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
= business success
Low prices + Average quality + Good
service
= business success
= business success
High prices + Premium quality + Bad
service
= success followed by failure
= success followed by failure
Low prices + Average quality + Bad
service
= success followed by failure
= 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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