If Tesco had known just how badly the discounters would ultimately handle their post-recession come-down I don’t think they’d have worried so much about them during the downturn and even bothered launching their Discounter Brands range.
The latest evidence to emerge of their continued weak performance comes from grocery experts IGD that found the main three Aldi, Netto and Lidl have all massively under-delivered on planned new store openings. The biggest failure was at Aldi that had bragged during its peak trading in 2008 that it would open a store each week. Actual result is 15 opened in 2009.
Netto sensibly promised nothing so its opening of six new stores in 2009 could be described as a positive result. But it is still disappointing compared with the 13 it opened in 2008. And Lidl stated its intention to open up to 50 outlets but it could manage only 30 last year.
The discounters have failed to pick up new units because of the inflexibility of their property departments that have very fixed ideas of what to acquire. In contrast, the large UK grocers have proven very adept at picking up a variety of different sized units in diverse locations, thereby running rings around their cheap-priced rivals.
The deterioration in store openings at the discounters is modest compared with the drop-off in sales that has seen all three disappoint since their high points in 2008 when Terry Leahy, CEO of Tesco, rather presciently suggested they were simply enjoying their “moment in the sun” (reported in The Times, 11 June 2008)
That moment in the sun swiftly passed and all three discounters went on to boot out their managing directors in varying circumstances. This suggested that even when the sun was shining on their backs they had mis-managed the opportunity. Now that there are much fewer opportunities for them in the UK and shoppers have returned to buying premium products again their prospects look as bleak as the interior of my local lidl store.
Disclosure: I still buy my daughter ice cream from my local Lidl store despite its interior.