Aldi and Lidl will not compromise the core of their proposition. Its competitors should follow the same principle: know what you’re good at

The growth of Aldi and Lidl has been the single most important dynamic in the grocery industry in the last 10 years. If you thought this narrative had all but played out, when Aldi and Lidl both lost share during the lockdowns, you need to think again. The share loss was due to circumstances very specific to lockdown (especially shielders feeling compelled to shop online). In the latest Kantar data, both Aldi and Lidl achieved their highest-ever share, and they are once again growing ahead of the market. The whole industry is rightly focusing a lot of effort on what to do about it.

So what can we learn, from Aldi and Lidl?

There is one overriding learning: know what you’re good at and keep doing it, better and better.

As observers, we may get a bit bored of this story. We know how it works – a relentless store opening program, cheaper retail sites, a very efficient way of working at the centre and in stores. Procurement on a massive scale and simpler ranging to drive cost effectiveness. Minimal distraction online and very fresh food because of the speed of stock turn. The result? Decent quality and great price.

We get bored, but shoppers do not. They just keep lapping it up. The fact it doesn’t change is a good thing – Aldi and Lidl have the discipline to not play with the toy. They will make tweaks, with Aldi looking to catch up to Lidl on in-store bakery and both doing great things with premium own label to keep the more aspirational shopper interested. But they have not and will not compromise the core of their proposition.

And this spells a major problem for those who compete with Aldi and Lidl. Because ultimately, this is a brand thing.

Aldi and Lidl have consistently delivered on their core proposition over many years. Shoppers trust those brands to deliver on quality and price.

Lots of prices are changing in all retailers in this inflationary situation. The majority of shoppers will not know the detail of price comparisons on every item, but they have learnt through experience over the years that Aldi and Lidl are going to give them great (and probably the best) quality for price. Tesco and Sainsbury’s can say what they like about price matching; Asda and Morrisons can say what they like about cuts and freezes. Even if they were able to match the actual quality and price offered by Aldi, across every product, they would still have a problem. It would take many years to build up the trusted value Aldi has, because shoppers quite rightly put a greater premium on what they experience rather than what retailers say in their marketing.

What is the answer for those competing with Aldi and Lidl? It’s the same principle: know what you’re good at. Can Sainsbury’s be as cheap as Aldi, in the minds of most shoppers? No. Can it convince us its food is better? Yes. Can Morrisons be cheaper? Again, probably no. Can it have better fresh (Market Street)? Yes.

It’s about choosing a game you can win. If you’re playing Aldi and Lidl at price, you can’t win. Know what you’re good at, and keep doing it – better and better.