Despite better sales numbers from Sainsbury's yesterday it's Aldi that's giving the mainstream grocers - including Tesco - pause for thought. The German discounter saw a 25.2% climb in sales in the four weeks up to 25 May, according to latest Nielsen sales data while Tesco, Morrisons and Asda all saw market share dips.

What's behind the Aldi sales surge - and how long will it last?

Cheap German pickle

Tightened financial belts, a growing appreciation of alternatives to the mainstream supermarket rivals, and value for money.

"With continued high levels of advertising," says Nielsen's UK head of retailer and business insight, Mike Watkins, "Aldi is one of the few retailers consistently able to attract significantly more new shoppers."

Kantar Worldpanel's figures don't contradict Nielsen's findings. Kantar found Aldi took an all-time record 3.5% share of the grocery market for the 12 weeks up to mid May. Lidl has also seen strong sales growth (though weaker than Aldi).

More middle class

Both retailers are attracting more middle-class customers into their aisles - no mean feat when you consider the indifferent success of smaller supermarket players like Netto and Kwik Save.

It's also become increasingly acceptable for many middle class shoppers to act cheap, or more left-of-field: why spend more money than you need?

Brand name avoidance

Especially if cash is tight and UK wages remain under pressure. Aldi and Lidl have similar business models. Both sell some brand names. But keeping prices down via their own-label staples helps them avoid paying higher prices from major household names.

There's also a focus on weekly deals on the basics and simple advertising (this approach is hardly rocket science). Both German discounters have won awards for the quality of their products; last year Which? awarded Aldi the title 'Supermarket of the Year'.

Graduate trainees for Aldi earn a decent wage - £40,000 - though Aldi insists on a 2:1. Some stores feel fairly back-to-basics, especially when compared with the sheen of a Waitrose. And there's still too much emphasis on German meats and canned fish. But both Aldi and Lidl are improving.

How important, then, are brand names to you?



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