service by hiring staff has dented profits.

Aldi announced record ​annual ​sales ​of £7bn, but operating profits fell four per cent to £260.3m following increased investment in prices and staff.

​An insider at one of the big four supermarkets said Aldi is seeing enviable sales growth, but they are starting to see profits fall.

“The more complexity they add to the business, the harder it is to maintain profitability and service. For us, that’s good,” he said.

Could Aldi be biting off more than it can chew?

​We report today that new EU rules will require companies to change their auditor at least every 20 years to avoid cosy relationships that could blunt an accountant’s scepticism.​ ​​

This follows ​public ​anger that accountants gave banks a clean bill of health just months before the financial crisis.

For too long the big four ​have happily cleared up each other’s messes with no blame being apportioned.

Shareholders have already proved their mettle by kicking out overpaid CEOs at the likes of insurer Aviva and now they need to kick out overpaid accountants who have been let off scot- free.