What can we learn from Lidl?
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Kantar measure Lidl’s market share at a record 6.9% in the twelve weeks to May.  That compares to 5.8% share just before lockdown hit, and 2.7% ten years ago.  So they are delivering long term, consistent growth in the UK, only fleetingly interrupted by lockdown (shielding).

How are they doing it?  And what can we learn? 

First, there’s the price perception they have earnt.  The company is built on working practice and a philosophy that has consistently delivered low prices and good value, over many years.  This means that shoppers do not have to question the price of every item, or the receipt from every visit.  They feel confident in Lidl to deliver value, every time.  This confidence is reinforced with occasional knockout prices, via Pick of the Week, WIGIGS and the middle aisle.  In late May, Lidl offer a bag of satsumas for 59p.  There is a WIGIG on chicken fillet – £8.79 for 1.8kg – which will be very hard for competitors to match.  These individual examples reinforce the long held reputation and perception.  It is a virtuous circle.  And all this before you even factor in Lidl Plus (their loyalty App).

But it’s not just about price.  Second, it’s about quality where it matters.  Lidl know what has long been true.  The categories that most drive quality perception are Produce, Meat and Bakery.  As you arrive at the store, there is well lit, abundant Produce, fresh and high quality.  There is an excellent fresh bakery counter, best-in-class from an “eat now” perspective.  Meat and Fish are kept inside fridge cabinets that imply life and freshness benefits.  There is significant share of voice in advertising and in store for Lidl’s quality stories (“quality for all”).  Lidl’s body language is not “cheap as chips” and it hasn’t been for a long time.

 

Finally, Lidl offers positivity.  In a challenging world (war, cost of living, disappointment in our leaders), here is a bustling environment where shoppers are encouraged to get on with enjoying life.  There’s a good BBQ range, Summer Wines, outdoor furniture and games for the kids.  This cheerful air contrasts with many massive out of town stores, so fashionable twenty years ago, but slowly losing volume year by year, cutting costs accordingly, and often looking tired and grey. 

 

In the industry, we might like to think the Discounter story has peaked.  But it hasn’t.  The public don’t get bored of what they are offering.  Great prices, quality where it matters and a positive environment.  That's a formula for more growth. 

Jeremy Garlick is a Partner of Insight Traction, consulting with FMCG and Retail companies.  He was formerly Head of Insight at Sainsbury’s, Waitrose and Premier Foods.