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Grocers And Inflation

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The supermarkets getting squeezed at last:

Discount retailer Aldi saw its UK and Irish businesses swing to a loss of over GBP58m (US$92m) in 2009 on the back of rising costs and investment in expansion. The company booked a loss of GBP58.04m for the 2009 calendar year, accounts filed with Companies House show. In 2008, Aldi's operations in the UK and Ireland generated a profit of GBP73.6m.

Sales inched up 1.6% to GBP2.04bn despite the retailer opening 45 new stores and extending a number of existing outlets.

http://www.just-food.com/news/aldi-swings-to-loss-in-2009_id112732.aspx

Similar in the US - Safeway is one of the biggies:

The grocer is increasingly vying with discount retailers such as Wal-Mart Stores Inc. and Target Corp. for customers. U.S. consumers have sought discounts as they struggle to recover from the economic slump and an unemployment rate close to a 26- year high. Consumers now expect to get the same prices at Safeway as at discounters, Safeway Chief Executive Officer Steve Burd said on a conference call.

http://www.bloomberg.com/news/2010-10-14/safeway-profit-drops-4-7-as-competition-for-shoppers-escalates.html

Waitrose recently committed to matching Tesco on prices.

So who suffers by price inflation?

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I am often in Aldi or Lidl, they always seem to be quite busy...

No messing about with bag packers either. Do the job yourself and keep up with the till operator as there is another 6 people in the Q behind you.

Their business model is proven and will produce increasing returns in future years.

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Aldi is a quality operation, they have totally nailed the German market and will be becoming a bigger player in the UK.

They have got their work cut out though, the UK is just about the most competitive retail market in the world.

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Is there a over supply though? It's a zero sum game, have we reached saturation? We're not eating more?

Most of the larger independent news agents are chains now: Spar, Co-op, Martins, Kwiki-mart etc.

Then there are the smaller Tesco Express that are popping up, etc.

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Very few people do their full supermarket shop at a german discounter their appeal is offering a limited range of heavily discounted goods.

Kwik Save had a similar model and suffered through a combination of lack of parking, as their car owning customers became more numerous, and the regular supermarkets launched value ranges. They then lost their unique selling point.

Both the big german discounters have relied upon heavily promoted deals on desirable non-food items like flatscreen tellies and laptops etc. The public can't so readliy afford laptops so ironically they're less keen to visit the german discounters.

Edited by Soon Not a Chain Retailer

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Very few people do their full supermarket shop at a german discounter their appeal is offering a limited range of heavily discounted goods.

Kwik Save had a similar model and suffered through a combination of lack of parking, as their car owning customers became more numerous, and the regular supermarkets launched value ranges. They then lost their unique selling point.

Both the big german discounters have relied upon heavily promoted deals on desirable non-food items like flatscreen tellies and laptops etc. The public can't so readliy afford laptops so ironically they're less keen to visit the german discounters.

FWIW, I try and do as much of my supermarket shopping as possible in Lidl, simply because it's more pleasant than the alternatives. It's the only one with trolleys that are comfortable to push, and more important it's the only one NOT to inflict muzak on us. Yet it seems under-used and never crowded :unsure:

I'm not quite there, but I'd like to make it the only supermarket I use. Along with the small shops and the market in the town centre, many of which have excellent stuff!

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FWIW, I try and do as much of my supermarket shopping as possible in Lidl, simply because it's more pleasant than the alternatives. It's the only one with trolleys that are comfortable to push, and more important it's the only one NOT to inflict muzak on us. Yet it seems under-used and never crowded :unsure:

I'm not quite there, but I'd like to make it the only supermarket I use. Along with the small shops and the market in the town centre, many of which have excellent stuff!

It's often noted that they don't get busy at the normal peak times. It's suggested that a lot of its clientele might be people who don't work therefore you don't see the usual supermarket evening/weekend rush.

I also think it's equally likely that people in a rush want ready meals to cook in a rush therefore they'll rush round the supermarkets that stock large selections of these. Despite the down and dirty image I wouldn't be surprised to find your average german discount shopper didn't do more cooking with ingredients than average.

Edit to add: I suspect you might not be shopping for a family that's where a full shop at a discounter would be harder. The absence of screaming kids in the aisles probably also contributes to the more serene shopping experience.

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Went into Lidl last week, for the first time in about a year. (It just happens to be the supermarket furthest from us, by quite a way)

The increase in the number of what you might call "middle class" targetted lines is very noticeable.

It looks really odd, as in the main the pricing is very reasonable and/or outright cheap, and then you have a display of branded (I mean known UK brands that you'd find in Tesco, Sainsburys etc) hand creams and facial scrubs at 3.99 too.

If you knew nothing about it and what was going on in the economy, you'd struggle to understand their business model looking at the range of stuff on the shelves especially given that it isn't a very big store.

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Very few people do their full supermarket shop at a german discounter their appeal is offering a limited range of heavily discounted goods.

Kwik Save had a similar model and suffered through a combination of lack of parking, as their car owning customers became more numerous, and the regular supermarkets launched value ranges. They then lost their unique selling point.

Both the big german discounters have relied upon heavily promoted deals on desirable non-food items like flatscreen tellies and laptops etc. The public can't so readliy afford laptops so ironically they're less keen to visit the german discounters.

Interesting retail insight.

LIDL has been doing £5 off £30 promotion on daily express etc a few times last year - I suppose that is hardly a sign of too much demand for their 'services'.

Personally, I find having even less stuffs that I want to buy compared to LIDI...

I also price compared LIDL and don't think they are that cheap. e.g. a prince tuna in sunflower oil, 3 for £2.79 (93p per unit) and Tesco does 4 for £3.50 (87p per unit) (and shoppers get double clubcard point).

I do however find LIDL/ALDI checkout about twice as efficient as the major's checkouts.

Edited by easybetman

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  • 261 Brexit, House prices and Summer 2020

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      • down 5% +
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      • Even
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      • up 5%



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