Consumer: Rise and rise of ‘budget’ supermarkets

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Ever-diversifying budget supermarkets are blurring the lines between themselves and the big boys.

Budget supermarkets are slashing the cost of high-end products as retailers “fall over themselves” to cater for middle-class tastes, according to a major consumer magazine report.

Discounters such as Aldi and Lidl are no longer just for the “cheap basics”, with both stocking products from South American filter coffee to flour for the breadmaker, Good Housekeeping magazine said.

The magazine compiled a list of 19 seasonal products, including items ranging from a leg of lamb and Parma ham to pesto and asparagus, to compare prices across nine supermarkets - Aldi, Asda, Tesco, Morrisons, The Co-operative, Sainsbury’s, Waitrose, Marks & Spencer and Lidl.

It found the same set of items could cost up to £20 less at a budget store than at its higher-end rivals.

The research found Lidl’s summer basket was the cheapest at £33.61, followed by Aldi’s costing £34.01 and Asda at £38.65. The same basket cost £49.32 at Sainsbury’s, £51.16 at Waitrose and £52.59 at M&S.

A survey for the magazine found 53 per cent of shoppers have switched to cheaper stores or divided the shop between a supermarket and budget store since the recession.

The poll found more that 40 per cent shop regularly at Aldi and Lidl, 30 per cent visit Iceland once a fortnight and 56 per cent visit a £1 or 99p store at least once a month.

Just two per cent said they would be too embarrassed to shop in discount stores.

Good Housekeeping consumer director Caroline Bloor said: “Retailers are falling over themselves to feed middle class tastes.

“Discounters like Lidl and Aldi aren’t just for people looking for cheap basics.

“Our shopping list shows you can now buy anything from South American filter coffee and ciabatta to Parma ham and flour for the breadmaker.

“Since the recession consumers are no longer embarrassed to be seen hunting out a bargain and why would you be when you can save as much as £20 on the same basket of goods.”

In a poll last year by consumer watchdog Which?, Aldi and Lidl were voted as two of the three best supermarket chains in the UK, beaten only by Waitrose.

Waitrose topped the poll due to its excellent customer service and the quality of its fresh produce. Tesco propped up the supermarkets league table, receiving low marks across the board for quality of fresh produce, pricing, store environment and customer service.

Which? had conducted a poll of 11,000 consumers, asking participants to rate supermarkets with scores based on customer satisfaction and the likelihood they would recommend it to a friend.

Just last week, Tesco announced it is cutting prices across more everyday items and its online grocery service as it fights back against competition, including the rise of discounters Aldi and Lidl.

The supermarket giant has announced it will drop prices on more than 30 products, including bacon, baked beans, broccoli, peppers, sugar, lettuce, cucumber portions and lines from its bread ranges. It is also introducing free click-and-collect on grocery across all locations while one-hour home delivery slots will be available for £1.

The new prices - which are expected to stay down - include a box of six Tesco free range medium eggs cut from £1.38 to £1, English slightly salted butter down from £1.49 to £1, baked beans down from 45p to 32p and wholemeal bread cut to 75p from 90p.

Earlier this month, Tesco boss Philip Clarke said customers would see prices coming down as Britain’s biggest supermarket revealed a second year in a row of falling profits and a deepening deterioration in UK sales.

Tesco says it has already cut the cost of staples including butter, milk and eggs by an average of 24 per cent, and Mr Clarke said customers would see more prices coming down.

The firm’s UK marketing director David Wood said: “I’m absolutely delighted we can do this for our customers. We never stop thinking about how to make their lives better and easier, and these new lower prices on everyday products will really help families on a budget.”

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