Retail Newsagent analyst Neil Saunders looks at how the increasingly-premium offers from the discounters is creating yet another headache for the multiples

WEB-Neil-SaundersOne 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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