Battle of the discounters

Lidl currently has 135 Irish stores and holds a 6.6% share of the market
Lidl currently has 135 Irish stores and holds a 6.6% share of the market

With Aldi currently shooting ahead of fellow discounter Lidl when it comes to market share growth, Gillian Hamill visited two inner city Dublin outlets to see how they squared up

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16 November 2012

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Aldi is a standout star performer within the Irish grocery market. That’s the message delivered by the latest supermarket share figures from Kantar Worldpanel in Ireland, for the 12 weeks ending 30 September 2012, which show that the discounter has posted market share growth of almost 30% – an all-time record for the retailer.

Doing something right

While it’s clear that Aldi is doing something right in growing from a 4.6% to a 6% share of the market over the space of just one year, its star – bright as it may be – has yet to eclipse the performance of Lidl which currently holds a 6.6% share of the market, having grown by 1% since last year. Undoubtedly 1% growth is significantly less impressive than 30%, but in saying that, it’s also expedient to point out that Lidl now holds a higher share of the market than Superquinn, which stands at 5.5%.

Of course, one reason for Lidl’s higher market share is that it operates from more stores, yet according to one industry expert we spoke to who declined to be named, the numbers don’t quite stack up. "Aldi has 95 stores in Ireland and 6% market share and Lidl has 135 stores in Ireland with 6.6%. That means for an extra 40 stores, Lidl is only achieving 0.6% extra market share which is not enough." Why then, with 40 less stores than its rival, is Aldi’s growth rate currently charging ahead of its similarly bargain friendly rival? ShelfLife decided to investigate two of the discounters’ most prominent outlets within the capital. We duly headed to Aldi on Parnell Street and Lidl on Moore Street to check out what the inner-city stores, separated by merely a couple of minutes’ walk, had to offer.

Aldi vs Lidl: what we found

Taking an in-depth look at both stores, our first impressions were positive. Lidl’s trolley bays are fully enclosed by its glass frontage, whereas Aldi’s is located under an alcove with open entrances. This, coupled with the fact that Lidl’s trolley bay is flanked by a large poster with a key message: "Thank you for choosing Lidl", probably created a slicker entrance. In saying that, due to having less POS stands in the middle of aisles, Aldi’s layout felt more spacious and easier to navigate.

A significant plus for Lidl when it came to creating that all-important first impression was the positioning of its home bakery stand with goods "freshly baked thoughout the day" at the front of the store. After all, who can resist the smell of freshly-baked bread? The range included pain au chocolates, pumpkin loaves, cheese and onion rolls, sunflower bread, maple and pecan plaits and the ubiquitous French baquette. The upmarket artisan-style baskets for bread also created an atmosphere of a store where a ‘foodie’ would be happy to shop, albeit that this was rather discordant with the no-frills shelves directly opposite the bakery section. 

By contrast, the first thing we noticed upon entering Aldi was the flowers for sale, such as pansies, heather and lillies; the latter at a purse-pleasing price of just €1.99. This was followed by bakery goods from the likes of Byrne’s Bakery, and cereals, the majority of which appeared to be from Harvest Morning. A recurrent theme we noticed throughout the store was that there was a high level of product innovation, although not from the brands Irish shoppers would be familiar with. This included the likes of packets of various Harvest Morning berries and seeds. 

Easy to complete full trolley shop

What’s more, while the view has sometimes been put forward that shoppers will buy certain essential goods at a discounter store and then go to another supermarket to complete their full trolley shop, it appeared to be the case that within each of Aldi’s category, a shopper would be hard-pressed not to be able to complete their full trolley shop, unless they had a particular devotion to their favourite brands. That said, the discounters have both done a good job at promoting the various awards such as Blas na Eireann gongs that their products have won, which may make shoppers more likely to try out the alternative product by an unfamiliar brand, as will the likes of Aldi’s ‘Like brands’ campaign.

Aldi’s fresh fruit and veg section can also hold its own with the country’s multiples, boasting a wide selection including avocado and grapefruit. The home cook was similarly well catered for with packets of fresh herbs such as parsley, coriander, mint and thyme available for 99 cents each. Harder to find items such as packets of mixed chillis (€1.49), ginger (€0.75), bunches of asparagus (€1.79) and butternut squash could likewise all be found gracing Aldi’s shelves. 

Aldi has 95 Irish stores and a 6% market share

Aldi has 95 Irish stores and a 6% market share

Fresh food delights

Next it was on to Aldi’s fresh meats section, where a whole chicken could be picked up for just €5.99 and two Irish Angus fillet steaks cost €11.99. Nearby an appetising-looking Casa Barelli stonebaked focaccia pizza carried a price tag of just €2.99, next to a nice focaccia for €1.99. Rivalling the likes of Marks and Spencer, a range of salads in tubs was also available. 

