Aldi Improving Health & Beauty Fixtures In Next Phase Of Investment Programme For Existing Stores

Aldi has revealed that it plans to invest £67m in upgrading its existing stores during 2025 as part of a programme to improve the shopping experience for its customers.

The discounter noted that it had spent almost £600m on store upgrades since 2017, and with the first phase of these updates nearly complete, it was moving on to the next stage of its store enhancement programme.

The initial store upgrades focused on creating more space for fresh, chilled, and food-to-go ranges, alongside simpler layouts, improved fixtures and energy-efficient LED lighting.

The new phase will include additional in-store features such as improved bakery and health & beauty fixtures for customers. Stores will also benefit from CO2 refrigeration upgrades, contributing to an estimated reduction in carbon emissions equivalent to heating over 6,500 homes when the programme is complete.

“Aldi’s £67m investment is a major step forward in our commitment to delivering an even better shopping experience for our customers across Britain,” said Jonathan Neale, Managing Director of National Real Estate at Aldi UK.

“Building on the success of our previous upgrades, we’re enhancing store layouts as part of our dedication to providing customers with more sustainable stores, convenience and an improved shopping experience nationwide.”

As well as store improvements, Aldi is investing approximately £650m in new openings across the UK in 2025, with a target of around 30 additional sites.

NamNews Implications:

• Aldi appears to be addressing possible negatives.
• Whilst making improvements in the estate.
• All adding to an improved shopping experience for more shoppers.
• And if their share starts growing again….

Aldi Tops Cheapest Supermarket Ranking Despite Rival’s ‘Loyalty Schemes And Flashy Promotions’

Aldi has again been named as the UK’s cheapest supermarket in a price comparison survey by trade magazine The Grocer.

The study of a basket of 33 everyday items revealed the gap between Aldi and the four largest full-price supermarkets (Tesco, Sainsbury’s, Asda and Morrisons) was 16% on average.

Despite recently announcing the return of its Rollback scheme, Asda only managed fifth place, with its basket checking out at £7.62 more expensive than Aldi’s.

Tesco was found to be 14% (£7.52) more expensive than Aldi, even when loyalty prices are applied, while third-placed Morrisons came out as £7.36 more expensive.

Lidl was in second place, just 16p behind Aldi.

“The latest data confirms that our prices simply can’t be matched and our customers know that the only place to get Aldi prices is by shopping at Aldi,” said Julie Ashfield, Managing Director for Buying at Aldi.

“Other supermarkets can try and compete with us through loyalty schemes and flashy promotions but the only thing on a roll is Aldi, being named the best on price time after time. That’s because our promise to our customers is straightforward and simple – they will make significant savings every time they shop with us.”

NamNews Implications:

• A 16% advantage on average Mults’ prices has to count for many shoppers
• Key for Aldi to give more shoppers access to their outlets
• Hence the importance of their store opening programme…
• Meanwhile key for suppliers to find ways of working with Aldi..?

Asda Trialling Automated Sampling Machine

Asda has begun testing an automated vending machine that offers free samples to customers at its store in Pilsworth, Bury.

In report a report by trade publication The Grocer, the supermarket described the machine as a “first to market innovation” that could “revolutionise in-store sampling”.

To access a free sample, shoppers have to scan their Asda Rewards loyalty app. A screen on the machine also allows customers to browse ingredient and dietary information.

The first brand testing the new machine is Müller, which is offering shoppers free samples of its Frijj milkshake.

A spokesman for Asda told The Grocer: “We are trialling a digital sampling machine at our Pilsworth store so that customers can try newly launched products from our branded partners simply by scanning their Asda Rewards ID.”

Access to the machine is being offered by the supermarket’s retail media arm, LS Eleven Media Services, and aims to help brands “engage customers with dynamic content and product trials”.

NamNews Implications:

• If only Asda was not saddled with other distractions…
• i.e. we have seen some very original ideas coming from this beleaguered grocer…
• Anyway, key for suppliers in appropriate categories to ensure their access to these sampling machines.

Historic Equal Pay Win For Tens Of Thousands Of Asda Workers

Tens of thousands of Asda’s checkout workers, customer service staff and shop floor assistants, most of whom are women, could be in line for historic payouts after the biggest ever private sector equal pay claim.

A court ruling has made clear that many of the roles on Asda’s shop floors, carried out mainly by women, are of “equal value” to the better-paid ones in the supermarket giant’s warehouses, which are predominantly filled by men.

