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Tesco Romping Ahead of Aldi in Kantar’s Market Share Results 12 Week March 21
Join Andrew Grant and Darren A. Smith in the twenty-fourth episode of the Grocery Guru discussing how Tesco is romping ahead of Aldi in Kantar’s market share results.
You Can Read the Full Tesco and Aldi Market Share Episode Transcript Below:
Darren A. Smith:
Welcome to this week’s weekly grocery guru with Andrew Grant. Andrew, how are you?
Andrew Grant:
Good morning, Darren. Yes, very good.
Darren A. Smith:
Good, good. Well, episode 24, Andrew. And I hope we’re not running out of things to say to our viewers. I sense we’re not. What’s in our postbag this week?
Andrew Grant:
Well, not necessarily postbag but news of a sort, I suppose. But maybe it’s lockdown and I should get out more, but the world is turned on its head, as we all know. But I never thought I would see the day again when Tesco would grow its market share and Aldi would lose market share.
Darren A. Smith:
Well, that sounds strange. Yeah, go on. Tell me more.
Andrew Grant:
Yeah, because I mean, the history of the last, what? 10 years has been Aldi just going like that and Tesco slowly losing share every single month. And latest Kantar data has just come out. It’s very exciting for people like you and me, but I’m not sure a lot of people stay up late at night to wait for it. But it’s staggering. We talked last week or the week before I think, about this lockdown effect and how the malts have been the big winners.
Darren A. Smith:
Yes we did.
Andrew Grant:
But obviously, but would you really want to be a buyer this year facing last year’s peaks?
Darren A. Smith:
Oh, I mean, it will be terrible for every buyer out there, every supplier, year on year, will just be… Hard. Yeah.
Andrew Grant:
No. Yes and no. Not so bad if you’re a Tesco, Sainsbury’s, Morrison’s. Pretty bad if you’re an Aldi or a Lidl.
Darren A. Smith:
Okay.
Andrew Grant:
What Kantar have very helpfully done is done a two year change figure, two year growth figure. So, they’ve done a year on year figure for March and a two year figure for March, so you can really see the effects of lockdown last year.
Darren A. Smith:
Okay. So you’re looking at some Kantar data. What’s this? 12 weeks to end of March?
Andrew Grant:
22nd of March. [crosstalk 00:02:03]
Darren A. Smith:
22nd of March.
Andrew Grant:
Yeah.
Darren A. Smith:
Okay. Okay. And you’re picking up on some observations in that data? What you’re seeing?
Andrew Grant:
Well, yeah. What is staggering is Tesco have actually grown market share. 26.8 to 27.1. So up 0.3. Aldi have lost 0.3, magically.
Darren A. Smith:
Okay.
Andrew Grant:
You’ve got Tesco growing ahead of the average. So they’re growing at 8.5 versus multiples at 7.4. Morrison’s at 8.7. Aldi 1.5.
Darren A. Smith:
Ouch.
Andrew Grant:
Yeah.
Darren A. Smith:
Oh. So, just give us… The average growth for a multiple, did you say it was 8.5?
Andrew Grant:
7.4. Tesco had 8.5.
Darren A. Smith:
7.4. And Aldi’s growing at six points less than that.
Andrew Grant:
Yeah. I mean, almost not growing.
Darren A. Smith:
Wow.
Andrew Grant:
Which to me, shows what happens when you haven’t got an online home delivery presence.
Darren A. Smith:
Yes, yes. Very helpful.
Andrew Grant:
And what nails that even harder home, you look at Ocado. Do you have a guess what Ocado’s growth is year on year?
Darren A. Smith:
Well, so they’re obviously very good at home delivery. That’s their model. No, go on. Tell us.
Andrew Grant:
34%.
Darren A. Smith:
Wow.
Andrew Grant:
So, what? Yeah. Four times Tesco.
Darren A. Smith:
Wow. Now we talked in our previous episode, I think it’s a couple of weeks ago, about the Morrison’s preliminary results. And their sales were up well.
Andrew Grant:
Yeah.
Darren A. Smith:
But their profit had died because they were trying to manage COVID, the buying of PPE, labor and store, blah, blah, blah. That I guess won’t be the case for Ocado, because the model is the model.
