Aldi shows it's not immune from the effects of the price war it started

The discounter's growth is slowing and its profits are falling, but it's ready to respond and that should worry Britain's established grocers

Aldi raises a glass to growing sales, but that growth is slowing

If can’t be much fun running a supermarket chain right now. They have to run like Mo Farah just to stand still. Much of the sector is struggling to keep up, and the result is falling sales, falling profits and conference calls with increasingly unhappy shareholders.

Chances are there will be more of those in the weeks and months ahead. Aldi, one half of the German invasion that is a major cause of the sector’s current difficulties, is planning to spend £300m on giving its stores a facelift while ensuring its prices continue to pose a challenge to its rivals.

It comes on the back of another record year (to 31 December 2015) in which UK sales came in at £7.7bn, a rise of 12 per cent when it is not uncommon for UK headquartered rivals to be reporting falls.

However, Aldi’s growth, while impressive, is slowing markedly. It reported a 31 per cent increase in sales this time last year.

Some degree of slowdown was inevitable. The bigger you get, the harder it is to grow. Nonetheless, the scale of Aldi's points to the fact that it is proving far from immune to the effects of the price war it started with the help of its shadow sibling.

Britain’s grocery establishment has responded to the challenge, which helps to explain the1.8 per cent fall in Aldi’s operating profits despite that still impressive growth in sales. Aldi had has had to institute fresh price cuts of its own.

Morrison’s has shown signs of revival. The Co-op might not be making much money but its doing quite nicely where sales are concerned. Retail analyst Nick Bubb has just highlighted the widely followed Grocer 33 weekly supermarket pricing survey which saw Sainsbury claiming “a rare but timely win, ahead of next week’s Q2 trading update”. Another survey showed it providing the best service.

Asda continues to struggle, it’s true, and it will be interesting to see if Waitrose can hold its own with a basket more than £10 dearer than the equivalent at Sainsbury’s in the Grocer 33.

But the German entrants simply can’t afford to coast, a fact that Aldi has recognised.

What remains remarkable about the ferment it helped to institute – and Amazon is now stirring the pot as well – is the lack of any real casualties.

Some chains have suffered more than others, some CEOs have lost their jobs, as have many managers lower down the food chain. Dividends have been cut, or eliminated, and the sector’s share prices have taken a battering. But they’re all still fighting on unbowed, if rather bloodied.

Which suggests that there was quite a lot of fat to be cut from the industry before Aldi began its rise and nowhere near enough competitive pressure within it.