Lidl Giving UK Grocers Indigestion

by Broad Street | Published 08/04/2015 | Alcoholic Beverages, Grocery Stores, World News

The German retailer Lidl is kicking some major butt among legacy UK grocers like Tesco, Sainsbury, Morrisons and Walmart-owned Asda.

It and fellow German-owned Aldi have already forced British retailers to slash prices as part of a bruising price war.

Several recent blind taste test competitions have had both retailers besting much higher-priced offerings, reinforcing a perception in the buying public’s mind that price isn’t the significant indicator of quality that it had been in years passed.

One area where Lidl is kicking butt is in wine: after adding 20 new stores in the past year, Lidl has seen a 38% growth in sales to £200MM ($311.6MM). While still a small section of the £5bn ($7.8bn) UK “off-trade wine sector” (i.e., alcoholic beverages sold outside of pubs & restaurants, or in other words, “retail”), the chain is giving consumers what they want: value pricing. The top offering is a a Margaux Château La Tour de Bessan 2012, at £16.99, but the average is Prosecco from between £5.50-£7.50 per bottle. Lidl is showcasing new wines with its Wine Cellar promotions, where additional brands are featured for a limited time offering.

Not all UK supermarket chains are hurting. Waitrose and Marks & Spencer have held onto their market share because of consumer perceptions they are the place to shop for specialty items and indulgent purchases.

The question is whether the two German mega-retailers will succeed in the US?

 

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