The highest level of sensitivity for retailers is at the consumer price point. This is clear in Aldi’s vow to keep costs low for customers – despite rising inflation. In the short term this is working, with the supermarket attracting almost 1.5 million extra customers to its stores over the past 12 weeks alone. However, as inflation is predicted to remain high for the next couple of years, there is only so much cost that supermarkets – whether it’s Aldi or any other – can absorb before their margins begin to be impacted.
To remain competitive, supermarkets must optimise costs where possible – this means being more agile when it comes to changing the mix in stores. They should, for example, align consumer demand with data science-driven store assortment to support availability and maximise profit per square foot of the store space. This is in addition to focusing on their price match schemes to stay competitive, whilst negotiating hard with suppliers to keep prices down.