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Retail Newsagent analyst Neil Saunders looks at how the increasingly-premium offers from the discounters is creating yet another headache for the multiples
One emerging threat to the supermarkets in 2016 comes from the fact that Aldi and Lidl have both now evolved their own models from a pure focus on price to one that focuses more on value. The new store formats, range development into mid-priced and premium products, and the enhancement of customer service are all signals that they both intend to play – albeit on their own terms – a far greater role in the middle and higher ends of food retail. Admittedly, neither player will likely ever be seen as a true alternative to Waitrose or Marks & Spencer on premium – but they likely will, and to a certain extent already have, taken some share away from the big four. Given the higher margin nature of mid-priced and premium lines, this is a worrying development that will put further pressure on supermarkets’ financials.
Neil Saunders is managing director of retail analysts Conlumino
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