8th Apr 09
A Guide to Lidl
by Adam Dunning
Lidl: what does the name mean to you? People from a lower socio-economic group (Chavs) who need to watch every penny they spend will probably know the shop fairly well. They may even shop there regularly. However, if you come from a higher socio-economic group (Toffs) you may not be familiar with the name, or even if you know the name you may never have ventured into its aisles.
I wonder if they know where the bag came from?
Lidl was founded in 1973 and is classed as a ‘deep discount’ supermarket chain. That basically means that it specialises in offering goods at low prices. Lidl is still a privately owned company with the German entrepreneur Dieter Schwarz at the reins. It is one of the fastest growing retailers in Europe. In its domestic market of Germany it has 2,500 stores with over 151,000 employees and it also has shops in 16 other countries in Europe. Future plans include expansion into Canada and Asia. However, according to many industry observers this success comes at a price. Lidl stands accused of bullying its workforce. Uni Commerce, an international organisation overseeing retail unions, claims that in its attempt to emulate US retailer Wal-Mart, Lidl is “forcing down wages and benefits” as it tries to squeeze as much as possible from staff.
A Lidl worker is ready to start!
Every cloud has a silver lining and for Lidl this is certainly true. The credit crunch might see many retailers struggling to stay open while their profits spiral rapidly downwards, but low-cost stores such as Lidl are seeing their customer base expand. Middle class families who would have previously never dreamed of entering a Lidl are now scouring the aisles for bargains. In these times of strained finances private school fees still have to be paid. Figures from the market research firm TNS reveal that in the last 12 weeks of 2008 Lidl saw its sales rise by 11.6 per cent compared to an increase in the grocery market in general of 6 per cent. Tesco and Sainsbury’s, on the other hand, underperformed. In a recent survey of 50 of the best-known British stores Lidl scored higher than Asda, Morrisons, Tesco or Sainsbury’s on customer satisfaction.
A Lidl customer is a happy customer
Lidl’s philosophy is to reject expensive advertising and other frills, “This isn’t just any old food this is Lidl food” is one marketing slogan that you won’t be seeing. The shops have a smaller range of products than other supermarkets and the goods are taken straight from the warehouse to the pallets in the aisles. That might not sound especially pretty, but Lidl claims that this allows it to sell quality products at cheap prices. Since 2005 Lidl has been trying to attract a more affluent customer by making its stores more attractive. Matthias Queck, a market analyst with Planet Retail, believes that in the next five years they could double their market share. The aisles may be little more than simply gaps between the pallets, but their smaller size coupled with barcodes on both sides of their products makes shopping a much more streamlined experience. Most customers can be in and out in less than half an hour. How can these stores beat Tesco, Asda and Wal-Mart on price? The answer they would say is that they work with lower profit margins. The biggest supermarket chains will have mark-ups of between 32 and 40 per cent on all their products, so this still leaves the discounters with sufficient margin to make a profit. Rather than stocking thousands of lines, some of which may have a slow turnover, these stores concentrate on what sells best. Lidl stocks only 1,600 items in its stores. Tesco might sell 5 brands of baked beans, but Lidl will stock just one.
If they're in a nice pot, you can't tell the difference..
To those who champion the discounters they are bastions of real value for money and to their equally vociferous detractors they are cheap stores that sell cheap and nasty products. So which view is correct? Aldi is another store that has the same philosophy as Lidl and is also currently doing well. The well-known chef Rick Stein carried out a taste test on Christmas puddings in one of his television shows. The line-up included puddings from Waitrose, Tesco, M&S, Sainsbury’s, the Bread Company and last, but not least, Aldi. Of course the assumption was that Aldi’s pudding would trail in last, but although it didn’t win it was picked by Rick Stein. This may have caused consternation to the chef and amusement to his fellow judges and the audience, but does it tell us something about these supermarkets? Might their products actually be better than we might suppose?
Are these products good or not??
One thing you will notice when you first enter a Lidl is that many of the brands that you are familiar with do not appear on their shelves. Instead you will find brands such as Del Rivo, Golden Sun and Ombra. Companies that normally sell under more prestigious names make these products, and Lidl, rather than putting their own brand on them, gives them a different name with only the small print to indicate that they are made for them. The quality of these items can often match that of the better known brands. Perhaps in a nod to the more affluent of its customers, Lidl has recently introduced organic and fair trade lines, although you may find that the range is limited. Lidl has won awards for some of its produce. The magazine Which? named it the Best Value-for-Money Retailer of 2008. Its Morello Cherry Extra Jam Conserve, Parmigiano Reggiano Cheese and Premium Chocolate Squares all won awards at the Quality Food Awards in 2008. Their Cream Liqueur also won an award at the Quality Drink Awards. Lidl stocks few wines, but it has won some awards and they have tried to move more upmarket in recent years. Lidl likes to term it ‘aspirational thrift’ and whereas its best selling white wine used to be Liebfraumilch it is now Pinot Grigio. Wines which they would not have stocked just a few months ago, such as their Chablis, Fleurie and Vacqueyras all sell well. Wine critics who have sampled the wines on offer find the cheapest to be pretty grim, but would accept that you can find some decent wines (if a little bland), and even on occasion a good wine. As well as their food items Lidl also has weekly special offers on non-food items, although you need to be on the ball as the stores receive limited stocks.
Some of the wine is a bit suspect!
Tesco and Sainsbury’s have attempted to compete with the discounters by adding their own line of discount products. However, analysis of some of the products has suggested that the low cost has come at a price. Sausage rolls were found to contain only 6% pork, fisherman’s pies only 9% fish and the cheese slices only contained 11% cheese; they had all been bulked out with cheap ingredients such as animal fat, water and sugar. In many cases products at Lidl were found to be superior to those in the bigger chains. For example Sainsbury’s own marmalade cost 75p and contained 26g of fruit per 100g, but Lidl’s marmalade cost 55p and had 5% more fruit. Tesco’s 500g of pasta sauce contained 56% tomato and 9% puree and cost 79p. Lidl had a similar jar of pasta sauce that contained 72% tomato, but only cost 67p. Sainsbury’s wafer-thin ham cost £2.38 for 400g and Tesco’s wafer-thin honey-roast ham cost £2.98 for 400g, both contained 80% pork. In contrast Lidl’s wafer-thin ham cost £2.19 for 400g and contained 97% pork.
Tesco are competing with Lidl now
Whether it is worth shopping at Lidl or not will depend on a number of factors, including how close your nearest Lidl is. Many people shop at Lidl for basic items using other shops or markets for the rest of their shopping. What studies have shown is that the cheaper prices at Lidl do not necessarily mean that the products are less nutritious or contain a string of dodgy ingredients, anymore so than they do in the larger supermarkets. Shoppers should be selective and check the ingredients before purchasing. One thing that is certain is that the stigma of shopping at what was once considered a supermarket for society’s disadvantaged has gone. Nowadays it is almost chic to say that you shop at Lidl.
What do you think? Have you shopped at Lidl? Do you like it?
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