Lidl and Aldi are BOTH going to fail

One of my online contacts recently asked me if I had a grudge against Aldi. He meant it in a half-joking sort of way. But the point he was getting at, is that there have been several articles about Aldi over the last year on this website - and none of them have been complementary!
So to show that I am not biased, I thought it would be worth telling you a little story about Aldi's main rival, the cut-price retailer Lidl.
If you read my article on 09.09.17 then you will have noticed that Lidl has recently overtaken Waitrose in the Top 10 supermarkets in the United Kingdom. Although they are still smaller than Aldi, branches of Lidl seem to be springing up just about everywhere at the moment. In fact one has just opened in the Armley area of Leeds, close to where I live.
I always love to check out new shops. And for some inexplicable reason I am obsessed with the marketing and customer service of supermarkets. That was going to be my intended Phd dissertation subject. So I made a point of visiting this new branch of Lidl as soon as they opened.
I've been in plenty of branches of Lidl before, so I knew more-or-less what to expect. You get an awful lot of own brand products which tend to be cheaper than the ‘big four’ supermarkets, and you get a lot of odd products that seem to be very out-of-place, such as cheap DIY items, camping equipment, and (bizarrely) specialist clothing for people who are going on a skiing holiday (what the heck is all that about?!?!?) And that's not to mention piles and piles of other weird and wonderful products mixed in with their core offering, which is basically just cheap own-brand food.
So back to my story. I bought six items and took them to the checkout. There were two checkout operators working at the time. So as usual (and exactly the same as in Aldi) I had to wait quite a long time in the queue to pay for my items.
When it was my turn, the surly checkout operator (who looked like he had only just left school) started throwing my items through the checkout as quickly as he could. He was rushing so much that he managed to (quite literally) throw my large pack of potato crisps onto the floor, when he should have just been politely passing it to me to put in my bag.
I gave him a look as if to say: "well aren't you going to pick it up for me then?" But he just ignored me and carried on throwing items through the checkout. So my partner said to him: "you've just thrown our crisps on the floor, aren't you going to pick them up?"
Very reluctantly he bent over to pick them up and pass them over to me to put in my bag. He then said: "It's not my fault. They force us to rush people through the checkout, or otherwise we get into trouble."
I think that sums everything up about Lidl and Aldi. You get cheap prices, but the low prices come at the cost of awful customer service.
Why had he been instructed by his manager to rush people through? It's obvious. Because Lidl try to save money by not employing enough staff.
In a newly opened busy store, with lots of people wanting to pay for their goods, there were literally just two checkout operators. In any of the other ‘Big Four’ supermarkets (Asda, Sainsbury's, Morrisons and Tesco) there would have been at least four or five checkout operators serving the same number of customers.
We all want to have a pleasant experience when we go to a supermarket. Nobody wants to be rushed, especially not if you are elderly or disabled and you need a bit of extra time to pay for your items, and maybe have a friendly chat with the checkout operator.
I have predicted several times on this blog that it's only a matter of time before the bubble bursts for cut-price supermarkets like Lidl and Aldi. Sooner or later the ‘Big Four’ supermarkets will start doing heavy discounting in order to buy back their market share.
And unlike Aldi and Lidl, in my opinion all four of the big supermarkets offer good - sometimes excellent - customer service for most of the time.
All that Aldi and Lidl can compete on are their cheap prices. But you cannot sustain this business model in the long term unless you also offer good customer service. Low prices are not a substitute for good customer service, the two must go hand in hand.
Here is a simple equation I have created to illustrate this:
High prices + Premium quality + Good service
= business success
Low prices + Average quality + Good service
= business success
High prices + Premium quality + Bad service
= success followed by failure
Low prices + Average quality + Bad service
= success followed by failure
In the case of the latter two, the business failure won't come straight away because the company will (at first) have a competitive advantage - from either offering premium quality or low prices. But sooner or later, competitors will enter the market to wipe out this competitive advantage. And when this happens, the customers that have gone elsewhere will have forgotten about the low prices. They will only remember one thing: poor customer service.

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