Moving on to frozen foods, again it was hard to see how most Irish consumers would not be able to do a full shop here, apart from those consumers who are particularly partial to ethnic frozen ready meals as there was a limited selection of those. However there was a wide choice of fish, pork, lamb and chicken products with shoppers able to snap up the likes of an Oakhurst pork joint for just €5.99, 

Aldi’s off-licence section was likewise well-laid out with red wines beginning at €3.99. Spirits wise, the cheapest vodka available appeared to be Tamova vodka (€11.99 for 50cl) while Clontarf Irish Whiskey was €15.99 for 700ml. While Aldi was noticeably short on well-known brands throughout the store, the off-licence section was one where brands seemed to be accorded greater importance, with Guinness, Heinekein, Budweiser and Taurins all available alongside craft beers.

Smaller non-grocery offering

All in all, all categories in Aldi were well-stocked and it would be possible for consumers to do a full shop in the store. Somewhat surprisingly, limited floorspace had been assigned to non-grocery items with only one aisle containing diverse items such as hiking boots and thermal vests. Throughout the store, it was impossible to ignore the multitude of signs hanging from the roof along each aisle proclaiming "Love Ireland, Like Aldi.

Lidl packed with well-known brands 

 On then to Lidl, where as mentioned previously, the scent of freshly baked bread was an enticing opener. Directly opposite the bakery was where the confectionery and chocolate was located and it quickly became apparent that Lidl has gone for a stance much more heavily populated with well-known brands. This proved to be a recurrent theme throughout the store, and one which the industry insider that we spoke to, believes has not played to Lidl’s best advantage.

"Lidl had a similar strategy to Aldi in terms of trying to deliver what Irish shoppers want, but it wouldn’t really have looked at the palette as much and what Lidl did was it said, well Irish people love brands so let’s sell brands, but let’s sell them at cheaper prices than Tesco and Dunnes.

"However, it’s very easy for the multiples to move on those brands and sell them at a cheaper price so I think the consumer essentially went into Lidl and said, well, I can get this in Dunnes and Tesco; why would I bother coming here? By comparison, when they go into Aldi, it’s very hard for Dunnes and Tesco to price-match because the products are all own-label."

Impressive range of goods

Continuing our perusal of Lidl Moore Street, next up was the fruit and veg category. Although we were previously impressed with Aldi’s selection, we have to concede that this particular Lidl seemed to just have the edge with coconuts, rocket salad, aubergines and even dried porcini mushrooms all present and correct. Greater space had also been allocated to the fresh meats section, yet prices seemed largely approximate to Aldi, with a super roaster chicken available for €5.99. 

There was a much larger selection of non-grocery items, ranging from a Silvercrest microwave for €59.99 to an acoustic guitar for just €49.99. However our source is one commentator who remains firmly unconvinced about the merits of such an offering. "In my opinion, Lidl got it [non-food] horrendously wrong. It ordered way too much. Back in the boom days, the group said, right, let’s get all the non-food offers from Germany, let’s source local non-food offers, let’s get tonnes of non-food into the business and then when the recession hit, it didn’t sell. The result is that it now needs to hold warehouse sales, such as the recent weekend sale at Liffey Valley. At Lidl when you go round the non-food aisles, I think what you’re seeing are old offers which have been repackaged, repaired, and are not particularly good, whereas Aldi’s offering is a bit slicker, it’s more relevant and current."

In another plus for Lidl Parnell Street though, we found the store also had the edge within the off-licence section, with a wider beers and spirits selection and very competitive pricing. Another string to its bow is that magazines and newspapers are sold in-store. Like Aldi, Lidl’s support for Irish producers was highly visible on signage across all departments. The slightly larger Lidl store would also have earned credit with the nation’s foodies for its broad selection of goods, with the likes of its cheese selection including buffalo, gorganzola, feta, gouda, and more commonplace variants.

A fundamental difference

While Lidl is therefore undoubtedly flying the flag for Ireland, the industry expert we spoke to, believes that by focusing on a non-branded offering, Aldi has managed to stay one step ahead of the game. "If you look at Lidl’s advertising, they are really getting into the local offer now but Aldi has been doing that for a long time. The consumer for whatever reason – and I think it’s because Aldi was so early off- the-block with quality product that was Irish – sees Aldi not as a discounter but as a very credible, fresh food, quality food retailer and that’s the fundamental difference between the two of them."

receiptSizzling sales

ShelfLife decided to stock up on ingredients for a traditional Irish fry at both Aldi and Lidl to see which came out trumps in the value-for-money stakes. As you can see, we found the discounters are keeping an incredibly beady eye on each other’s pricing strategies!

*Prices as recorded on 25 October 2012

 

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