Deutschland uber aisles

Whilst the four major supermarket chains Tesco, Sainsbury, Asda and Morrison face declining sales their main threat is coming from the German discounters Aldi and Lidl who are going from strength to strength.

Lidl expect sales this year to grow by 20% to more than £4 billion. Over the next 10 years Lidl plans to double in size with up to 1500 outlets. Meanwhile latest figures from Aldi show that UK sales increased 36% to £5.3 billion last year ldiscounters.eading to a 65% increase in profits.

These two companies have been the beneficiaries of a shift in consumer buying habits following the financial crisis of 2008 and the global recession. People are looking for value for money and these discounters are providing it. The big four UK supermarkets were slow to appreciate the threat and now find themselves very much on the back foot.

Morrison have now launched a loyalty card “Match and More” which takes into account not only its traditional rivals pricing structure but also the German discounters.

At the same time as facing this heightened competition the UK big four supermarkets find themselves under scrutiny in respect of how they are reporting their figures and the treatment of rebates or costs of promoting products which they levy on suppliers.

From a consumers perspective there is a general desire to get back to basics i.e. good quality at the best possible price. More and more people are turning away from the “bargain offerings” of buy one get one free the so called BOGOFF.

Lidl and Aldi have certainly stolen a march on the established grocery chains who will have to respond with some innovative and aggressive marketing as they attempt to recoup market share.

Whilst this will be good news for the consumers there will be pain to be felt and this will certainly be the case for those supplying the supermarket chains. These companies will undoubtedly be pressured to reduce their prices whilst having to accept a lengthening of payment terms.