Burnham’s crackdown on ‘price-gouging’ splits supermarkets

Aldi's chief executive, Giles Hurley, has criticized rival British supermarkets for offering "misleading" discounts that do not provide real value to customers. Hurley's comments have sparked a dispute between Aldi and Tesco and Sainsbury's, as the government plans to intervene in the pricing practices of major retailers. Aldi does not offer loyalty discounts, unlike Tesco and Sainsbury's, which both have loyalty card schemes that attract millions of members.

Hurley argued that loyalty discounts distort customers' understanding of the true cost of products, as the "savings" they claim do not always reflect the actual price paid at the till. He emphasized that buying a product at a discounted price that is still higher than other retailers' prices does not equate to genuine value. Tesco and Sainsbury's defended their loyalty schemes, insisting that they offer genuine savings.

The Competition and Markets Authority (CMA) recently investigated loyalty discounts offered by major supermarkets and found that they generally provide between 17 and 25 percent savings compared to rival prices. However, the watchdog also noted that some loyalty-priced products were found to be significantly more expensive than the cheapest price at rival supermarkets.

Despite the disagreement over loyalty discounts, the UK's grocery industry remains fiercely competitive, with major supermarkets striving to match the low prices offered by German discounters Aldi and Lidl. The British Retail Consortium (BRC), which represents the UK's largest supermarkets, is confident that they are among the most competitive in the world, and its low prices contribute to downplaying food price inflation despite supply chain challenges and rising costs.