How supermarkets helped Aldi & Lidl be successful

When people write about the rise of Aldi and Lidl they usually focus on low prices as the main reason for their success. This fixation with price masks other factors that cause supermarket customers to go to Aldi and Lidl.

Picture this

It’s easy to imagine how it started. Retailers were so earnest in their quest to reduce costs that when self checkouts were discussed they were seen as a great way to reduce staff numbers.  As soon as one supermarket introduced them most, but not all, followed.

Such was the scale of the investment both in terms of costs and personal reputations they just had to work. Of course some customers complained – well they would wouldn’t they. A common view amongst retailers was that if shoppers got used to self-service petrol pumps in time they would get used to scanning their own groceries. Wrong.  There is not much that can go wrong with filling your car with petrol but there are heaps of potential problems in scanning a basket of groceries. In fact there are so many potential problems that I don’t even need to list them.  I think that everyone who reads this has experienced problems for themselves.

Self-service loses customers

Some retailers realised quite quickly that forcing shoppers to use self-scan checkouts was a problem. Take B&Q for example. They introduced too many self checkouts and reduced the number of checkout staff dramatically.  Shoppers who tried to scan big lengths of wood without a bar code were not happy. They couldn’t even go to a staffed checkout because the queues were so long – so they went to other DIY stores instead. To be fair to B&Q they recognised quite quickly that they had gone too far and sales were being affected.  They increased the number of staffed checkouts. Not all supermarkets have been as responsive at B&Q.

Some basic laws of statistics also kick in when you reduce the number of staffed checkouts.  The fewer checkouts that you have the greater the likelihood that queues will form. So self-service checkouts can make queues longer for all shoppers – and shoppers hate queues.  This is particularly true when they believe that supermarkets are deliberately creating queues to force customers to use self-service checkouts. Some shoppers have some strange ideas don’t they?

Shoppers “adapt” to self-service checkouts

Shoppers soon realised that using more than one bag at a self checkout often resulted in a public announcement that an item has been removed from the baggage area. So they buy less.  They also realised that the less they buy the lower the risk of them being embarrassed and needing help from a hard working assistant.  I think you can see where I am going with this.  Yes they then go to other smaller stores because it’s easier than traipsing round a big store for a few items and no risk of a checkout embarrassment.  Some of the stores they go to are convenience stores and others are Aldi and Lidl.

Aldi and Lidl do not have self checkouts.  They don’t have the four or more places and ways to pay that most large supermarkets offer either.  Just staffed checkouts. Their stores are smaller but their space at the checkouts is bigger making it easier for shoppers. This also encourages shopper to buy a few more items because it wouldn’t cause a problem in the bagging area. Their average basket size is increasing while larger supermarkets find theirs decreasing.

The demise of the big weekly shop

Remember when every Friday night or Saturday morning the world with their partners and their children and their relatives all went out to do the weekly shop?  It was awful.  As you can imagine reducing the number of staffed checkouts did not help. Even the smart shoppers who decided to do their weekly shop in the late evening to avoid the crush suffered. They discovered that often only one or two checkouts were open and in several stores no staffed checkouts were open at “quiet” times. This means that weekly load shoppers were left with no choice but to use the self-scan checkouts.  This was a painful experience.  After one or two attempts they give up and decide to give Aldi and Lidl a try. Often they don’t come back. Abandoned trolleys don’t just happen on-line.

Self checkout can work well

Of course retailers who carefully thought through what impact self service checkout would have on customers have implemented them well and customers are happy.  However, you can see from this article what could go wrong if they don’t and the unexpected consequences kick in.

Reducing costs can help your competitors

Self checkout is only an example of a larger problem which can cause of shoppers to go to Aldi and Lidl.  The core problem is not assessing the impact on customers of every important decision in the business before a final decision has been made.

For example whenever costs reductions are planned retailers must consider the potential impacts on their shoppers as well as how their competitors could benefit from their actions.  The question to be asked is this: “Could this action cause shoppers to check themselves out of using our stores?”  Shoppers want shopping to be easy and simple. They want to shop in stores they can trust to be consistent and fair who don’t mislead or make things difficult for them.  This is what the voice of the customer should be about rather than who has the biggest mountain of customer data and survey results.

 

 

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One Response to How supermarkets helped Aldi & Lidl be successful

  1. PJ says:

    This article is pretty much spot on. Once I knew what time a local Tesco store near me switched off the normal checkouts, I would go elsewhere to shop after that time, even if it meant more expense, or I would only buy a few items.

    The self-service checkouts are also terrible for people with anxiety, as it’s difficult for such people to ask for a normal till to be used, especially when the answer is almost always “no”. I have some anxiety at times and I’ve actually left stuff or walked out of a store when I’ve unintentionally entered it at a time when the normal checkouts weren’t in operation – I’m not going to try to put loads of items through one of those terrible machines.

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