Two retail chains in the Republic are really enjoying the recession, Aldi and Lidl. The latest market research, from TNS Worldpanel, shows that for the last quarter of 2008, their combined share of the grocery market climbed even further, from 7.4 per cent to 7.8 per cent, higher than Superquinn. For most Irish consumers these days, price is everything and the cheaper, the better. Some produce, mostly fresh food, is sourced in Ireland, but everything else is imported.

The first German discounter to arrive in Ireland was Lidl, in 1998, followed by its rival, Aldi, in 1999. For years, the popular wisdom was that most of the people who shopped there were immigrants to Ireland, from eastern Europe and elsewhere. The 2006 abolition of the Groceries Order, which prohibited below cost selling, helped free up trading conditions for the two discounters.

Now, that popular perception of the discounters has all changed. It’s said in the trade that people who once shopped in Superquinn traded down to Dunnes and Tesco, while people who had been customers of Dunnes and Tesco gravitated towards Aldi and Lidl. These days, it’s the in thing for many Irish families to shop in the discounters. After all, as Aldi says, someone spending €200 on a grocery shop can save €60 with it compared to one of the supermarket chains.

Aldi and Lidl have resisted dealing with the media since they arrived in Ireland and their silent approach persists. Neither group will ever make any comment to the media about any aspect of their trading and in the grocery business, Patrick Kaudewitz, managing director of Lidl in Ireland, is known as the “Scarlet Pimpernel” , because his appearances at grocery trade functions are so rare.

But Lidl has continued to expand fast in Ireland; at the latest count, it had 105 stores in the Republic. It sells mostly own brand, but does special offers on national brands and many specials on other items like home office equipment, electrical goods
and other consumables, including furnishings, clothing and footwear, a similar retail offering to Aldi. Its slogan is: “Seriously cheaper,” while Tesco has responded by claiming to be the biggest discounter in Ireland.

Lidl’s headquarters is at Newbridge, Co Kildare and it recently opened a second distribution centre, at Charleville, on the borders of north Co Cork and south Co Limerick, to serve the Munster region. Lidl now employs around 2,500 people in the Republic.

Recently, there was much commotion over Lidl taking over the former Habitat store in College Green, close to the foot of Grafton Street in Dublin. But Lidl shied away from the idea of paying up to €2m to take over the lease and the place is now going to be a Viennese-style café.

Aldi in Ireland, headquartered at Naas, Co Kildare, is slightly more revealing about what it does than Lidl. Managing director for Ireland, Donald Mackay, has revealed that Aldi’s sales in Ireland jumped by 21 per cent during 2008. He says: “New customers are trying Aldi because they are more conscious of getting value for money.”

The hard discounters are here for the long haul

Close on 95 per cent of the products sold in an Aldi store are own brand. Currently, Aldi has 59 outlets in the Republic and plans to open a further 17 by the end of 2009, in such towns and cities as Dublin, Drogheda, Mallow and Wexford. Over the next three years, it plans to open a total of 35 new stores, creating 650 new jobs in the process and bringing the number of its outlets much closer to Lidl’s tally. Typically, each Aldi store in Ireland employs just 14 people.

Often, the company’s practice is to develop a small cluster of retail outlets, taking one for itself. In December, for instance, it was granted planning permission for a development in Portlaoise that includes seven retail units, including one earmarked for its own use.

Aldi is also planning a major new distribution centre for Munster, based in Mitchelstown, north Co Cork. Construction is due to start in March and when open, it will employ 160 people. The approach to shopping at Aldi and Lidl is decidedly low on frills and the only thrill is in the prices charged. They are to the grocery trade what Ryanair is to the aviation industry, but now that the benefits of convenience shopping have been ousted in favour of lowest prices, the two discounters score well.

Last year, the National Consumer Agency found that Lidl was significantly cheaper than anyone else, although Aldi still comes close to Lidl on prices. The agency found that with a basket of like-for-like mid- range own brand goods, Lidl came out 52 per cent cheaper than Tesco.

Aldi and Lidl are competing with an Irish discounter, Cost Cutter, run by the Mallow, Co Cork, wholesalers, Barrys. It has over 80 outlets now, supermarkets and express. Tesco and other multiples have been reacting aggressively to Aldi and Lidl, so much so that Tesco now proclaims itself as the “largest discounter” in Ireland. But the latest market share figures show that Tesco Ireland has slipped slightly, from 26.4 to 25.8 per cent, while Dunnes, which has been equally aggressive in its pricing promotions, has climbed to 25 per cent. Super Valu is also performing strongly and claims to match all the others on price.

Superquinn has slipped from 7.9 to 7.3 per cent, even though it too has been strong on cut pricing. Recently, it has been running promotions on prices to retail a range of branded products for just €1 each. Competition from Northern Ireland has intensified. Asda and Sainsburys between them now have 2.5 per cent of the Republic’s grocery trade, even though neither has an outlet in the Republic, a reflection of cross-border shopping.

All this amounts to aggressive competition at the discount end of the market. But for the moment, at least, Aldi and Lidl, are reaping a fine profits fuelled harvest in the Republic.

Printer friendly version

Email this article to a friend

Bookmark this

---