Surprises in store?

  • Market share taken by discounters like Aldi and Lidl has exploded in recent years. Both companies have major expansion plans and Lidl has recently announced it will pay all of its UK employees at least the rate described as the Living Wage.
  • Global market analyst HIM International is to look at whether discounters pose a major threat to convenience stores and last month the Scottish Grocers Federation held a study tour where members visited Aldi, Lidl and other discounters.
  • Leading retail industry academic Leigh Sparks, professor of retail studies at the Institute of Retail Studies at theUniversity of Stirling blogged recently about discounter developments he and others had found surprising.  Scottish Grocer asked Professor Sparks about discounters and their impact on c-stores in Scotland.

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Discounter Lidl surprised some industry observers by launching a trial of a promotional card scheme in Scotland.
Lidl’s advertising campaigns feature the line “Lidl surprises” and the discounter sprang a couple of surprises recently when it launched a trial of a promotional card in Scotland and announced it would pay all of its UK workers at Living Wage levels or higher.
Last month leading retail industry academic Leigh Sparks said he had been surprised by the promo card and that some members of the SGF study group that visited discount stores in Musselburgh had been surprised by what they found in Aldi and Lidl outlets.
“There were some people who I don’t think had been in too recently and they hadn’t realised quite how they had upped the game,” he said.
“There was a quality uplift and then there was the Scottishness that came through as well. The way in which the stores were positioning themselves as so Scottish – both externally and internally with some of the local products they had in the range.”
The SGF will discuss the study tour, which visited other discounters as well as Aldi and Lidl, later this month. And it’s certainly not the only organisation taking an interest.

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Professor Sparks – store density will make a big difference. As discounters fill in the gaps in their networks and simply increase their physical presence they will have more of an effect on c-stores.

Both Nielsen and Kantar Worldpanel have stressed that one in two UK shoppers now visits Aldi and/or Lidl.
Analyst HIM International recently asked if German discounters posed a threat to convenience stores. At present the UK proportion of shoppers visiting discounters is around the global average but in Germany some 80% visit discounters and only 7% visit c-stores.
And Kantar Worldpanel and another major market research firm IRI are jointly launching special discounter statistics for brand owners.
That all suggests discounters, especially Aldi and Lidl, are becoming a very established part of UK retailing. What does that mean for other stores, especially convenience outlets?
Leigh Sparks says that, while he is still not entirely sure what Lidl will get out of offering a money-off card system that doesn’t appear to collect data, it’s clear that the two big discounters seem keen to get away from the discounter label.
He expects the key thing influencing impacts on c-stores, however, will be discounter store density. Both Aldi and Lidl are looking for many more stores and where they open they will obviously provide local competition that hasn’t existed to date. However, he reckons good c-stores do have significant plus points and not every aspect of a discounter opening will necessarily be bad,
“If you look at the plans I think there’s an awful lot of infill that will go on in the networks they have at the moment.
“If that comes then the sheer physical presence and sheer visibility and nearness of them will chip away at individual convenience stores.”
In particular he thinks that poor c-stores may well find it difficult either to compete against or complement a nearby discounter. But excellent c-stores do have some strengths to trade on and could attempt to gain new customers who visit the area.
“There’s a quality of relationship with customers and the quality they have in terms of their store operations.
“You could think about the discounters as disrupters. You often get people who are very committed to what they’ve done in the past. You bring a discounter in and that brings new patterns, they go to those stores and suddenly see a convenience store that they haven’t thought about going into before.
“And there are some where the convenience store will give complementarity where the discounter doesn’t have some goods or services,” he said.