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A Lidl Lesson In Simplicity

The continuing expansion plans of both Lidl and Aldi have been in the news recently.  Lidl MD John Paul Scally spoke of his company’s ambition to have a Lidl store in close proximity to everyone in the country, requiring about 200 stores versus their current 152.  However, there’s also some potential hurdles to overcome, with Tesco lodging appeals with An Bord Pleanála against proposed developments by both of the “discounters”.  And it got me thinking about the evolving retail landscape in Ireland, and the many and varied predictions of what the future of grocery holds.

At one time, Tesco determined that this required 24 hour out-of-town superstores to service weekly shopping routines, only for customers to become less routine in behaviour and require more convenient, flexible solutions.

More recently, click and collect; home delivery; personalisation through data and rewards; virtual stores; drive thru; and Alexa and the “internet of things” (with its intelligent fridges and cupboards), have all sought a role in serving the sector. 

But perhaps Lidl and Aldi’s approach is proving to be the template for success, and one that Tesco is very much aware of.  Simplicity rooted in bricks and mortar.  Closer to the traditional corner store than Minority Report. 

Not that the model is simple in its development or execution (both embrace a “lean” approach that focuses on efficient stock through-put, limits warehouse space, and reduces waste and green emissions), rather it is clever in its recognition that we are simple in our behaviours.  We have enough complexity to navigate, without grocery shopping being anything more than a regular chore, with a treat here and there.

(Source; kantarworldpanel.com, 13.08.2017)

Aldi entered the Irish market in 1999, with Lidl following in 2000.  Early criticisms focused primarily on the lack of Irish produce, however both have rectified that in the interim years.  By 2013 Lidl was sourcing 40% of its produce in Ireland and recent figures reveal that it now purchases over half a billion euro worth of Irish produce each year, with about 30% of this going for sale in overseas stores. 

Both have masterfully woven themselves into Irish society, with their bricks and mortar presence complementing the approach to sourcing local produce and in Lidl’s case, its support of women’s GAA.  

With a combined share of the grocery market now standing at 23.5%, their success is rooted in consistency and convenience.  They don’t do rewards programmes, but consistently reward customers with genuine everyday low prices.  They don’t do home delivery, but strive to make the shopping experience as quick and convenient as possible.  As others add complexity, Lidl and Aldi embrace simplicity.  Simple.