Lidl turns up the heat on rival competitors as sales are expected to reach £4bn



Lidl turns up the heat on rival competitors as sales are expected to reach £4bn

According to Kantar Worldpanel data, made available on Wednesday, grocery sales have increased sluggishly by 0.8% since August 2013, representing the slowest rate of price growth for a decade.

Conversely, the same data shows that Lidl attained a market share of 3.6% in mid-August, up from 3.1% on the previous year, as sales shot up by 18.3%. Staggeringly, Aldi managed to outperform their biggest rival, as their sales rose by 29.5%, giving them a 4.8% market share.

Lidlís new advertising campaign is expected to be worth around £20m, and titled LidlSurprises, it is Lidlís first marketing venture in the UK. It is intended to impress upon UK citizens the amount of high quality, British foodstuffs the German discounter stocks and as such, instil confidence within a public very much warming to the affordable nature of both Aldi & Lidl.

Lidl UK managing director, Ronny Gottschlich, targeted sales growth of 20% yielding profits £4bn, as Lidl attempt to eat away at the pseudo-monopolisation the ëbig fourí have enjoyed over the market for decades. Seeking to dispel any assumptive claims about the origin of Lidlís produce, due to its remarkably affordable prices, Mr Gottschlich noted that almost half of these sales will be from stock reared in the UK.

He added: ìWe know that many of our first-time visitors are attracted by a particular offer or product, or just by sheer curiosity, but they choose to keep coming back when they realise that we sell the best quality, freshest food at the best price.î

Lidlís expansive aspirations are not good news for the ëbig fourí ñ that is Asda, Morrisons, J Sainsbury and Tesco - who collectively have all been adversely affected by the success enjoyed by the discounter.

Although not utterly devastated by the fresh competition, ëthe big fourí have had to endure a torrid four weeks leading up to August 17th, with the Kantar data revealing Sainsburyís shares plummeted by 2.6% due to deflated prices and lower sales. Additionally, Tesco shares fell by 1.1% in the same period, meaning its market share is lower now than it was 12 months ago underlining the job facing chief executive, Dave Lewis..

Clive Black, analyst at Shore Capital, bemoaned the current relationship between supermarket giants and their clientele. He said: ìConsumer behaviour in the UK is changing with households still carefully managing their budgets. Whilst employment levels are high, living standards are growing at a very pedestrian rate and groceries have been a key lever in managing down household budgets. ìSuch a lever has positioned the limited assortment discounters and high street value retailers very well for the prevailing mood. Additionally though, an increasing number of folk are eating out more, where value can be strong in pubs and cafÈs, plus the affordable treat remains a robust feature of spending patterns.î The data from Kanter Worldpanel comes shortly after the Office for National Statistics (ONS) disclosed that spending in food distributors as a whole decreased for the first time since records began.

It is apparent that the executives of the ëbig fourí supermarket giants now need to innovate in order to garner the same percentage of the market they could previously count on as regular custom.  Other discounters are quietly growing alongside Aldi and Lidl, with greater numbers of Poundlandsí and B&Mís popping up on high streets and industrial complexes, and as such, restructuring, new marketing strategies and a greater online presence could be the way forward for established supermarkets such as Tesco & J Sainsbury.

Mr. Black echoes this perspective, stressing that Tescosí chief executive ought to recognise the wants of the modern British public, and address its dated modes of operation: ìTesco is in no manís land as it moves from one management regime to another. ìIt has lost its relationship with the British household. Price isnít the only factor, but Dave Lewis has to get it right first to take advantage of its other qualities in online, food and fuel.î