Which of These 4 Myths Regarding Aldi & Lidl Do You Still Believe?

According to a recent Bain survey of shoppers  the hard discounter market has much more appeal to your shoppers than you might think.   Also Private Label products play an important role in this appeal. The following quotes from this study.

 

Myth #1: Hard discounters cater primarily to low-income shoppers. They’re not representative of my shoppers.

Reality: According to our findings, Aldi shoppers are not too different from traditional grocery shoppers in income and education. Historically, Aldi’s strongest segments have been smaller households that are not fussy about brands. However, over the last few years, the discounter has pursued more affluent, suburban shoppers—those who typically shop at mass retailers and club stores.

In particular, Aldi has increased its penetration in two specific segments that together account for about 25% of all grocery spending: Mainstreamers, classic, low-maintenance shoppers whose major preference is for stores that are clean and organized; and Family focused, private-label fans who actively seek deals, scan weekly ads and shop at the lowest-priced grocery stores

 

Myth #2: Even if they resemble hard discount shoppers, my own shoppers won’t try hard discounters because they love shopping my store.

Reality:  On average, 61% of shoppers who have never shopped at an Aldi before say they would likely try the discounter if one opened nearby; just above 71% said they would likely try a Lidl.

The main reasons they haven’t tried hard discounters yet are merely unawareness and lack of presence. This should worry grocers in the markets where Aldi—and soon Lidl—are making big expansion plans.

Other reasons shoppers have stayed away include assortment, value and quality perception—concerns that both Aldi and Lidl are systematically addressing .

Shoppers who shop primarily at traditional grocers but already have tried Aldi perceive the discounter to be superior on value and price, which also happen to be their top two criteria.

 

Myth #3: Even if they try hard discounters, my shoppers continue to strongly prefer branded goods and aren’t attracted to private labels.

Reality: On average, shoppers of all types have a favorable perception of private labels. We found that 85% of all shoppers are open to private-label products—with more than half of them saying private labels are as good as, or have even better quality than, national brands.

Age is more of a factor than income in private-label perception. Younger shoppers are more likely than their older counterparts to believe that private labels are equal to, or better than, national brands. However, high-income shoppers are just as likely to have that same sentiment toward private labels as low- or middle-income shoppers.
Furthermore, shoppers have a very positive perception of Aldi products specifically. Among our survey respondents, 75% of shoppers, regardless of their primary grocer, believe that Aldi’s products are as good as, or better than, national brands. This holds across almost every category, but most predominantly in milk, eggs, dairy, and canned and frozen foods.

Most concerning to incumbents is the fact that 69% of shoppers who have never tried an Aldi, but would consider trying it, agree or strongly agree that Aldi’s quality matches or beats national brands.

 

Myth #4: My shoppers may buy a couple of items from hard discounters. But they’ll never capture a meaningful share of my shoppers’ weekly spending.

 Reality: We see a predictable pattern of behavior when shoppers try Aldi. In looking for great prices and good value, they typically start out by buying a few products in key value item (KVI) categories where price is very competitive and quality is assumed, such as milk, eggs and some canned goods. These items are a barometer of quality for the entire store, and they become the conduit to trying other categories, which are usually fresh produce, other dairy, frozen foods and cereal. If consumers start purchasing from this many categories, they are well on their way to seeing Aldi as more of a primary grocery outlet and one-stop shop.

Bain’s survey data suggests that a high percentage who shop across three categories not only see the price as better, but perceive Aldi quality as on par with, or better than, national brands. The shift has a significant effect on share of wallet. Shoppers who purchase one category from Aldi spend an average of 13% of their total share of wallet at Aldi vs. 45% for shoppers who purchase three or more categories.

This scenario will get tougher for incumbents as Aldi and Lidl introduce new product lines in new categories.

 

 

For more on the Bain study click here

For an Infographic on these findings click here.

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