Aldi UK pledges price advantage despite rivals' schemes

By James Davey

WOKING, England (Reuters) - The boss of the UK arm of German discount supermarket Aldi has guaranteed to keep its price advantage over rivals despite being challenged by the price matching schemes of market leader Tesco and No. 2 Sainsbury’s. Giles Hurley, Aldi UK and Ireland chief executive, said on Thursday a cost-of-living crisis stretching into its second year meant Britons were prioritising price like never before. "Most importantly, what I can guarantee is that we’ll always have the lowest prices in the UK," he told Reuters in an interview at the opening of Aldi UK’s 1,000th store in Woking, southern England.

Hurley said German parent Aldi Sud accepted that this pledge could limit profitability because it was focused on the long term opportunity in the United Kingdom.

"That’s probably one of the key benefits of being a privately-owned organisation. No matter how tough times get we can keep our promises," he said.

"That allows us to be laser focused on price and looking after our customers and what matters to them most is price."

Aldi UK is Britain's fastest growing grocer, according to market researcher Kantar, with its sales up 21.2% in the 12 weeks to Aug. 6. Its market share of 10.2% means it is the fourth largest after Tesco, Sainsbury's and Asda.

Aldi UK is also the cheapest, according to regular surveys from consumer group Which? and industry publication The Grocer.

The appeal of Aldi UK and fellow discounter Lidl GB has grown during the cost-of-living crisis and, unlike their traditional rivals, they continue to open lots of new stores. Aldi UK on Thursday raised its target for stores to 1,500.

The discounters' performance has forced the traditional major players to compete more aggressively.

Tesco and Sainsbury's have schemes that match Aldi prices on hundreds of key products, while they have accepted a profit hit to keep prices down.

Both say the price gap with Aldi UK has significantly narrowed.

Aldi UK's profitability has not matched its stellar sales growth. Operating profit tumbled 79% to 60.2 million pounds ($75 million) in 2021, its last published results. Its operating margin was 0.4%.

Results for 2022 will be published on Sept. 25.

($1 = 0.8026 pounds)

(Reporting by James Davey; Editing by Emelia Sithole-Matarise)