Tuesday 20 February 2018

Lidl and Aldi to export their Irish model for luring middle-classes

The interior of an Aldi Store in Naas, Co Kildare
The interior of an Aldi Store in Naas, Co Kildare
John Mulligan

John Mulligan

WE are used to learning from the Germans, but now it seems they are learning from us as Lidl and Aldi introduce some lessons from their successful Irish stores to their operations in Germany and Britain in a bid to lure new shoppers.

For the first time this Christmas, Lidl will advertise on the TV in the UK, following its success here.

It's something Irish consumers are well used to, with both the German discounters having made a play for increasingly hard-won wages in a tough economy.

But Lidl and Aldi have become adept at doing something no one here would have dreamed them capable of in the heady days of the Celtic Tiger, when the pair made their first forays into the Irish market: luring the middle-class euro.

Fancy foods, in-store bakeries, locally sourced goods and adverts that promote meat quality and traceability, as well as savings, have gone a long way to ensuring they have become mainstream.

All that is a long way from the dour shops back home in Germany, where shoppers must still pick products out of boxes, rather than off shelves.

In Germany, pricing, rather than range or presentation, has generally been the defining selling factor – but that is now changing.

In austerity-hit Ireland (where Aldi and Lidl have a combined 14.6 per cent share of the grocery market), consumers may be looking for bargains, but they often want something more from discounters too – the same kind of delectables they might be able to find at other retailers.

It is the success of the model in Ireland that has been carefully eyed by the two chains' operations elsewhere.

Lidl's Christmas TV ad campaign in the UK was launched due to the continuing success of its Deluxe range there. It's predicting that sales of the produces will rise 50pc this season to £63.8m (€75.3m), compared to Christmas last year.

Whole cooked lobster and reindeer steaks are just some of the fare on offer.

Also in the UK, Aldi recently began selling lobster, capitulating to the demands of the middle class. Those shoppers have been instrumental in driving Aldi's fortunes in the UK, where its revenue jumped 40 per cent last year to £3.8bn (€4.5bn) and profits more than doubled to £158m (€186m).

In Germany, Aldi and Lidl have a combined 7,540 outlets, representing 37 per cent of the nation's discount stores.

The market there is intensely competitive and the pair have also been upscaling their products to attract punters with deeper pockets.

And if lobster, crab claws and caviar can sell in crisis-hit Ireland, just imagine the potential in Germany.

Sunday Independent

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