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 Nestlé 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?
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 Nestlé 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?
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