Saturday 21 December 2013

The slow, inexorable decline of Tesco

The queues to get in and out of the Lidl car park in Norbury this morning are disturbing to behold, and the news that half the UK population visited Aldi or Lidl - the discount supermarkets - in the last 12 weeks does concentrate the mind wonderfully.

It does so because, among others, Tesco has always been the Great Satan as far as I'm concerned, the very symbol of a corporate that has been allowed to get too powerful, and which corrodes the UK food industry as a result.  It is a glimpse of the emerging world of semi-monopoly.

Only a few years ago, I wrote an essay which imagined a kind of Lion, Witch and Wardrobe future where there are only two companies left in the world, one of which is TescoVirgin.  You can read it in my book The Age to Come.

I still fear the emerging monopolies, but my guess is that Tesco won't be among them because - despite everything I said - there is still capacity for competition in the supermarket sector.  Aldi and Lidl have pushed Tesco below its 30 per cent market share.

They will go down slowly because of the virtual monopolies they have managed to build up in so many times, but they will go down.

Because if you want to shop somewhere where there is nobody to help you, and the security guards keep you obviously under observation, then - well, you might as well go somewhere cheaper.  If you want a shop without soul, then why not go to Lidl.

They are the Woolworths of the 2010s.  We will see their like again, and it will be Aldi.  This is not an optimistic prospect, as half of us now know - it is the least sensitive to local markets of any supermarket model.  Go along to your local discount store, and see the downside of the vision of the future.

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Simon said...

because lidl and aldi don't sell organic!

Paul Walter said...

I agree with the thing about local, because, for example, Lidl seem to base their model on European wide discount bulk purchases.

But I think it is rather glib to describe both Lidl and Aldi as "discount stores".

The quality of a great deal of the produce in Lidl is very high. Indeed, "foodies" have been going there for years. Very often you are paying less because you are not buying a known brand and because there is a choice of one type of many of the things. Go to Waitrose and you can choose from 34 types of sliced meat. Go to Lidl and there's a choice of one sliced meat and the label is written in German. But it is very good sliced meat and is cheaper than anything in Waitrose. There is many a high quality bargain to be had from both Lidl and Aldi.

One element here is what I call the Champagne/Cava syndrome. Champagne and Cava are the same thing. But Cava costs you £3-4 a bottle while Champagne costs you £20-50. Why are you paying extra? For all those decades of marketing of the name "champagne".

Similarly, many of the goods in Aldi and Lidl are the same quality as Tesco but they cost less because you don't know the brand name from Adam.

I think we should also acknowledge that the Pound Store/Poundland/99p store etc are also nipping away at the heels of Tesco. But, again, there is a misunderstanding that such stores are exclusively discount, cheap stores. Very often they sell reduced sized packages to get to £1. Example: Instead of a ream of paper, they sell 250 sheets. It's the same paper as you buy at Tesco but you can buy a quid's worth. We should also note that sometimes pound stores actually increase prices (compared to other stores) to get to £1. An example used to be shaving foam which you could buy at 86 pence from Wilkinson, but it was £1 (obviously) at Poundland.

Anonymous said...

We shop at Tesco regularly because it is our nearest shop. The quality is consistent and good, the Security Guard is friendly and helpful, and the staff are lovely. We also shop at Aldi because they have good stuff too, but they are further away and on the far side of a traffic jam, so less attractive.

Tesco seems to get knocked consistently. It seems to be the "thing to do" for some people. But, hey!,some people claim to like Shakespeare - each to his own . . .