In Depth

Aldi and Lidl – and Waitrose – set for Christmas boom

Savvy shoppers are planning to use multiple outlets to grab bargains and afford treats

Changing shopping habits mean the end of "the big Christmas shop", says the Daily Telegraph.

In the continuation of a growing trend, shoppers have indicated they are going to spread their spending this festive period and make selective use of discounters Aldi and Lidl – as well as more expensive stores like Waitrose and independent shops.

In all, 70 per cent of more than 1,000 consumers surveyed by IGD said they would make use of Aldi and Lidl this year. But they said they would visit for specific bargains or products not available elsewhere - and just £1.7bn of the total estimated £20.3bn spend on groceries over the festive period will go to the disruptive duo.

With 56 per cent planning to spend at more than one store, the Telegraph says the data show a "growing trend for mixing and matching shopping trips to Lidl and Waitrose is not going to go away over Christmas".

Sainsbury's, which like Waitrose attempts to distinguish itself through quality as well as price, also hopes to benefit.

Joanne Denney-Finch, chief executive of IGD, said supermarkets "will remain by far the most popular destination but discounters, specialist stores (such as butchers and off licences) and convenience stores are also favoured by many".

She added: "People are shopping around and spreading their spending across a growing number of formats."

The figures showing a potential gain for discounters over Christmas come as separate research by the Centre for Economics and Business Research for Asda showed shoppers will spend less this year over all, despite having more disposable income.

The Times says the "average household had £193 of weekly discretionary income in October, up by £17, or 9.6 per cent, compared with the same time a year ago", but adds that "more than two-thirds of consumers plan to spend the same amount on Christmas this year as they did last year, while one in five are planning to spend less".

Aldi and Lidl to build at five times the pace of 'big four'

16 November

The two German discounters that have shaken up the UK supermarket sector are planning to step up their assault on the market share of the 'big four' with a major expansion drive.

According to figures from Barbour ABI, reported by the Sunday Telegraph, Aldi has submitted 93 applications for planning permission for new sites this year, while its rival, Lidl, has submitted 78. The combined plans for 171 new stores compares to just 29 that have been submitted by Tesco, Asda, Sainsbury's and Morrisons combined.

The big established brands have "called a halt to the 'space race' in the wake of sliding sales and profitability", the Telegraph says. Having previously faced criticism for squeezing out local shops with rapid expansion – or simply sitting on vast land banks – most are now retrenching as they seek to refocus their appeal to shoppers in the face of a bitter price war.

Tesco has mothballed and sold more than a dozen of its development sites and has closed more than 50 unprofitable stores since the beginning of 2014. Morrisons has sold its entire estate of convenience stores and confirmed in September it would close 11 underperforming stores, taking closures for the year as a whole to 21. Asda recently said it would be abandoning an aggressive expansion in London as it seeks to trim costs.

Aldi and Lidl offer a smaller range of items than their peers, meaning that while around half of all households shop at one of the two they only account for less than 10 per cent of all supermarket sales. This has catalysed a major change of shopping habits away from single weekly shops towards more frequent, smaller shopping trips to get the best value, prompting a strategy re-think from the established players.

For Aldi and Lidl the goal is now to evolve their offering and continue to broaden their base. The strategy appears to be working: Aldi has for the sixth consecutive year topped the annual Global Brand Simplicity Index produced by US researcher Siegel & Gale, with Lidl coming in third.

According to the Telegraph, "Siegel & Gale said 63 per cent of consumers are willing to pay more for a simple retail experience, making it ironic that the list is consistently topped by the budget supermarket chains".

Can Lidl conquer 'Waitrose country'?

11 September

Disruptive discount supermarket Lidl is trying to shed its cheap and cheerful image and broaden its appeal to middle class shoppers, it has been claimed, after announcing plans to open stores in affluent London boroughs referred to as "Waitrose country".

The Evening Standard cites a brochure intended for commercial property agents, which sets out a desire to buy up to 281 new units within the M25. The "wishlist" covers "exclusive 'villages' including Chelsea, Notting Hill, Highgate and even Mayfair", as well as other addresses "that were previously uncharted territory for Lidl and where Waitrose, Tesco and Sainsbury's dominate".

Lidl says it is looking to buy "standalone" sites of between 10,000 and 28,000 sq ft – smaller than its typical out-of-town supermarket format but "bigger than a typical convenience store" – or up to four acres for "a bigger property development that includes housing as well as shops".

According to the BBC, it amounts to a "plan to shake off its discount image". Alongside fellow German brand Aldi, Lidl has pursued an aggressive pricing strategy to gain a sizeable market share – currently above four per cent.

According to industry figures, the chain's sales increased by almost 13 per cent over the summer months, while the so-called 'big four' continue to shed shoppers and even Waitrose recorded its first fall in seven years.

David Gray, retail analyst at Planet Retail, said the move is part of an ongoing strategy to take the brand in a new direction. Lidl has recently started to carry more "premium ranges", last week introducing 60 new lines to its "Wine Cellar" concept, including "less well-known wines such as Arbois, and a white Châteauneuf-du-Pape".

But Gray said there was still a long way to go before Lidl or Aldi would be able to compete with the likes of Tesco, Sainsbury's, Asda and Morrisons, which between them still control more than 70 per cent of the market.

"Lidl is still a discount store, with a limited range, and shelf-ready packaging. You still do your main shopping at Tesco or Sainsbury and then top up at Lidl."

Aldi and Lidl to build at five times the pace of 'big four'

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