Read the full article on the ITV website

NamNews Implications:

• It appears that this issue is heading towards a conclusion...
• ...that could cost Asda considerable sums in backdated ‘top-ups’ for workers.
• The resulting uncertainties has to add to the current pressures on Asda.
• A speedy resolution in terms of a negotiated settlement and known cost...
• ...could at least move this issue off the table.
•  Allowing the company to focus on its recovery plan?

Morrisons Hails Strongest Quarterly Performance In Four Years

CEO Rami Baitiéh’s turnaround programme at Morrisons appears to be picking up speed after the group delivered its strongest quarter since the start of 2021.

Over the 13 weeks to 27 October, the grocery retailer’s like-for-like sales increased by 4.9%, with total revenues up 4.8% to £3.8bn. The robust fourth-quarter figures meant that annual like-for-likes had grown 4.1% – a marked improvement on the 1.8% rise the previous year.

Full-year underlying EBITDA was up 11.2% to £835m on revenue that increased 3.8% to £15.3bn.

Morrisons noted that it had made good progress in improving product availability, with it up four percentage points on fresh goods. Its revamped More Card loyalty scheme also saw linked sales grow to 68% at the year-end (76% today), whilst its discounter Price Match initiative now covers over 500 everyday items.

Morrisons also highlighted progress on tackling the large debt burden left over from the takeover by CD&R. The group’s debt is now down 40% from its peak, with CFO Jo Goff saying: “A year of broad-based operational progress has helped to deliver a significantly strengthened Morrisons.

We delivered a further £150m of progress on our working capital programme in the year, taking the total since the start of the programme to £450m, and have achieved £312m in our cost-saving programme in the year.”

Other highlights of the Morrisons year included the sale of its petrol forecourts to MFG for £2.5bn and the acquisition of 36 convenience stores in the Channel Islands.

The group’s convenience store estate now stands at over 1,600 stores after rapid growth in recent years.

“This has been a year of urgent reinvigoration and positive progress for Morrisons. Customer transactions increased, market share grew from Q2, and we saw positive switching from our competitors,” said Baitiéh.

He noted that improvements across the business had resulted in “better availability in our stores, sharper prices, more effective promotions and a strong and growing loyalty scheme”, which was now starting to be reflected in its financial performance.

Baitiéh concluded: “I want to thank everyone at Morrisons for their commitment and energy every day and for playing their part in the significantly improved performance that we are reporting today.

"Supermarkets, Convenience, Online, Wholesale and Myton Food Group all contributed to the improving picture, helping us serve our customers better.”

Morrisons did not reveal how it traded over the key Christmas period. However, Kantar data released earlier this month suggested the chain lagged well behind Tesco and Sainsbury’s.

NamNews Implications:

• Latest stats looking good
• Lowering the debt burden means reduced pressure on debt servicing...
• Is it time for suppliers to join with Morrisons newfound optimism?
• (despite a probable Christmas lag vs Rivals?)

Asda Restarts Search For New Chief Executive

Asda’s new Chairman, Allan Leighton, has restarted the group’s search for a Chief Executive to support his efforts to turn around the performance of the ailing supermarket.

The company has now been without a permanent CEO since the abrupt departure of Roger Burnley in August 2021 following a fall-out over strategy with TDR Capital. Co-owner Mohsin Issa subsequently took charge of operations in 2022 while a search for a new leader was launched.

A large number of people were approached, but Asda failed to attract a candidate despite the prospect of a lucrative pay package, said to be worth up to £10m a year. Reports at the time suggested that Mohsin’s control of the business had put off some experienced industry executives.

With Mohsin having relinquished the reins of the grocer at the end of last year, Leighton is said to be seeking a candidate who he can work alongside rather than a Chief Executive he can oversee as Chairman.

A report by The Telegraph stated that Leighton would retain significant day-to-day involvement in Asda’s strategy through his Executive Chairman role.

Asda hired Leighton at the end of last year following months of falling sales and market share. Initial moves have included strengthening the group’s leadership team and restructuring its regional management setup.

Leighton has vowed to “restore Asda’s DNA” by cutting prices and improving product availability. However, he has warned that it could take as long as five years to restore the supermarket’s fortunes fully.

Earlier this month, Leighton stated his turnaround plans would be based around moves to “satisfy the daily and weekly shopping needs of ordinary working people and their families, who demand value”.

Last week, it was reported that Asda is preparing to launch its biggest Rollback price cuts campaign in years.

NamNews Implications:

• i.e. Asda is seeking a candidate who can work alongside Allan Leighton…
• …rather than a Chief Executive he can oversee as Chairman.
• (Little or no learning-curve time available...)
• i.e. Someone that has worked with Alan previously might seem the best bet…

Sainsbury’s Cutting Thousands Of Jobs In ‘Challenging’ Cost Environment

Sainsbury’s is set to cut thousands of jobs through the closure of its hot food counters and cafes, and by reducing senior management roles, amid concerns about higher labour costs from impending tax rises.

