If you want to unsettle a supermarket CEO, mention the discounters. It’s a touchy subject, because sales at the discounters are soaring while supermarket sales are flat. The Rise of Discount S
The reasons are complex and varied but price, quality and simplicity are central. The discounters’ typically compact range, about 10% of a Tesco Extra, helps keep prices down. As Lidl MD Ronny Gottschlich puts it, if you want to offer 20 types of mineral water, the customer pays for that choice.
So, whenever the economy slumps, discounters thrive. But the challenge is to retain them when things pick up. One way of doing that is to demonstrate that spending less doesn’t mean sacrificing quality. Ominously for the big four, with the economy on the mend, the discounters are scooping more own label awards than the majority of the major mults.
The proof was literally in the pudding as the show held a blind taste test to identify which Cornetto was the real deal, which came from a supermarket and which came from a discounter. The biggest, the cheapest and the most delicious, came from Lidl.
The discounters aren’t perfect. They are still evolving - Lidl only launched a limited range of fresh fish this year, for example. Yet sales are rampant. At Aldi, they are up an unbelievable 36.1% year on year. Yet when Tesco CEO Philip Clarke insisted “I’m not worried” when asked about a survey that showed 36% of new discounter customers had emigrated from Tesco, that was the most unbelievable bit of all.