Aldi Price Match: clever pricing campaign or free press for the German discounter?

Synonymous with affordable and efficient shopping, Aldi has shaken up the UK supermarket sector over the last 12 months, officially overtaking Morrisons and taking its place in the ‘Big 4’ last autumn.

Over that time it has become increasingly normal for the likes of Sainsbury’s, Tesco, Asda and Morrisons to defend their sales losses (£170m at the last count) as customers head to both Aldi and Lidl to enjoy cheaper prices.

The successes of the German discounter – which saw an impressive 26% growth over the Christmas period – has left mainstream retailers such as Tesco and Sainsbury’s feeling they have have no choice but to convince cash-strapped customers that their offering will match Aldi’s low prices.

Tesco first launched its Aldi Price Match campaign in early 2020, just as the pandemic began to have a real effect consumer shopping habits. It’s still running strong today and last week, Sainsbury’s announced that it had increased its own Aldi Price Match range by almost a third, up from 233 products in December to 310.

The supermarket dubbed it the ‘biggest ever Aldi Price Match’, with 25% more items available in comparison to the campaign’s autumn selection.

It must hurt the marketing divisions of both Tesco and Sainsbury’s to see Aldi’s name plastered everywhere in store, reminding shoppers facing a cost-of-living crisis that their competitor consistently guarantees cheaper prices.

While price matching is by no means a new marketing strategy, is it a wise one in the current climate? Inflation remains high and consumers are shopping primarily with their budgets in mind, leading some marketing and retail experts to question whether the price match strategy actually benefits Aldi more in the long run.

So is Aldi Price Match branding continually promoting a rival… or is it a clever branding ploy, convincing loyal customers that they need not shop elsewhere?

Weighing up the pros and cons of the ‘Aldi Price Match’

School of Marketing CEO Ritchie Mehta believes that the only way a supermarket can achieve growth in such a saturated and mature market, is “to take a bite out of your competition’s lunch” and eat into the “heartland of the key players with bargain, no frills prices.”

Mehta feels that Aldi has been “pretty smart” with its advertising, using “cut through” Cuthbert the Caterpillar to go head-to-head with M&S on the social media side and introducing Kevin the Carrot on their above the line work. He believes that it is key to mix brand performance with a strong direct consumer-led proposition.

However, the marketing expert believes that if you “poke the bear” you will eventually “feel its wrath”, as Tesco and Sainsbury’s have both launched several attempts to “meet with Aldi on their turf”.

“When the voice of Tesco and Sainsbury’s shout, you listen, particularly since they have a big advantage over Aldi given their number of physical locations. In the case of Tesco they triple Aldi’s foot print. Combine this with a price match message and its going to throw a punch.”

Mehta states that the two sole aims of a price match are to drive new customers to stores and reassure existing ones.

However, the School of Marketing CEO also finds that price discounting often “doesn’t move the needle as much as you think.” He says that in the majority of cases price matches just erode value as “most of the customers would have likely bought from supermarkets anyway for a whole multitude of reasons.”

“Plus when you add in the load of free airtime you have just given Aldi – since their low prices are the central theme of the advert – you have invariably increased mental availability for them, at least comparable to what you have done for your own brand. An own goal some would say.”

Overall, Mehta says that the Aldi Price Match is a “risky play”.

“In today’s climate being a good value player is important but is it important to directly call out a competitor to achieve this? This is the big question I would be asking the top brass at the behemoth chains.”

Tesco vs Sainsbury’s

Both Tesco and Sainsbury’s’ Aldi Price Match schemes have been running for over two years but International Private Label Consult (IPLC) UK partner, Paul Stainton, believes the former triumphs over the latter.

Three years ago Tesco created the initiative to stem the loss of sales to Aldi and Lidl. Stainton accredits Tesco with creating an original and “innovative” campaign that generated “a lot of media publicity and resulted in good traction with their customers”.

However, the positive PR did not prove to be permanent as some people questioned whether the quality was “like-for-like with Aldi”.

“Some products were removed from the list and, over time, Tesco added more of their ‘standard tier’ own label products, for which the quality was/is comparable,” Stainton added.

In comparison, Stainton believes that Sainsbury’s price match launch was not as impactful as Tesco’s, “possibly as they were second to the table and criticised for copying Tesco’s campaign.” However, Sainsbury’s soon changed its price match logo and in-store material to make the campaign more effective, a move which Stainton said “resonated more with their customers”.

Despite the praise Stainton has given to the two supermarkets however, he feels that the “huge” amount of instore point-of-sale (POS) in both Tesco and Sainsbury’s – as well as newspaper, radio and TV ads – are damaging for the brands as they “shout about Aldi’s better prices”.

“Surely, such constant, frequent, messaging mentioning the brand Aldi can only make the Tesco or Sainsbury’s customer think: ‘They have great prices … maybe I’ll try them.'”

Customers may start to believe that the supermarket they remain loyal to is “losing its identity as all it can talk about is another retailer”.

In spite of the negative view of the Aldi Price Match however, the IPLC UK partner personally feels that the schemes will continue for the foreseeable future.

“Stopping them could cause Tesco and Sainsbury’s damage, as consumers will feel they’ve had to stop them as they can no longer keep their prices as low as Aldi. They are also strong price message campaigns which are very relevant in the current economic climate.”

Execution makes the difference

Ecoinomy Limited head of transformation and change, Steve McGeough, supposes that the retailers’ execution on how the Aldi Price Match is communicated to the customer “makes the difference”.

McGeough believes that Sainsbury’s’ execution is not hitting the mark as the volume of POS and space (in store and online) dedicated to telling customers that Aldi prices are being matched, is “detrimental to their brand.”

“This is just free advertising,” he adds. “Not only are they telling customers that Sainsbury’s is more expensive, the brand is also only matching on a select amount of lines. Therefore, the idea that customers should go to Aldi to get the lowest price on everything else is planted in the consumers head.”

McGeough feels that Tesco’s execution of its price match messaging beats that of Sainsbury’s.

“Tesco Online is more subtle and includes Aldi Price Match within its ‘we want you to spend less’ section as a range of propositions they use. For me this is more effective as it talks about Clubcard and Low Everyday Prices.”

In spite of this, McGeough ultimately feels that Aldi will always be “the winner”.

“The discounter is getting airtime for free and their competitors are having to invest huge sums of money to keep up with them.”