Aldi and Lidl bullish on prices in face of Sainsbury’s-Asda merger

Sainsbury’s last week promised to bring down prices on everyday items by 10% after it completes its £12 billion merger with Walmart-owned Asda.

Sainsbury’s chief executive Mike Coupe said he would put pressure on large suppliers and pass on cost savings to consumers.

Walmart’s significant buying power will also give Sainsbury’s an advantage in general merchandise, he said.

However, the German discounters have responded aggressively to Sainsbury’s price promise, saying they will remain the cheapest option on the high street.

A spokesman for Aldi said: “We will never be beaten on price and are absolutely committed to maintaining the significant price gap between Aldi and our competitors.”

Lidl boasted that its global buying power and simple operating model provided the business with “unparalleled resilience” when compared with rivals.

“Our customers can be assured that we cannot be beaten on price,” a Lidl spokeswoman said.

Mr Coupe has refused to say where the price cuts would fall, arguing they can only be determined once Sainsbury’s and Asda have access to each other’s buying data.

However, it is understood that Aldi and Lidl would be willing to undercut the newly-formed grocery giant in whatever product range it targets.

A Sainsbury’s spokesman said: “We welcome competition and see this as more good news for British households.”

Aldi and Lidl have both been gaining market share in the UK by undercutting the so called Big Four supermarkets – Tesco, Asda, Sainsbury’s and Morrisons – and have become a particular threat to Asda’s value offering.

According to the most recent data from Kantar Worldpanel, Lidl was the UK’s fastest-growing bricks and mortar supermarket with sales up 9.1%, while Aldi continued to experience strong growth with sales up 7.7%.

The two supermarkets now have a combined market share of 12.7%, and both have ambitious expansion plans.