Aldi boss wades into supermarket ‘price-gouging’ row
The boss of Aldi has waded into the bitter row over whether supermarkets are profiteering off of struggling customers as he backed a government crackdown on “rip-off” discounts.
Giles Hurley, the chief executive of the discount grocer, said the government is “right” to take on misleading discounts and promotions “in their work to tackle cost of living pressures”.
“For too long, shoppers have been bombarded with discount signs and loyalty prices that can give the impression they’re getting a great deal, when the price they pay at the till can still be higher than elsewhere,” he said.
Earlier this week, Andy Burnham pledged to outlaw fake discounts as part of his bid to deliver households some “breathing room” on the cost of living.
The Prime Minister said that Westminster “has got used to telling people that everyday hassles” like phoney discounts and subscription traps “are just a part of life”.
“I don’t think that’s right, especially when the cost of living continues to weigh heavily on so many people’s lives,” he said.
Retailer row over ‘profiteering’
This move extended the government’s efforts to force supermarkets and retailers to take responsibility for protecting consumers during the cost-of-living crisis caused by the Iran war.
At the start of the month, Chancellor John Healey revived a row with grocers – started by his predecessor Rachel Reeves – when he threatened retailers against taking consumers “for a ride at the pump or the till”.
Retailers quickly hit back, with the British Retail Consortium (BRC) – their trade body – telling the government they are prepared to prove that they are doing everything in their power to keep prices down.
Jim Bligh, the BRC’s corporate affairs director, had said: “It’s not helpful for the Chancellor to label retailers as potential profiteers when it’s one of the UK’s lowest margin industries.
“That competition is also keeping food price inflation down – on which the government has done nothing to support the industry.”
Aldi: Loyalty cards ‘distort value’
But Hurley’s comments appear to have placed one of the UK’s most successful supermarkets on the side of the government in this row.
The Aldi boss told the Sunday Times that its rivals’ use of loyalty discounts – including Tesco’s Clubcard and the Sainsbury’s Nectar card – distort shoppers’ understanding of the real value they are getting at the till.
He said: “The problem with loyalty pricing is that it encourages shoppers to focus on how much they’ve supposedly saved, rather than how much they’ve actually spent. Taking £2 off a £6 product doesn’t make it good value if you can buy it for £3 somewhere else,” Hurley added.
“And when so-called special prices are running week after week, shoppers are entitled to ask what the real price actually is. A permanent promotion isn’t the same as a permanently low price.”
Aldi, alongside fellow German discounter Lidl, has rapidly tightened its hold on the UK grocery market in recent years, forcing competitors Sainsbury’s and Tesco to hit back with “price-match” schemes.
But both Aldi and Lidl could see their ascendancy slowed, after the UK’s competition watchdog said it plans to close a loophole which allows the German discounters to block competitors from opening sites on nearby land.