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All about Aldi. And Lidl

Germany's hard-discounting cousins are winning the war for customers thanks to some rather conventional tactics

If you’ve travelled in Europe you’ve probably wandered into an Aldi or Lidl store. Once upon a time, Lidl looked at coming to Canada. Instead, it’s now heading to the U.S. Aldi is already in America and some speculate its next stop will be Canada. Whether or not that happens, Aldi and Lidl are worth a closer look.

Aldi and Lidl are often mentioned in the same breath. Many people think they’re identical. True, both hail from Germany, both have thousands of stores across Europe and both are limited assortment, hard discounters. But there are some big differences between the two.

One of the most notable differences is their in-store environments. Over the last five years, Aldi has invested big to upgrade stores and roll out a warmer format. With lots of natural light, fresh colours, wide aisles and extra shelves, Aldi is dispelling the stereotype that discount stores look and feel cheap.

In the U.K., Aldi has taken this a step further, remerchandising its stores and allocating space to reflect where its strongest sales lie. Areas such as meat and produce now have more dedicated chilled space, while lower volume lines have been moved off bulk displays and onto shelves, leaving fewer pallets on the sales floor.

Lidl, meanwhile, is improving the shopper experience within specific categories, notably bakery and wine. It has rolled out in-store bakeries on the sales floor, enabling shoppers to see production take place. This move has reinforced Lidl’s freshness credentials.

Within wine, Lidl has introduced more upmarket lines to make the category feature and to cater to a more affluent shopper base. Last year, the retailer won 14 awards for its own wines at the International Wine & Spirit Competition, held in London.

Aldi and Lidl also differ on product mix. Almost all of Aldi’s products are private label. The retailer has invested significantly to improve the quality of these ranges–reflected in the number of consumer taste awards Aldi keeps racking up.

Aldi’s Specially Selected premium- tier range has been particularly successful. Aldi also recently introduced a wider range of vegetarian and vegan products in Germany; and gluten-free, natural and organic ranges in America.

At Lidl, national brands have a bigger presence, accounting for around 20% of its range. National brands are used to signpost key categories, promote value and reinforce quality. But it’s not just national brands gaining shelf space. Lidl also likes to support local. In the United Kingdom, 95% of its fresh meat products are sourced from the U.K.

Aldi and Lidl are also taking different marketing routes. For Aldi, it’s TV. Ads are centred on its “Swap & Save” campaign in which Aldi benchmarks its ranges against national brands on quality and value. Lidl, meanwhile, uses Facebook and Twitter to reach customers in a personalized way.

Last year, Lidl topped 10 million fans across its European Facebook pages.

What is striking is that many of Aldi’s and Lidl’s strategies resemble those of conventional supermarkets. Developing warmer, more inviting stores; extending private brands into new, fast-growing segments; using social media to build online communities; and adding more local products are tactics usually associated with conventional stores, not discounters.

But such tactics are working for Aldi and Lidl–especially in Great Britain. In the last quarter to Feb. 1, Aldi’s U.K. sales rose 21.2%, and Lidl’s were up 14.2%, according to Kantar Worldpanel. Most of Britain’s biggest grocery chains, including Sainsbury’s, Asda and Morrisons, saw their sales decline in the same period.

To maintain their winning ways, Aldi and Lidl must keep differentiating from each other without moving too far away from their hard-discount roots. If they can do that, they’ll be a force to be reckoned with. Together and on their own.

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