Andrew Grant:
That’s a good point, actually. Yeah. They’re probably driving some very profitable sales. Although, the point you just made, relate that back to Aldi. Imagine, Aldi’s operating margins are probably the tiniest in the industry. They don’t divulge them.
Darren A. Smith:
Yeah.
Andrew Grant:
But they’ll have had exactly the same costs as a Tesco, Asda, Sainsbury’s, et cetera. But they’re driving no growth.
Darren A. Smith:
[inaudible 00:04:09].Andrew Grant:
Aldi will be under a lot of pressure. It just shows this new world post-COVID, where the growth is in online and home delivery. And if you haven’t got an online and home delivery presence, you’re in trouble.
Andrew Grant:
Now, the other thing I find interesting, Asda are still managing to grow quite strongly. They’ve got the home delivery and an online presence. They haven’t quite got the loyalty presence that a Clubcard or a Nectar card brings.
Darren A. Smith:
Yeah.
Andrew Grant:
Because what I’ve found again, quite interesting. And I mentioned it last week, a relatively big headline, “Asda start a hundred million pound price war.”
Darren A. Smith:
Yeah.
Andrew Grant:
I think it was in one of the big read top papers. And Asda’s new owners recognizing that they can’t allow Aldi to steal their customers. [crosstalk 00:05:09] And about the only thing they’ve got to fight on is price.
Darren A. Smith:
Yes. Yes.
Andrew Grant:
So, great, big, hundred million pound price war.
Darren A. Smith:
Yeah.
Andrew Grant:
Are you impressed? Are you going to be going down to Asda for your weekly [crosstalk 00:05:21]
Darren A. Smith:
Obviously, a hundred millions a big number. And it’s a good part of PR. I sense where this is going.
Andrew Grant:
Yeah. Asda’s turnover is 23 billion.
Darren A. Smith:
Yeah.
Andrew Grant:
So, a hundred million investment is 0.4p in the pounds. Less than I ha’penny in the pound. Now, obviously, they won’t invest that hundred million on every single line.
Darren A. Smith:
Yeah.
Andrew Grant:
But even if they took their top 10% line, say.
Darren A. Smith:
Yeah.
Andrew Grant:
And invested that money, it’s four pence reduction.
Darren A. Smith:
It’s all pretty-
Andrew Grant:
4p on a can of larger. Are you really going to cross the road for that?
Darren A. Smith:
Well, you’re not. When you put it like that, you’re not. So, it’s a little bit like when the government say, “We’re going to put 10,000 more bobbies on the beat.” And we don’t end up with 10,000, we end up with fewer numbers than that.
Andrew Grant:
Well, it’s not that, is it? It’s when they say what the investment is. Because I think Diane Abbott got caught out by that, didn’t they? Saying, “We’re going to put 10,000 bobbies on the beat and it’ll cost a million pounds.” And somebody said, “Oh, we’re paying policeman 100 grand a year now, are we?”
Darren A. Smith:
Something like that, wasn’t it?
Andrew Grant:
Yeah. The one that gets me is the sofa warehouses and the home furnishing warehouses that you see on the out of town centers. And they go, “Incredible 50 million pound sale.” And you think, “Well, I personally aren’t thinking of spending 50 million pounds on a sofa. So what’s 50 million mean?”
Darren A. Smith:
It’s just a big number to bandy about. Coming back to your Kantar numbers. The bit I’m taking out from our Morrison’s preliminary results look, and the Kantar your shared today, is the real darling of all this must be Ocado, because their sales are up hugely and they haven’t changed their model. So they must be the ones that are really profitable and really smiling from all this.
Andrew Grant:
It gets so, other than obviously, if you do look at Ocado’s results. Their operating model is a very, very heavily capital invested model, which will take a lot of years to pay back. But yeah, on the day-to-day face of it, they must have the biggest smiles of the lot on their face.
Darren A. Smith:
I’ll look forward to that.
Andrew Grant:
But as I said, I think, just bringing it round. Aldi have got real problems. Because…
Darren A. Smith:
Haven’t they started Click & Collect?
Andrew Grant:
They have, but I tried it because I’m actually quite an Aldi fan. I think their quality is superb. The price is no longer jaw-dropping, but still very, very good. And other than them never having more than one checkout open and it taking forever to get through, I quite like Aldi.
