Showing posts with label Lidl. Show all posts
Showing posts with label Lidl. Show all posts

Wednesday 13 January 2016

Aldi's older UK stores growth slowdown - beginning of the end, or end of the beginning?

With Aldi growing new space by 10-15% per annum, the discounter is clearly racing to reach its full foot-print potential in the UK.

Although like-for-like sales in stores open more than 1 year are 1%, the emphasis has to be on making the Aldi offer accessible to the entire UK population, in the current flat-line market. Given the relatively low cost of opening new outlets, Aldi – and Lidl – are better able to afford a greater degree of geographical infilling than are the redundant-space mults.

It could therefore be said that Aldi are approaching the end of the beginning of the first discounter-wave in the UK.

With Kantar figures showing Aldi and Lidl attracting 1m more shoppers to their stores, resulting in a 13.3% and 18.5% jump in sales respectively, it can be seen that initial access to their offering can be lucrative for the discounters. Given that they are simultaneously pushing upmarket, successfully, and with no end to flat-line demand in sight, the discounters are surely pursuing the right priorities in this market.

Given eventual discounter outlet saturation, both players will then have sufficient financial momentum to focus on optimising like-for-like performance at local level, well in advance of any end in sight…

Meanwhile, branded suppliers have to find ways of sharing in this discounter growth. This means finding ways of moving from the ‘ongoing continuous relationship’ process that was possible with traditional retailers, to the ad hoc transactional dealings necessary with discounters.

For instance, a little-noticed announcement by NestlĂ© some weeks ago re highlighting its confectionery brands in all of Aldi’s German outlets, indicates one of the moves being made towards continuous collaboration with this increasingly important route to consumer for major brands…

To help your colleagues focus on this challenge, why not consider running a what-if on the Aldi-Lidl combination eventually moving from a 10% to a 20% share of the UK grocery market?

Tuesday 4 August 2015

Aldi-man new fashion range launch

Having landed a few heavy punches on the grocery mults, Aldi is now squaring up to the High Street clothing giants M&S and Next, with its first fashion range for men.

The new summer clothing range includes linen trousers (£9.99), smart chino shorts (£7.99) and Oxford shirts (£6.99), and for those NAMs wanting to avoid being recognised by other Aldi-NAMs, marl zipped hoodies are a must-buy @ £8.99….

Worth at least a store visit, but if you cannot afford to be seen in Aldi, some good in-use pics are available here.

Where is this headed?
Sharp-eyed followers of mens’ fashion will remember that Lidl beat Aldi to it via their launch of a men's fashion range in November 2014.

However, apart from resulting in a little headline-grabbing skirmishing, taking both initiatives together gives another indication of the extent of the discounters’ ambitions in the UK.

In other words, someone at Aldi/Lidl has to be assessing potential opportunities category by category, seeking the right blend of complacent-pricing and tunnel-vision that might respond to a Lidl proper discounting...

It costs little to try, and one discounter’s success automatically provides a pointer for the other…

Meanwhile, one can only imagine the additional disruption in the men’s fashion world should Poundland find a way to follow suit…?

Thursday 9 April 2015

What if Aldi & Lidl grow at 10% in flatline?

Apart from politicians' assurances re post election growth, just suppose that we are into flatline growth for the next five years, at least...

Also given Aldi & Lidl combined share of 9% (see yesterday's NamNews) and a conservative (!) estimate of 10% growth vs major mults at 0%, the two discounters will reach 15% share by 2020...

The resulting issue for suppliers has to be, barring radical changes in discounter ranging policy, most of this growth will be via surrogate branding, at the expense of national brands...

Branded suppliers have a choice:
  • Either persuade the discounters to stock more brands...
  • Or find a way to optimise private label, and seek a fair share of the discounter action
...whilst the major mults mount the deepest price cuts ever, possibly fuelled by back to front margin moves...

Tuesday 25 November 2014

What if Aldi UK keeps going?

Given its UK 2013 sales of £5,275m and growing at 25%, Aldi could reach £16bn by 2018.
In a flat-line market, this would make it twice the size the Co-op Foods business and say 50% of a major multiple, given zero to very low growth of its competitors in the meantime.

