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Morrisons to slash prices as German discounter Aldi reports record Christmas

Aldi sold almost £1bn worth of food and drink in the run-up to the holiday season, and Morrisons has responded by slashing the prices of more than 900 products
aldi store
Aldi now has 827 stores in the UK having opened 65 in 2018

Aldi made almost £1bn of sales last month, making it the German discount supermarket’s best-ever performance over the all-important Christmas trading period.

The budget retailer, which commands a 7.6% share of the UK grocery market, said the sales growth was driven by “exceptional demand” for its premium ranges as well as an influx of festive customers who would usually shop at other, “more expensive” supermarkets.

READ: Aldi to open 130 new UK stores as it return to annual profit growth

“Our Christmas range was the largest and most innovative yet and caught the imagination of our customers, who visited our stores in record numbers,” said UK chief executive Giles Hurley.

“Although we saw strong growth across all key categories, the standout performance was in our Specially Selected brand where shoppers treated themselves to premium products for a fraction of the price they would have paid elsewhere for similar quality products.”

During December, Aldi sold more than 17mln bottles of wine, Champagne and Prosecco - equivalent to 3.2mln glasses per day. It also sold nearly 50mln mince pies and almost 100mln sprouts.

In response to the continued growth of Aldi and its German discounter peer, Lidl, WM Morrison Supermarkets PLC (LON:MRW) has slashed the price of more than 900 products.

Slew of retailer updates due

Britain’s fourth-largest grocer, along with peers Tesco PLC (LON:TSCO), J Sainsbury plc (LON:SBRY) and Marks and Spencer Group Plc (LON:MKS), is due to update on its Christmas performance later this week.

Those announcements are expected to confirm that their cheaper rivals are continuing to take market share from them.

Bradford-based Morrisons is fighting back though and said today it would cut an average of 20% from the prices of “store cupboard favourites” such as tinned tomatoes, cereal and ready meals.

Marketing director Andy Atkinson said: “We’re listening to customers who are telling us that their budgets will be stretched in January, so we are cutting every penny we can on the essentials that will help them feed their families.”

Tesco likely to best of ‘Big Four’

Aldi said it would look at the price changes but added that it was confident its stores “would still be cheaper to shop in”.

Speaking to the Guardian, a spokesman said: “We see this every January, and Morrisons is unlikely to be the last one to cut some specially chosen prices.”

Analysts expect Morrisons to post a 0.5% rise in sales on Tuesday, versus a forecast jump of 2.4% in overall food sales.

READ: Dunelm lifts full-year guidance

A small drop in sales is predicted at Sainsbury’s, while the City is speculating that Tesco could register a 1.5% Christmas sales rise.  

The positive Christmas update from Aldi, as well as similar statements from Hobbycraft, Dunelm PLC (LON:DNLM) and Next PLC (LON:NXT), has bolstered the share prices’ of most of the sector.

Morrisons is up 1.5% to 219.0p, Tesco has soared 2.7% to 202.7p, while Sainsbury’s has added 2,.1% to sit at 201.6p. Marks & Spencer is also up by 1.8% to 257.7p.

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