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We look the continued evolution of Aldi and Lidl UK, including three key areas the retailers are focusing on.

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In the nine months since its launch in September 2018, Tesco has opened nine Jack’s stores. As the retailer nears critical mass for its trial of 10-15 stores, we share our view on developments so far.

Buy more, save more: flexing the Jack’s format for bulk shopping   

In a similar approach taken by Sainsbury’s during its short-lived joint venture with Netto, Tesco is trialling Jack’s in a variety of locations. This has led to a high degree of format flexing across the network. Its latest opening is Rawtenstall is a marked departure from other stores we’ve visited, and around three times the size of the first Chatteris store.

Its “buy more, save more” slogan is key point of difference, boldy written on the front of the store and on each aisle-end. Shoppers pay less per unit by buying in bulk, with the unit price displayed on red stickers. This mechanic applies to a wide selection of Jack’s own brands and market-leading brands.

Larger pack sizes are available for many branded products, prominently displays at the end of the aisles. Cases of products are available on the shelf,  easy to get to the checkout on flatbed trolleys.

Beer, wine, spirits and soft drinks near the front of the store set a different tone for shoppers on entering this store. This compares to bakery and fresh produce first in flow, as we’ve seen in other Jack’s. The Tesco supermarket that previously fillled the site has likely influenced this layout.

Source: IGD Research

Jack’s is “part of the Tesco Family” – but how closely are they related?

Jack’s own brand range is one of the features Tesco claimed to be “unique” to the format, helping distinguish it from other Tesco stores. The Fresh Five produce deal, and When Its Gone Its Gone (WIGIG) deals on general merchandise are other standout Jack’s features. They are also the signature promotions of leading food discounters Aldi (Super Six and Specialbuys) and Lidl (Pick of the Week).

These Jack’s identifiers are now creeping into the main estate. In May a small selection of Jack’s products appeared down the Tesco promotional power aisle. For price sensisitve shoppers, these offer great value, such as £1.07 for 750g of breakfast cereal. The move also offers a welcome boost in volume for lines that are currently only sold in nine stores. This will help Tesco understand the national demand for Jack’s products. But as part of an own brand strategy, adding Jack’s to the mix after the entire 10,000 SKU range has been revamped, including the launch of the “Exclusively at Tesco” entry tier, was a surprising move. It raises a lot of questions: could Jack’s be Tesco’s fourth own brand tier? Will Tesco products ever go into Jack’s? From a shopper perspective, does it dilute the differences between Jack’s and Tesco (where they get the convenience of a bigger range, Clubcard points, and more )?

Fresh Five has also recently become embedded in Tesco’s produce promotional cycle, a tactic that only usually appears at Tesco at Christmas. While Jack’s Fresh Five and Tesco’s Fresh Five include different products and prices, they play a prominent part of the value and freshness messaging for both.

New general merchandise format trials have also seen Tesco introduce WIGIG fixtures similar to those found in Jack’s. This will help drive footfall, excitement and impulse purchasing for the category and the store.

Source: IGD Research

Mission-possible: increasing competition in food-to-go and meal for tonight  

While Jack’s food-to-go and meal inspiration fixtures add complexity to the efficiency-focused model, they are a necessity if Jack’s is to compete alongside Aldi and Lidl. Both discounters are developing their propositions in these areas. For example, Aldi has food-to-go and meal for tonight fixtures in stores, and its award-winning premium ready meals appeal to an ever widening flavour palette.

At Jack’s, displays combine chilled and ambient groceries for themes like Big Night, a convenient solution and a break from the value messaging.

Coffee machines adjacent to the in-store bakeries, as well as packaged sandwiches, drinks and snacks also appeal to shoppers on the go. Tesco’s expertise in these areas are a strong benefit for the Jack’s chain.

Source: IGD Research

Want to know more?

Retail Analysis subscribers can download our Jack’s store report, and latest Tesco Strategic Outlook report

Get in touch with our analysts for more insight on UK discount: [email protected]

We look at the latest developments from Lidl UK including expansion into ecommerce, a new marketing campaign and labelling system.

1. Exploring ecommerce

Lidl has said it is "actively exploring" ecommerce in the UK for the first time according to The Grocer. This comes after the retailer has advertised for an e-commerce project manager and a junior project manager. It has been a year since Lidl created the holding company Lidl Digital Logistics. Since then there has been growing evidence that the retailer is looking to expand into online.

Lidl first introduced its delivery service in Ireland in 2018 in partnership with Buymie. Buymie is a third-party grocery delivery service that began as a start-up in Dublin. It uses self-employed couriers to fulfil orders placed on an app in a similar way to Deliveroo. After a successful trial it rolled out the service across Dublin in January 2019.

Source: Google Play

Buymie now looks as though it is expanding into London. It has recruited a London-based general manager according the The Grocer. Buymie secured  €1m (£880,000) of investment in January and is expected to use this to roll out its operations in the rest of the UK. The businesses new general manager is Oli Reynoldson who previously worked for Deliveroo.

