Not many retailers would want to turn the clock back to March 2009, the darkest hour of the worst recession since the Second World War. With more than two million out of work and the stock market at its lowest ebb, economists were expressing real fears that the UK was on the brink of a 1930s-style slump.
But at the Warwickshire head office of no-frills supermarket Aldi, business was booming as the unloved German discount grocer unexpectedly became a recession darling. Consumer trend-watchers talked of the "Aldi effect" and dubbed its customers the "Aldi-rati" as middle-class shoppers embraced the "hard discounters", making £4.99 Canadian lobsters at Lidl and £7.99 bottles of Châteauneuf-du-Pape from Aldi the talk of the dinner party circuit.
The hype created a snowball effect that saw Aldi routinely chalk up monthly like-for-like sales increases of 20% – even 25% – in 2008 and 2009, an unprecedented level for a sector that rolls along at 4%.
Fast forward to 2010 and it is a different story. Aldi's stores in UK and Ireland fell to a £58m loss last year on sales of £2bn, while its smaller Danish rival Netto has quit the country, selling its stores to Asda. Recent market share figures from Kantar show upmarket chains Sainsbury's and Waitrose are the stars on the rise, with both chains gaining market share in the three months to 3 October, compared with the same period a year ago. Analysts say consumers have tired of austerity food shopping, with large supermarket groups reporting sales of their premium own labels picking up again, suggesting the upstart discounters may have had their day.
One industry executive believes the discounter market has a natural ceiling of 4-5% and that the chains, which had been underperforming prior to the recession, were able to play catch-up when it hit. "I can't see any reason why the discount market would get any bigger," he says. "Why would people seek out a limited range of brands, with names that they have never heard, at prices that are not much different to what is on sale in Asda and Tesco?"
Sainsbury's is now the fastest-growing member of the big four (the others being Tesco, Asda and Morrisons), while Waitrose is growing at twice the market rate. Detailed figures show Aldi underperforming the industry, with its market share unchanged on a year ago at 3%. Lidl is faring better, but its share is also unmoved at 2.4%.
The Observer, p46