Europe
2019.11.13 02:18 GMT+8

Aldi and Lidl grow share in UK while 'Big Four' supermarkets suffer

Updated 2019.11.13 02:18 GMT+8
Sarah Walton

Budget supermarkets Aldi and Lidl have grown their share of the UK market, while the country's "Big Four" chains lost ground.

Figures from research firm Kantar show growth in supermarket sales is sluggish, with year-on-year figures increasing by just 1 percent in the 12 weeks to 3 November. But sales at Tesco, Sainsbury's, Asda and Morrisons fell as they lost market share to their smaller rivals.

Sales at Aldi grew by 6.7 percent, which makes it the fifth biggest supermarket chain in Britain. Lidl is the country's seventh largest supermarket, with its sales increasing by 8.8 percent.

Why have they been successful?

While the major supermarkets have expanded the variety of goods they offer, Aldi and Lidl have continued to stock a limited range of products. That allows them to order larger quantities, keeping prices low and giving them more buying power with producers.

Stocking mostly privately made "own brands" has also allowed them to dispense with the sales middleman for many items.

Rather than run one-off price drops, which create a short-term demand for a specific item, the budget stores say they keep prices low by maintaining a reliable demand for products.

They also focus on everyday produce that will sell out quickly, which limits wastage and the amount of money the companies have tied up in stock.

The money-saving extends to store layout as well. Goods are often set out in the containers they arrived in, avoiding the need for store furniture and limiting the amount of time staff spend restocking shelves. The shops also generally employ fewer people than the big stores and there is an emphasis on speedy service to keep shoppers moving through the checkouts.

Then there is the famous "middle aisle," where one-off product lines are available only until they sell out. Everything from winter coats and coffee machines to children's toys can be found here, often bought in container loads by the company. 

The "when it's gone, it's gone" strategy increases the likelihood of impulse purchases and brings customers back to the stores regularly to see what new items are on sale.

But none of this would work if there was not a market for Lidl and Aldi's approach to shopping.

Commerce experts say the stores have benefited from the recent period of rising inflation and stagnant wage growth, which has led to an increasing number of shoppers who need to save money. 

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