Darren A. Smith:
Yeah.
Andrew Grant:
And I’ve had a look at their Click & Collect and it’s poor.
Darren A. Smith:
In what way?
Andrew Grant:
It’s clunky. It’s not in every store. I don’t think it’s every product. It’s not seamless, like a Tesco or a Sainsbury’s experience is.
Darren A. Smith:
Right.
Andrew Grant:
And it’s Click & Collect.
Darren A. Smith:
Yeah. It’s different.
Andrew Grant:
And obviously, Aldi stores don’t necessarily have the car parking and the space to make it easy to operate Click & Collect.
Darren A. Smith:
Yeah. Very true.
Andrew Grant:
So, will they be going into vans? And the other thing that struck me again, going back to Asda’s hundred million pound price war, it’s very unsubtle, very brutal. And probably not going to work if it’s less than a ha’penny in the pound.
Andrew Grant:
I can imagine what the likes of Tesco are doing and they’re doing it very successfully in terms of winning back Aldi customers. They’ll be deploying a weapon that Asda can’t deploy, which is Clubcard data.
Darren A. Smith:
Yes. Yes, of course.
Andrew Grant:
You can imagine Tesco being all over their shopper baskets, trying to work out which shoppers are still shopping in Aldi and what products they’re buying.
Darren A. Smith:
Yeah.
Andrew Grant:
And then particularly, I guess, home delivery stuff as we get post-pandemic. Some people are buying all their toilet rolls in Aldi. Toilet rolls are literally a pain in the ass to get back. They’re so bulky.
Andrew Grant:
Or bottled water. That’s another one. You buy six two litre bottles of bottled water and try and carry those to your car. If you were Tesco, you’d be finding out which of my customers are buying their bottled water and toilet rolls at Aldi. And then targeting them with free home delivery vouchers or something.
Darren A. Smith:
You would. And particularly because you’re supposed to shop on your own, what you just said is even more exacerbated by the fact that I got to carry this whole damn lot myself if I’m shopping on my own. Okay.
Andrew Grant:
I think Asda at the moment’s seemingly doing okay, but price is always a very blunt and very short term tool and easily replicated the next day by your competitor.
Darren A. Smith:
Yes.
Andrew Grant:
Whereas this very fine… That’s the shotgun approach. People like Tesco would be using a sniper approach of literally picking off customers and garnering back their loyalty and growing market share. Coming back to where we started. Tesco grows its market share. That’s a headline in a decade.
Darren A. Smith:
That is. That is. And I love your metaphor there. The shotgun versus the rifle or the sniper approach.
Andrew Grant:
Yeah.
Darren A. Smith:
Yeah. I can see that. Asda, shotgun. Tesco, rifle. Yeah. Picking off their customers much more in a sophisticated way, understanding their shoppers, shopper insights, all that good stuff we’ve been talking about before.
Andrew Grant:
Yeah. Yeah. Incredibly interesting times that we so now fascinating, because obviously, not in this data is the effect of pubs and restaurants opening on Monday.
Darren A. Smith:
Yes.
Andrew Grant:
So, when we see… Well, maybe not April, maybe May’s data. How much of that food and particularly, alcohol spend just literally seeps away from the multiple sector?
Darren A. Smith:
Yeah. Yeah.
Andrew Grant:
Because if you read the press, you cannot get a beer garden reservation for love nor money.
Darren A. Smith:
And maybe that will continue. I mean, I guess it’s going to largely depend on what the weather’s going to be over our summer. If it’s a good summer, then I guess the prediction is pub for everyone. And the sales for the multiples will go backwards.
Andrew Grant:
Yeah.
Darren A. Smith:
Okay.
Andrew Grant:
Interesting to watch and for people like us that need to get out a bit more, waiting for the monthly Kantar data, is something to look forward to and savor.
Darren A. Smith:
Andrew, thank you very much. We’ll see you next week. Thank you for your insight into multiple growth from the Kantar data. And maybe we’ll touch on that in a month again and let’s see what happens.
Andrew Grant:
Take care.
Darren A. Smith:
Take care. Bye. Bye.
Andrew Grant:
Bye.
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