We all know that Lidl has been a consistent winner in UK grocery in recent years. And there’s no sign of this changing, with sales up 19% in Kantar’s latest figures and Lidl forecasting 50 new stores a year going forward.
So it is winning, and set to continue winning. But how is it doing it, and what can we learn?
A key element of Lidl’s success is fully understanding the category role, especially the role that categories play in the customer’s choice of store, and then acting decisively on that understanding to make it count.
Any retailer of scale will have people who know that bakery, fruit & veg and meat are categories that, if done well, can have real influence on store choice. It is obvious. But few, if any, of Lidl’s competitors can match the way it acts on that simple insight. Few can match it on being better where it really matters.
Look at bakery: excellent spotlighting to draw shoppers’ attention as they come into the store; high quality, fresh product; strong category ‘body language’, with good quality baskets and classy PoS. Better where it matters.
Look at fruit & veg: set out with visible care, abundant, well-lit, and with hero products to excite the customer (right now, loose cherries and vibrant red strawberries). Better where it matters.
Look at meat: super-fresh presentation behind glass, well-butchered meat, beacon products such as spatchcock chicken and vacuum-packed dry-aged beef. Better where it matters.
If you’re working in or with one of Lidl’s competitors, in one of these key categories, my advice is to take a look at what it is doing – a really honest look – and ask yourself: are we as good here, let alone better?
Of course, Lidl’s success isn’t only about understanding and acting on category roles. Its marketing is good. For example, it, like Aldi, continues to signal upcoming offers in a more systematic and effective way than rivals. It has always surprised me that others don’t imitate this simple idea. It is simply about telling the shopper what they might miss if they don’t come back next week. As I write, Lidl’s weekly leaflet is talking about lunchbox food as the new school term approaches. The combination of pragmatic lunchbox ideas, differentiated products and value is compelling and should be pretty frightening to competitors that seek to win with families.
So marketing is good. Oh, and by the way, it is quite sharp on pricing, as you may have heard.
But what is the main lesson? Category role. Take a clear-eyed look at which categories matter most for customers. Honestly assess where you sit versus competition. And don’t stop until you’re better than them.
Jeremy Garlick is a partner of Insight Traction