Sainsbury’s stated that the move was part of its three-year ‘Next Level’ strategy, which aims to bring more of its core food ranges to customers, while simplifying central divisions and management structures.

To create more space for its fresh food ranges, the company wants to close its remaining patisserie, hot food and pizza counters. In a further move to simplify the business, Sainsbury’s also plans to close its remaining 61 in-store cafés, subject to consultation.

They are also making changes to its central management structures to support “faster decision making and drive performance” in Sainsbury's and Argos.

Moves include: Rhian Bartlett to CCO Sainsbury’s, Graham Biggart to MD Argos & Chief Strategy and Supply Officer. Patrick Dunne, to Operating Board as Chief Property and Procurement Officer & MD SmartCharge.

In seeking £1bn of operating cost savings, all head office depts to become dedicated to the different needs of its Sainsbury’s and Argos businesses, while creating “fewer, bigger roles with clearer accountabilities”.

Sainsbury’s wants to drive faster decision-making and cost reduction via an estimated 20% reduction in senior management roles over 3 months. Overall, a proposed 3,000 reduction in roles across the business via discussions with staff affected and exploring redeployment opportunities where possible.

Chief Executive Simon Roberts said: “As we accelerate into year two and beyond of our strategy, we are facing into a particularly challenging cost environment, which means we have had to make tough choices about where we can afford to invest and where we need to do things differently to make our business more efficient and effective.

“The decisions we are announcing today are essential to ensure we continue to drive forward our momentum but have also meant some difficult choices impacting our dedicated colleagues in a number of parts of our business. We’ll be doing everything we can to support anyone impacted by today’s announcements.”

Clive Black, head of consumer research at Shore Capital, said Sainsbury’s had unveiled “further, increasingly necessary steps post the autumn Budget, to manage its cost base to enable ongoing investment”.

NamNews Implications

• Either cut job numbers or raise shelf prices...
• Looks like Sainsbury’s wants to try the ‘job-cut’ route before raising prices.
• In their attempt to deliver £1bn of operating cost savings.
• Anticipate similar moves from rivals as the Autumn Budget Tax increases impact the bottom line...

Owner Of Poundland Hires Advisers To Help Address Sales Slump

Pepco Group is reported to have drafted in City advisers to explore radical options for arresting the growing crisis at its Poundland chain.

According to Sky News, consultants from AlixPartners have been hired to address the sales slump at the discount retailer, raising questions over its future ownership.

City sources quoted in the report suggested possible formal restructuring process, prompting significant store closures or sale of the business.

AlixPartners is understood to have been formally engaged last week, with options including a company voluntary arrangement (CVA) or restructuring plan being floated by advisers on a highly preliminary basis.

Sources close to the group told Sky News no decisions had been taken and immediate focus was improving Poundland’s cash performance and reviving the chain’s customer proposition, stressing that a sale process was not underway.

Last week, Pepco Group revealed that Poundland’s performance had deteriorated further over the Christmas quarter, with like-for-like sales down 7.3% (weak clothing + general merchandise sales and “challenging” market conditions.

Poundland trading statement: they had suffered “a more difficult sales environment and consumer backdrop in the UK, + margin pressure + an increasingly higher operating cost environment”.

“We expect that the toughest comparative quarter for Poundland is now behind us – the same quarter last year represented a period prior to the changes made within our clothing and GM ranges – and therefore, we expect the negative sales performance for Poundland to moderate as we move through the year.

Poundland will also not open any net new stores during the year.

“We are continuing a comprehensive assessment of Poundland to recover trading and get the business back to its core strengths, including undertaking a thorough assessment of all costs across the business, as well as evaluating its overall competitive positioning.”

The appointment of AlixPartners comes several weeks after Stephan Borchert, the Pepco Group Chief Executive, said he would consider “every strategic option” for reviving Poundland’s performance.

He is expected to set out formal plans for the future of Poundland, along with the rest of the group, at a capital markets day on 6th March.

Among the measures the company has already taken to halt the chain’s declining performance has been to increase the range of FMCG and general merchandise products sold at its traditional £1 price point.

NamNews Implications

• Rivals have to be puzzled at how a ‘pound shop’ launched in December 1990…
• …can retail anything at a £1 price-point (having absorbed 3% average annual inflation)…
• ...meaning that a £1 in 1991 should be priced at £2.42 today.
• That said, great for Poundland to have made it work, thus far…
• But perhaps time to acknowledge that the Pound-shop concept has reached its limits…