McKinsey study: Aldi and Lidl are profoundly changing buyer behavior

Advantages not only through low prices - supermarkets have to learn from the discounters' concepts for success

The success of the hard discounters Aldi and Lidl is changing traditional retail and supermarkets more fundamentally than previously thought. The high growth rates of the discounters are no longer solely due to the low prices. The discounter business model is based on extreme simplicity, efficiency and speed. With this, Aldi and Lidl are noticeably changing the shopping behavior of Germans. The management consultancy McKinsey & Company came to this surprising finding in a new study that was presented in Frankfurt on Tuesday.  

McKinsey believes the impact on traditional trade is profound. "Supermarkets have to orient themselves towards the successful concepts of Aldi and Lidl. Only then will they have the opportunity to win back market shares with their own strengths," said Michael Kliger, partner at McKinsey management consultancy and head of retail practice. "Smaller assortments, clearer shelves and faster shopping - Aldi and Lidl set standards that traditional retailers can no longer ignore."

In the second half of 2003, McKinsey & Company examined supermarkets in Germany, France, Great Britain and Italy for the study "strategies for traditional retailers in competition with hard discounters". The consultants conducted extensive market research for the study in order to analyze consumer perception, examined product ranges and prices in the local shops and evaluated the different business models using financial indicators.

According to the study, the success of discounters is based not only on the low prices but also on the factors of convenience for the customer, novelty of the products and the awareness of the buyer that they are encountering an exclusive range of goods. Discounter customers also have great confidence in the range of goods, appreciate the smaller range and feel that the offensive communication of prices appeals to them in the best possible way. Even the supposedly limited service of the discounters is not perceived negatively by customers. 

What does the "supermarket of the future" look like?

According to the McKinsey study, the "supermarket of the future" is characterized by the following factors: The customer can clearly differentiate between low, medium and high price groups and can thus immediately recognize the advantages in terms of value for money. The supermarket only offers a particularly large selection where the customer appreciates it. In addition, attractively priced but also qualitatively appealing own brands are offered. Food for allergy sufferers and children or organic products make the offer even more attractive for new customer groups. The products are attractively presented in the store and customers can shop quickly and conveniently.

McKinsey partner Kliger named the supermarket chain Tesco, market leader in food retailing in Great Britain, as a positive example of how traditional retail can successfully position itself against discounters. For example, the chain offers products in clearly definable low, medium and high price segments. Tesco is aggressively marketing its prices and has successfully established strong own brands at the lower and upper end of the price architecture.

Since 1998, the hard discounters Aldi and Lidl have recorded enormous growth rates in Germany. In 1998 discounters achieved a total of 31,3 percent of food retail sales. This share rose to 2002 percent in 37,7. Aldi has achieved an annual sales increase of 1998 percent on average in Europe since 7,8. In the same period, Lidl was even able to increase its sales by 15,1 percent on average in Europe.

Source: Munich [ McKinseay ]