Image: www.imago-images.de / Chris Emil JanÒŸen
Discounter war: Aldi and Lidl face a nasty surprise on January 2nd
January 2nd is the key date: At the beginning of the new year, the VAT rates will be raised again to the old level. The day could lead to the start of a price war between the discounters Aldi and Lidl. According to “Lebensmittelzeitung”, the two supermarket chains are already considering strategies to gain the upper hand.
Because neither of the two discounters knows what the other is up to. Will consumer prices rise again after the temporary tax cut? Or do they stay the same?
Aldi and Lidl have to expect that the competitor will advance on January 2nd and cancel the price increase
Aldi and Lidl are threatened with a nasty surprise. Everyone plans to actually raise prices on January 2nd, according to the report. Just: What happens if the respective competitor rushes ahead? Then it seems unthinkable that the other discounter does not react. All plans for the price increases would then be thrown overboard for the time being. In the competitive food market, none of the giants can afford to be more expensive than the other. And Aldi and Lidl both make the absolute claim to be the cheapest provider.
But the game about the price increase does not only affect Aldi and Lidl. The entire market orients itself towards the two trading giants – should either of the two decide not to raise prices, the rest will follow. This could lead to severe entry losses right at the beginning of the year.
The head of the drugstore chain dm, Carsten Werner, told the food newspaper: “We are guided by the needs of our customers and therefore of course look at how the competition will proceed“, and thus announced a possible price adjustment to the discounters.
Edeka and Rewe are also prepared for the price change
According to its own information, Edeka is planning a gradual adjustment of prices to the VAT changeover. The employees are also important for the market leader – they shouldn’t have to endure additional stress after the exhausting Christmas business. The price change should be accompanied by advertising.
Rewe should have an easier time making the switch, because the chain has mostly offered special discounts instead of applying the VAT reduction directly to all prices. However, it could take a few weeks for both supermarkets to return to their old level.
It will take some time to see how the prices will eventually level off. None of the big supermarket chains can afford to offer discounts all the time. “Marketing gags” at the beginning of the changeover are to be expected, the “Lebensmittelzeitung” quotes the manager of a full-range retailer not named.
The price increase will also incur costs
The discounter chains Lidl and Aldi have been fighting a bitter battle for the lowest prices for some time. In July, the VAT cut came due to the Corona crisis and both providers lowered their prices. Aldi offered a flat discount of three percent – and, according to its own information, spent a three-digit million amount on it.
Aldi Nord, Netto and Lidl have to exchange around 2000 labels for the price change. Netto is said to have already planned a sum in the mid-single-digit million range. Aldi Süd and Penny have only shown the discount on the receipt and left all price tags unchanged.