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  • 5 mins
  • Level 1: Introductory

Cut prices, cut corners?

Updated Thursday 20th November 2008

Following the Credit Crash Britain programme Greg Wallace investigates what consumers gain and lose in budget supermarkets.

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Copyright BBC

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Paul Foley, Managing Director, Aldi UK: There’s one thousand one hundred products in the store, and that compares with a typical large supermarket with over forty thousand items. Interestingly, they don’t have many more different choices than me, I don’t have any depth of choice, so there’s one of everything. There’s one salt, there’s one tomato ketchup, there’s one cornflake, and if you look in a supermarket competitor you’ll find maybe up to sixteen different tomato ketchups but you’re only going to buy one.

Gregg Wallace: But that really puts you under pressure to get it right.

Paul Foley: Absolutely.

Gregg Wallace: I mean if I go to another store and I don’t like their type of cornflake I buy another one. I haven’t got that option here.

Paul Foley: No, I stand and fall on absolutely every individual product. So you can imagine, knowing that, I have to put enormous effort into making sure that the product that I sell is really excellent quality and is a good price. I’m not always the cheapest. There are some cheaper products than I sell, but I will tell you price and quality together I’m definitely the best value.

CHEAP STORE

 

Paul Foley: It costs money to put piped music into the stores, it costs money to have someone pack the bags for you, it costs money to build a bigger store with a greater product range in it. But you can do all of your weekly shop here. It’s not unpleasant, it’s just a little more utilitarian. It’s very simple; if you look at the store you shop it in an M, you go up down, up down and you’ve seen everything. And it’s very quick, very convenient, very easy. Shopping’s not, food shopping’s not something where people say that’s comparable with going to the cinema, it’s something you want to be able to do quickly, efficiently and satisfy all your needs.

HIGH VOLUME LITTLE CHOICE

 

Paul Foley: One of the features of our store is that we do a lot less handling of the product than the average supermarket. Here’s an example. This product would have been manufactured in the factory, would have been put onto that pallet, would have been shipped right through the distribution system and ends up on the shop floor exactly in the same format as it came out of the factory. Nobody, in fact the first person that ever touches an individual tin of the dog food is actually the consumer. We’ve never actually touched any of that. And that’s part of the programme, and of course you can only do that when you sell just one of something. So that’s one other reason. The second is that when you channel all of your volume through just one item within the range of fresh dog food, you get enormous volume and that enormous volume can translate into very efficient production which means that I can buy it at a very competitive price.

PREMIUM FOODS

 

Paul Foley: We have worked very hard on the product range and we’ve emphasised certain products in order to be more attractive to that group of people. Products like Beef Wellington, products like Sea Bass which is currently heavily featured on the TV by Phil Vickery, and that’s been important to just communicate the message that we’re not just tins and packets, there’s really a whole range of meal solutions in this store.

NON-FOODS

 

Gregg Wallace: Have you always stocked non-food lines?

Paul Foley: Yes, that’s an important part of our offer. Remember that I’m stocking the most common one thousand one hundred products that everybody’s buying every week, and it’s the same price every week, I don’t drop the prices and then put them back up again, you can rely on our prices being the same every week, so I need something to spice it up. So we came up with this idea that we offer a theme of products. It could be gardening in April time when people are getting their gardens done, it could be bicycling in the summer, it could be computers when it’s back to school time. We offer a theme of product, we offer it for approximately ten days only. Sometimes the offers are so successful they can even sell out on the day that we launch them. So every Thursday and every Sunday it’s a new theme of product, that product sells through very quickly and they are sensational prices. The prices I told you about on the grocery, being 20% or 30% lower than the competition is nothing compared to the non-food. Here I’m often 60% or 70% below the market price.

Gregg Wallace: How? Because you’re only stocking what’s being offered to you as a serious bargain, is that right?

Paul Foley: No. It’s a planned themed programme, so if you come into the store in March you’re going to find everything for your garden. If I had to stock lawn mowers all year round I’d need to make a little bit more money on them because, of course, you don’t sell a lot of lawn mowers in November or December. I’m only stocking them for the two weeks when people are interested in thinking about how they’re going to manage their gardens that year.

 

This video extra is associated with Food Fight: The Discount Boom.

 
 

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