Five Secrets To Discount Supermarkets' Success
Updated: 12:24pm UK, Monday 29 September 2014
German discounters Aldi and Lidl continue to record stellar growth figures as the middle-class warm to their products and the big four supermarket chains battle it out in the bitter price war.
BIG IS NOT ALWAYS BETTER
Over decades the big supermarket chains have expanded their range and variety of products. While giving consumers a choice of between 10 different varieties of baked beans, such choice creates a stock burden, demands on the logistical chain and the need to have bigger stores to stock the products.
Instead, Aldi and Lidl restrict the number of different types of the same product. This allows them to reduce store sizes, warehouses and transport costs.
VISUAL SIGNALS
Big brands spend millions honing their packaging graphics, logos and label colours. The discounters sell their own-source items, from cereals to deli items and tinned food at below the price point of big brands. There is a remarkable similarity in the discounters' goods to the familiar household labels.
Aldi's prosecco sparkling wine's orange label is a similar colour to a famous French champagne, its chocolate wrappers have a scroll graphic like a luxury Swiss brand, and you may need to do a double take when you see their rice crispy breakfast cereals.
ONLINE DELIVERIES
Apart from Morrisons, the big chains raced into online ordering in the 21st century. They have built up big IT structures and local delivery networks to offer the service. But it does not come cheaply. Some estimates put the cost of each delivery at more than £10, an expense borne by the retailer. Aldi and Lidl have avoided becoming sucked into the vortex of online ordering and delivery.
STAFFING
With smaller stores, the discounters can keep wage overheads to a minimum. Salaries are a big and fixed overhead for supermarkets. On October 2, Aldi opens its second store in Lincoln. The full staffing level of 45, for a store open long hours, is low.
Lower staffing levels means fewer checkouts and shelf stackers. The discounters get around this by selling many items directly from the transportation pallets. The big chains normally unload pallets in the back room and then restock using smaller trolleys. Wheeling pallets into their wide aisles saves time and the number of staff needed.
Fewer checkouts can cause tension and dissatisfaction for customers, but Aldi has found a way to trim a second or two from each item being scanned. Many of their products carry multiple bar codes, allowing checkout staff to improve item scanning time, alleviating the need to locate the code on the packaging.
The discounters have also avoided the added expense of setting up a chain of convenience stores. High street leases and fitting out costs are expense undertakings, and it has become another battleground for the big supermarkets.
WOOING THE MIDDLE-CLASS
Pre-financial crash many middle-class families were happy doing the weekly shop at their local out-of-town mega supermarket. With belt tightening, more awareness of food wastage and a range of items that appeal to more discerning palates, Aldi and Lidl have catered for those with less-constrained budgets without disenfranchising budget buyers.
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