Apart from a ‘handful’ of brands, this means that most of its business would be in surrogate brands, at the expense of national brands, effectively taking demand from the branded market.

This suggests that brand-suppliers have to find a way of dealing with Aldi, either via 1-off discontinuous promoting, or through supply of surrogate labels…

And with Lidl showing similar signs, they should be added to a new trade strategy

Perhaps yesterday’s news of changes at the top of Aldi UK - our biggest story of the day - provides NAMs with an excuse to help your company revisit corporate policy re the discounters?

Sunday 2 November 2014

Lidl’s giant step for UK discounting?

                                                                                                                              pic: Liverpool Echo

According to the Liverpool Echo, Lidl are to take over Liverpool's historic Lewis's Building, once one of the city’s landmark stores.

But having been empty for several years, it is now in line for a makeover by the chain. The ground floor will be taken up by Lidl, but much of the rest of it is still being developed as part of the Central Village apartments complex.

If Lidl are truly planning a move to large-space retailing, the issue will be whether a full-range offering, complete with overheads, will allow the discounter to operate the same low-cost business model, or will it have to compromise its pricing advantage over major mults?
(or is this the first move in opening a Kaufland Hypermarket in the UK by Lidl's sister company?) 

Watch this space, literally…

Thursday 21 August 2014

Having had your lunch, Lidl are coming for your clothes…

Having taken a slice of the multiples’ action - including some top-end delicacies - and dipped their toe into the rag trade via basics like underwear, vests and childrens’ wear, Lidl have moved into what it describes as "high-end, on-trend" mainstream fashion to capitalise on its growing UK foot-print…

The unbranded clothing range – manufactured in China and Bangladesh – will compete head-on with Asda's  George brand, Tesco's F&F and Sainsbury's Tu, as well as discount clothing specialist Primark.

In doing so, they and the mults are pushing at the open door of traditional clothing retailing...

Given that clothing retailers need retail margins of up to 60% to cover difficult-to-forecast demand, especially in fashion, and to finance end-of-season 50% price-cuts, the Lidl move represents a major threat to a sector already struggling for survival.

Try matching the highlight of the collection, "leather" jackets – two in faux leather and a biker-style design with leather piping – which will go on sale at £14.99 each, while stocks last (see pics at The Guardian),

Meanwhile, back at the branch, Lidl will attract, and keep a new stream of all-age, all income customers who will invariably be tempted to top up on foodstuffs…

Then having ‘done’ clothing, Lidl will busy themselves coming to a category near you… 

Thursday 14 August 2014

Where next for Aldi, Lidl and private label in the upturn?

Brand owners taking comfort in the belief that the swing to private label and the discounters’ surrogate brands (i.e. Smith’s coffee made exclusively for Aldi) is a temporary aberration due for correction in the current ‘upturn’, might lose a little sleep following the publication of new research on how consumer knowledge affects the choice of private label over national brands.

Mark Ritson gives a great summary of the paper and its implications in Marketing Week, where he notes
- Category knowledge (and the resulting confidence) is a key predictive driver in choosing private label
- ...if people are buying private labels not because they are trading quality for lower prices but because they know these products are as good as the manufacturer brands (Aldi, Lidl and private label will not lose share in the upturn).

Mark’s Marketing Week article is much more accessible, but it can also pay to go back to the original research paper for more details on OTC medicines and Pantry Staples. The paper also gives anecdotal insights such as … the welfare claims we make (for medicines) depend on the assumption that information per se does not affect the utility a consumer receives from a product. If, for example, believing that national-brand aspirin works better actually makes national-brand aspirin more effective at reducing headaches, then informing consumers could actually make them worse off…

The original paper concludes:
  • Across a range of products we find strong evidence that more informed shoppers buy more store brands and fewer national brands.
  • Consumer information plays a large quantitative role in health categories, where our estimates imply that expenditures and market shares would change significantly if all households behaved like expert shoppers.
  • By contrast, the role of consumer information is smaller in food and drink categories, where our estimates suggest much smaller gaps between expert and non-expert shopping behaviour...
    i.e. a moderately savvy consumer is likely to have more confidence in opting for private label food and drink, than medicines…
NB. The researchers emphasise that the study was limited to examining the effects of information on quantities and prices. If consumers were to become more informed, markets would adjust on other bases as well. In particular, a more informed population of consumers might change whether and how much firms choose to advertise their products, as well as which products are introduced to the market. 

