During the height of the Covid crisis, hard discounters Aldi and Lidl have continued to grow faster than the market in most European countries. However, they are losing ground on their home market. In the Benelux, the picture is equally mixed.
In conquest mode
In France, the hard discounters recorded a 6.8 % sales growth during the last twelve months (until May), while the overall market only grew by 1 % during the same period, LSA reports from recent NielsenIQ figures. In Spain, both German chains also gained 6.8 %, while the market grew by just 0.7 %. In Italy, both low-cost retailers advanced by 7.5 % (compared to 3.5 % for the total market). The United Kingdom took the crown with a 11.3 % growth for the hard discounters, more than three times the 3.5 % the total market grew. In all these countries, discounters gained market share, often substantially.
This impressive performance contrasts sharply with the situation on the German home market of the discounters: there, they lost 0.2 % turnover, while the market grew by 3 %. So their market share dropped significantly. Of course, this has everything to do with the historical situation in Germany: discounters – not only Aldi and Lidl but also Netto, Norma and Penny – are the dominant format there. Together, they have more than 40 % market share, making further growth difficult. In Switzerland and Austria, too, the hard discounters are declining slightly.
In many other European countries, however, Aldi and Lidl are still in “conquest mode”. In France, for example, the market share for hard discount is only 12.1 %, in Spain 11.3 % and in the UK 16.4 %. That leaves room for expansion. In France, Aldi recently took over low-cost chain Leader Price from Casino. These stores are now being converted. In the same country, Lidl plans to open about fifty stores a year. However, in Poland, discounters have a market share of 37.4 % and still manage to grow by 2.7 %.
Online Achilles’ heel
What about the Benelux? In Belgium, Aldi and Lidl have a combined market share of 17.6 %, which has grown in the past year by 0.2 %. The situation is very different for both players: Aldi has been active on the Belgian market for a long time (since 1976) and with more than 400 stores, it has a market penetration of more than 80 %. Expansion is not really an issue anymore: the retailer still renovates and enlarges stores, expands the assortment and focuses on marketing in order to strengthen the loyalty of occasional buyers. Lidl, on the other hand, entered the market more recently (in 1995) and still has considerable possibilities for expansion.
In the Netherlands, the hard discounters have a market share of 22.5 % – down 0.7 %. Competitors there engage in a fierce price war: Jumbo is the big winner and e-commerce is also growing strongly, both in ‘pure players’ (rapidly expanding Picnic) and in traditional supermarket chains. Recently, Ahold Delhaize CEO Frans Muller stated that e-commerce already accounts for ten per cent of sales for Albert Heijn in the Netherlands. Apart from a few test projects, the hard discounters are not active online. That is possibly their Achilles’ heel, now that the corona crisis has given e-commerce for food an enormous boost.
