The past nine months have been quite a step change for Lidl, having been consecutively named the fastest-growing brick-and-mortar supermarket and hitting a record market share of 8.1% in the UK. It is fast catching up to Morrisons’ 8.7% share and is not too far behind rival discounter Aldi at 10%, according to the latest report by the Grocery Gazette. With plans to open hundreds of new stores this year, Lidl’s growth journey looks set to continue.
LIDL’S GROWTH
Lidl has been on top form for some time now. It was the only grocer to win spend from all other competitors over the Christmas period and continues to be the fastest growing brick-and-mortar supermarket, a title it has held for nine consecutive months.
Senior retail adviser and consultant Matthew Nobbs, who spent 22 years in leadership roles at Lidl, highlights a few key reasons behind Lidl’s growth, which he says when combined, “add up to something pretty special. Lidl is good with its supply chain from making sure that products are available on the shelf, to having its warehouse network and its own logistics network across Europe.”
Nobbs notes the German retailer’s ‘Britishness’ has also helped it to slowly solidify its name in the UK market. “This started in 2015 when Ronny Gottschlich was the CEO, driving the fact that it’s a very British supermarket. British meat, poultry, fruit, and veg contracts that are not into the weeks or months anymore, but many, many years. The marketing of it as well – they’re more British than pretty much any other retailer. They’re shouting it from the treetops.”
Nobbs adds that more recently, it has been Lidl’s loyalty program that has helped “drive basket spend and get consumers to switch from competitors”.
Kantar strategic insights director Tom Steel agrees that its loyalty scheme is driving growth. He explains that “everything there is designed to incentivize people to do more shopping with them – it’s definitely all about the frequency at the moment”.
Steel believes that Lidl will continue to “perform really well” and will be “towards the top” of its growth list, however, he warns this may only be the case until August or September. “Essentially, we started referring to them as the fastest growing retailer around September last year and when they reach that point this year, it’s going to be harder to carry on growing that way,” he says. He notes that in order for Lidl to continue growing, “a lot will depend on store openings”. If Lidl keeps pace, opening stores ahead of competitors then it can continue performing at its current level, Steel asserts.
NEW OPENINGS
Last month, Lidl unveiled plans to open hundreds of new stores across the country this year in areas including Bristol, Birmingham, and Berwick in Scotland, as well as new London locations including in Wandsworth, Fulham, Hoxton, and Canning Town.
Lidl GB chief development officer Richard Taylor says: “We’re planning to open hundreds of new Lidl stores but ultimately see no ceiling on our ambition or growth potential. This is why we’re continuing to invest in new locations whilst exploring innovative routes to expansion. As we look ahead, we’re excited to welcome even more new shoppers to our existing stores, as well as those we’re planning to open across the country in the coming months and years.”
OVERTAKING MORRISONS AND ALDI?
While overtaking Aldi – which currently holds 10% of the market – is a slightly trickier job, Steel says that in the short term, Morrisons, which currently sits at 8.7%, is a different story. He says it is the “closest gap” between the two that Kantar has ever seen and predicts Lidl will leapfrog the Bradford-based supermarket within the next six to 12 months.
With plans to expand to much more of the UK alongside a compelling in-store and loyalty offer, the next year could see Lidl stealing more share from not just Aldi but the rest of the grocery market.