Who would have thought in 2022, when Aldi was the UK’s fastest-growing supermarket, that just four years later it would have plummeted to the bottom of the growth table – only just ahead of Asda?

Sales rose by just 0.4% year on year for the 12 weeks to 14 June, according to Worldpanel data released on Tuesday. That’s despite Aldi’s estate growing by about 4% with 40 new stores – a clear sign like-for-like sales are down, as they have been for some time. Its market share slipped to 10.7%, down from 10.9% a year ago and as much as 11.1% last May.

Today, the discounter fought back, launching a competition offering a £50 voucher each day throughout July and August. It feels less like a plan and more like a plea: “don’t  forget about us!”. It’s tinkering, not turnaround. But it does underline why things are going so badly for Aldi, while Lidl, supported by its loyalty scheme, has been the UK’s fastest-growing bricks & mortar supermarket since 2023.

Lidl, loyalty and losses

Lidl launched its loyalty app in 2020, and half of the growth reported in its latest full-year financial update came from shoppers using it. If Lidl were to disclose sign-up data, the line of Lidl Plus membership plotted alongside Lidl’s growth and Aldi’s falling sales would make for an interesting chart.

Without a loyalty scheme, Aldi has no way to communicate directly with shoppers, no way to say ‘this is offer is for you the next time you shop with us’. Its only way to target a demographic, such as families, is to dress up a generic competition as a ‘scheme to support families in the school summer holidays’, cross its fingers and hope journalists take the same line.

That’s not what the competition is, though. It’s a random prize draw, not limited to parents or carers of schoolchildren. It’s not even limited to Aldi customers. After all, without loyalty scheme customer data it’s hard to see how Aldi could limit an offer to parents of schoolchildren, even if it wanted to. 

It’s not a new approach. Aldi has run loads of similar competitions in the past couple of years, from a ‘back to school fund’ to a ‘Mamia new parent’ giveaway, and the terms for entry are never quite as targeted as the marketing might imply. It’s a PR exercise, which wins coverage in the likes of The Sun, but it’s clear from the Worldpanel numbers that not enough of it is landing where or how it needs to.

However, as Aldi’s rapid descent from fastest to second-slowest growing grocer highlights, the picture can change quickly and unpredictably. Just three years ago, The Grocer ran the headline “Lidl ‘concedes battle to be UK’s dominant discounter” – a quote from Ronny Gottschlich, Lidl’s UK CEO from 2010 to 2016, on its decision to dramatically scale back store openings in 2023. That’s not aged well.

The two retailers may be close enough in the minds of UK consumers for a loyalty scheme to be the tiebreaker, but they do have deeper differences. Aldi is, at heart, a hard discounter, while Lidl has always had ambitions to be more slightly more sophisticated, reflected in its range, which offers around 300 more products than Aldi’s 2,000.

Aldi has always focused on simplicity and efficiency as the route to low prices, viewing loyalty schemes as an operational cost that conflicts with that. A summer-long £50 giveaway sounds impressive, but the total value comes to just £3,100.

Instead, Aldi is striving to become more efficient, having opened ‘Britain’s largest food distribution centre’ in May, a 1.3 million sq ft facility in Bardon using state-of-the-art automation. It believes that reducing its cost base through new operational efficiencies, and shunning distractions, is the best way it can maintain and grow a price gap over rivals. And of course, it is still the UK’s fourth-biggest supermarket, ahead of Lidl, and one of the largest retailers in the world. It can afford to bide its time.

Aldi has historically done best when consumers are under intense financial pressure. It would be a mistake to think the story has reached a conclusion yet.

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