NAM Implications:
For many years we have been educating the consumer to be more savvy in their choice of our brand, and have been helping them place the brand within a functionally-based category context…

Have we been inadvertently driving them at the private label/surrogate brand in the process?

Thanks to Guy Cuthbert for the pointer…

Wednesday 18 June 2014

Lidl in it for brands as Schwarz Group heads to No.1 grocery retailer in western Europe by 2018?

With 2013 sales of €48.9bn compared with Carrefour at €76.7bn and Tesco at €73.1bn,  Lidl's faster rate of growth combined with Aldi means discount channel sales are expected to have raced up to €211bn against the giant stores’ €385bn on a CAGR of 4% by 2018, according to a new report on the grocery channel by Planet Retail.

Schwarz Group, which also owns the store chains Handelshof and hypermarket Kaufland, has operated since the 1930's. The first Lidl* discount store was opened in 1973, copying the Aldi concept. Schwarz rigorously removed merchandise that did not sell from the shelves, and cut costs by keeping the size of the retail outlets as small as possible. By the year 1977, the Lidl chain comprised 33 discount stores and latest figures show that it currently has 9,800 outlets...

The threat for branded suppliers
Whilst Lidl carry more brands than Aldi, the issue still remains that in a flatline market with any growth coming at the expense of competition, Lidl's growth rate represents a threat to branded products.

However, given its high use of surrogate labels, and with most branded suppliers focused on branded competition, Lidl and Aldi have thus managed to stay beneath traditional radar, in most cases.

NAMs now need to catch up by factoring Lidl & Aldi into their trade strategies, as per our earlier KamBlog

(Alternatively, why not await their discovery that national brands under pressure represent an even greater opportunity than surrogate labels...?)

*More Lidl details here

Tuesday 8 April 2014

A Lidl more class please...?

Plans for a Lidl branch in Eastwood, Essex may be turned down for a second time because the building is too boring.

Proposals for a store bigger than an Olympic-size swimming pool at the corner of Progress Road and Rayleigh Road have divided the public. Eastwood Residents’ Association and three-quarters of visitors to a consultation have backed the scheme, but nearby businesses, a 53-signature petition and 78 letters have objected.

Planning officers have recommended Southend Council throw out the plans, as they say a landmark building is needed at the entrance to the Progress Road Industrial Estate.

A pointer for Lidl in terms of keeping pace with the upward adjustment of its place in UK society?

Monday 20 January 2014

Lidl switches from hard to soft discounting in France - an inevitable move in the UK?

With increases in outlet size from 6,000 to 12,000 sq. ft., Lidl is offering a new range of regional products and extending its offering to include many more national brands to attract a wealthier clientele.

This is a real breakthrough for the French subsidiary of Lidl in its second largest market. According to Deloitte, it is the world's seventh largest distributor, with an estimated $87.8 billion in 2011 sales and 12,000 stores worldwide. In Germany, it has 3,300 stores and achieved a turnover estimated at €16.2 billion in 2012.

Lidl has operated their classic German model in France since 1988, and grown to 1,500 stores. It is the largest of the hard discounters (Netto, Leader Price, Aldi, Dia). But, like its competitors, it has stalled for four years in overall seventh place with a market share of 4.6%.

Whilst this Lidl move in France will provide useful insights on priority brands and eventual brand/surrogate-label balance, it gives time for UK suppliers to explore their options as Lidl UK, and possibly other discounters, embark on the next evolutionary stage in order to capitalise on the continuing flat-line conditions in retail.

Time for ALL NAMs – and retailers  to pop into a local Lidl, and reflect on where the offering  and their brands – could go, as they follow the French lead…? 

Might also be worth dusting down your EU network and monitoring progress via your French colleagues....

(Thx Joe)