Discount chain Lidl expanding as shoppers shun 'big two' grocers
Discount supermarket Lidl has continued its surge into the Northern Ireland market, snatching customers away from the big two supermarkets Sainsbury's and Tesco.
The German supermarket has attracted 25,000 new customers in the province over the last year, and has seen its sales increase by 13%, according to the latest retail research firm Kantar Worldpanel.
Lidl's success is to the detriment of the big supermarket chains, who have become locked in a bitter price war with the discounters.
In the latest results from the retail analysts for the 52 weeks to November 9, Lidl's share of the Northern Ireland grocery market rose to 4.3%, up from 3.8% in 2012/13.
Northern Ireland's biggest supermarket Tesco saw its share of the market decline from 35.9% to 35.3%, with its sales only rising 0.8% on the previous year.
Sainsbury's faced a similar problem with its market share falling to 18% from 18.2%. Its sales rose 0.5% during that period.
To make matters worse for Sainsbury's, Asda is snapping at the heels of Northern Ireland's second largest supermarket. The Walmart-owned store saw its market share rise in 2013/14 to 17.1% from 16.8%, and its sales grew by 2.5%.
David Berry, commercial director Kantar Worldpanel Ireland, explained why consumers are flocking to the discount supermarket. Mr Berry said: "Lidl has successfully managed to recruit new customers while also encouraging shoppers to buy across more categories in store - 25,000 more households have shopped in Lidl this year and on average one extra item has been included in each shopping trip. This has placed pressure on the competition, with the combined share of the big three retailers dipping by half a percentage point."
Lidl, which employs over 3,700 in Ireland as a whole, has opened 36 stores in Northern Ireland since its first in 1999 in Cookstown. Its 37th store will open on Belfast's High Street on Thursday.
Recent years have seen a change in the shopping habits of consumers, with convenience playing a much bigger role in where people buy their groceries.
Shoppers have started to shun the "big shop" at large out-of-town stores and instead turned towards doing more "top-up" shopping at smaller format stores, picking up items when they're needed.
Donald McFetridge, retail analyst at Ulster University Business School, highlighted three reasons for the changes in consumer behaviour. He said: "The recession heralded a new era of consumer behaviour in respect of supermarket shopping with consumers preferring to shop more frequently than before.
"Secondly, consumers changed their approach and attitude to larger retail outlets or formats and - in a large number of cases - swapped these for smaller sized stores in a wide variety of locations. They started shopping with the 'discounters' and also started spending more in the convenience sector which brought good news for operators in those categories.
"Thirdly, price became a very sharp instrument with the result that the discounters witnessed the arrival of a whole new league of shoppers keen to get value for money along with quality which they had not hitherto realised was actually there."
Next April will see the out-of-town supermarkets affected further by the revaluation of business rates. These stores are expected to see an increase of rates of at least 18%, but some may see an increase of up to 40%.