Is Lidl the retail future?

UK newspapers have reported that Lidl has now overtaken Waitrose with more than 5% of the market.

Having studiously avoided the discounters when shopping in Warsaw I was intrigued by their Exclusive range. So on Good Friday I went to the local Lidl in Konstancin to see if I could prepare a three course meal for three using only ingedients sourced from Lidl.

And guess what? Very much possible. The starter was Parma ham, pate de fois gras (duck), smoked goose breast, brie, french stick and salted (yes salted) butter. The main course was a very good roast duck, potato gratin and mixed leaf salad. Pud was an excellent cheesecake and Tiramisu. All washed down with a bottle of Prosecco and a bottle of Pinot Grigio. The speed with which the victuals disappeared confirms the quality and whole lot came in just over PLN 100 (18 pounds sterling).

Which just goes to show that a relative upstart (outside of Germany where it all started years ago) can not only source to a very low price point but also maintaim quality and what’s more cater for the less well off as well as attract those more used to shopping at Alma or Piotr and Paweł.

Now theoretically the likes of Tesco and Auchan should not have had much to fear from the upstart. But and this is a great but shopping at Tesco, Auchan etc is a joyless experience, having to tramp around for an hour or more just to do a basic shop. And not knowing which of their discounted products have been “manuafactured to a price point” by sacrificing quality. Whilst at the high end of the market Alma has good quality products the prices are sky high.

So what is Lidl’s secret? Well as far as wines are concerned they buy from smaller vinyards and sell until stocks run out, replacing by something new. The same goes for the Exclusive range which is relatively limited but again comes from small producers. Lidl avoids where it can the large multinational producers who in the main have agreements in place with the majors not to sell at attractive prices to wholesalers and the smaller chains. All perfectly illegal I am sure. As an example the Polish Cadbury plant sold a lot of its production to UK cash and carries as the plant was not covered by price maintenance agreements!

Tesco started life as a “pile it high, sell it cheap” retailer. It then moved upmarket in the UK and recently has lost the plot. Not least because I guess people have better things to do than: battle for a parking space 400 yards from the store entrance, navigate around acres of “special offers” and guess where the mechandising gurus have placed the horseradish sauce. Then wait in the checkout queue. And of course there is the fact that being faced with special offers people over buy and end up binning half of what they bought.

Much more enjoyable to pop into a local convenience store, plan meals around what is fresh and available, take no more than half an hour to shop and have the car parked no more than 30 metres away. And because it only takes half an hour or so you can repeat the experience several times a week buying smaller quantities.

For the “heavy” shop of washing powder, dog food etc there is of course home delivery from the large chains. One wonders what effect the start up of Amazon food sales in the US will have on US hypermarkets.

Ah well it was never going to last (the majors taking an ever greater share of the market). In the current world you have to be nimble with a flatish management structure to succeed. And an ability to listen to what consumers actually want.

Lastly Lidl shows that economies of scale are not all they are cracked up to be!

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