Lidl’s profits have soared through the cost-of-living crisis.
Will they overtake Morrisons as the UK’s fifth biggest supermarket? And is there potential for Lidl to break into the Big Four?
For years, the line-up of the UK’s four biggest supermarkets remained roughly the same. But, as unprecedented price rises ushered in the ongoing cost-of-living crisis, consumers increasingly began looking to discounters.
It’s not long since Aldi overtook Morrisons as Britain’s fourth biggest supermarket. After almost 20 years of Morrisons, Sainsbury’s, Tesco, and Asda enjoying a virtually uninterrupted spell in the four top spots, this was a seismic shift.
Now, Lidl is gaining ground as well, and quickly. The trend here is clear – customers are willing to let long-lasting loyalties slide in favour of lower prices.
It’s lift-off for Lidl
2022 has been a great year so far for Lidl.
Full year profits for the discount grocer have skyrocketed by more than 300% and sales are up 13% on 2020. But, crucially, these gains are not without context.
It’s no coincidence that Lidl’s growth has come as other retailers have struggled. You see, in the face of inflation and suppressed consumer demand, Lidl has been able to capture bargain-hunting consumers that more expensive grocers have lost.
In November alone, an additional 770,000 UK shoppers made their way into Lidl’s stores. And it looks as though many of these shoppers made the switch to Lidl from one of the original Big Four.
As a direct result, in the same period, Lidl have taken £58 million worth of spending from Tesco, Asda, Sainsbury’s, and Morrisons. At a time when consumers at all pay grades are looking to cut costs, this is hardly surprising.
Will Lidl overtake Aldi?
Lidl’s CEO, Ryan McDonnell, has stated that, “as a discount retailer, we are in the best possible position to support people through these challenging times.”
He also firmly believes that Lidl has the momentum it needs to eventually overtake Morrisons. But, looking ahead, a larger question looms: could Lidl encroach on Aldi and enter the Big Four?
The short answer: probably not.
The longer answer? Probably not, but it doesn’t need to.
As it stands, Aldi is the UK’s cheapest supermarket and has been almost consistently since January 2020.
At £75.79, the retailer’s average basket price was £1.89 cheaper than Lidl’s. Aldi also has a greater market share, at 8.6% versus Lidl’s 6.4%, and a greater profit margin. In other words, Aldi’s position ahead of Lidl is, for the time being, well cemented.
However, in many ways, this is less noteworthy than what Aldi, Lidl, and other discount retailers like them have achieved together: a complete shake-up of the status quo.
As mentioned earlier, the long-standing Big Four is no more. After many years of being established as the industry’s untouchables, these major retailers suddenly face a significant challenge to their positions at the top.
These days, as Tesco, Asda, Sainsbury’s, and Morrisons struggle to retain shoppers, Aldi and Lidl’s combined market share has shot up to 16.4%.
At the same time, other low-priced shopping destinations such as Poundland and Home Bargains are enticing more shoppers, too. In a country that’s full of consumers looking to cut costs, it’s likely these brands will continue going from strength to strength.
Shifting supermarket landscapes
Staying abreast of changes to the shifting supermarket landscape is key to what we do.
As a result, our consultants have seen an uplift in requests for Sales and National Account Management roles with specialised grocery and discount experience.
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