There has been no official announcements made but Buymie's new recruit has generated media coverage speculating over whether Lidl will partner with Buymie in London and launch a new delivery service in the capital. The Drinks Business has also revealed that part of Lidl's online team were at its London Wine Fair in May, adding to the speculation that an online offer is coming, and that alcohol will be part of this. 

Over the last 12 months, Lidl has expanded its online presence from four countries to 11, including grocery ecommerce operations in five countries.

Read more about how the how the discounter is accelerating its online expansion with an in-depth look at its presence across Europe and the US.

2. 'Big on the big shop'

Lidl has launched a new marketing campaign that focuses on product quality, sustainability and the wide range of products Lidl stocks. The retailer is still using the 'Big on quality, Lidl on price' catchphrase but the emphasis is on quality first and price second. There is a TV advertising campaign and in-store POS to support this.

This activity should help build Lidl's reputation as a destination for a full weekly shop. but when focusing more on quality, Lidl will need to take care not to alienate its more price sensitive customers.

Source: IGD Research Lidl Tooting

3. Transparency in meat production

Lidl is trialling a 'method of production' label on all fresh chicken products. The aim is to improve transparency and help shoppers make more informed decisions. This is a first for the UK. The retailer has said it follows the success of a similar labelling scheme introduced by Lidl in Germany last year, which has led to wide-scale adoption across the industry.

The label will distinguish between the following types of farming;

  • Indoor: Birds are reared outside the UK to legal housing requirements
  • British Indoor: Birds live in a safe, comfortable housing with natural daylight, bales, perches and pecking objects
  • British Indoor +: Birds live in housing with more space to exhibit natural behaviour with natural daylight and environmental enrichment
  • British Free Range: Birds live in safe, comfortable housing with access to the outdoors for a minimum of 8 hours a day
  • British Organic: Birds have access to large outdoor spaces, with smaller flock sizes and a GM free diet

Ryan McDonnell, Lidl's chief commercial officer has said;

"To ensure that we are continuing to make good food accessible for all households, it's important that we offer customers quality meat products that are from a range of different farming systems. In addition to working with trusted partners, to give our customers the confidence that welfare standards are being maintained, we feel it's important to provide them with very clear, objective information about how the meat was produced to enable them to make an informed purchase decision."

In addition, Lidl has also committed to sourcing all its fresh chicken from UK farms by October this year. The retailer sources two-thirds of all its core products in Britain at the moment and it is committed to extending this further in the future.

Sign-up here to receive our free newsletter that will keep you up-to-date about the latest news and developments from Lidl.

Lidl has announced that it will be investing £500m in expansion in London over the next five years. 

What the growth will look like

  • 40 new stores in London
  • The first central London store will be on Tottenham Court Road
  • New locations will be in Alperton, East Acton, Hackbridge and Watford amongst others
  • Lidl has shrunk its minimum size requirement for the new store openings

According to the BBC the chief executive officer of Lidl, Christian Hartnagel has said;

"London is at the heart of our growth plans across Great Britain."

The investment will also include opening a new head office in Tolworth (south-west London) and expanding its Belvedere distribution centre (east London). A new distribution centre is also set to open in Luton, becoming Lidl's fourth site to service Greater London.

Lidl currently has 88 stores within the M25, but none in central London. Expansion in all city centres, but particularly London, is often challenging for discounters. It is difficult to find the larger sites with car parks that they typically target. There is a sizeable opportunity for growth, however competition for the best sites is intense. Our ShopperVista data shows 53% of London shoppers would use an Aldi or Lidl more if there was a store closer to them.

Subscribers can read more about this is in UK discount: factors influencing future growth.

Discounter format development

We have seen Lidl open several new store designs across Europe as it expands its presence, and target different shoppers. The retailer started testing smaller formats in 2016 in Amsterdam, and in February 2019 opened its smallest store in Germany. That store is 503 sq m, less than half the traditional size and offers 80% of the standard range. Most categories are reduced, but the store still carries the retailer's entire fresh food offer. Four stores in this format will be opened throughout 2019 in Munich.

Other discounters are also testing new formats. Most notably, Aldi opened its first ever 'Local' store in Balham, London in March 2019. The store is around 600 sq m, half the size of a typical Aldi, and has a reduced range.

In Europe;

  • German discounter Norma is building larger stores and increasing its range. It will be adding around 160 SKUs to its existing range, mainly in chilled and fresh. The retailer is looking to emulate Aldi and Lidl's larger stores
  • Italian retailer Eurospin is also trialling a larger format, with greater space dedicated to fresh, including a bakery and butchery

Want to know more about Lidl's developments?

The retailer is continually developing its proposition. It has recently announced that it will be exploring ecommerce in the UK for the first time.

Sign-up here to receive our free newsletter that will keep you up-to-date about the latest news and developments from Lidl and other discounters.

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As Lidl continues its rapid expansion across Europe and the US, it is looking to build stronger relationship with its shoppers. 

We combine our latest shopper insight with our retail expertise to explore the accelerators and inhibitors to growth in the UK discount channel.

Key discount insight including reports, news and our views in a quarterly round-up to help you stay on top of the channel.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

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