Michael and Vicky are a couple in their early 30s. They have one child, both have secure, professional jobs, are comfortably off and own their own home in a nice south London suburb. They live five minutes from one of Sainsbury’s flagship stores. But they choose to drive past it to do their food shopping in Lidl.

Michael and Vicky are not alone. British shoppers are waking up to the fact that it’s not just the prices, but also the product that the hard discounters do well, and it is a move being accelerated rapidly by the credit crunch. Whether it be our ICM poll showing shoppers treating themselves less (pages 3 and 10) or TNS data showing the hard discounters outperforming the market (page 6), there is a raft of evidence this week showing that consumers are responding to the downturn more rapidly than any of us had thought.

The first phase of the downturn was the juddering halt in big-ticket discretionary items and on anything connected to the housing market. This spelt calamity for the furniture sector, where this week’s casualty, Ilva, will be followed by others soon. But the second has wider relevance and indicates that as food inflation soars, more shoppers are choosing where to spend based on price. Aldi and Lidl keep a low profile but, as Primark showed in fashion, word of mouth is the most powerful marketing tool a retailer can have.

And if, like Michael and Vicky, shoppers find the product is as good as the prices, why would they go back to Sainsbury’s when the economy gets better? Remember, the hard discounters are the same ruthlessly efficient machines that drove Wal-Mart out of Germany. Their success in Europe should serve as a warning to the UK’s grocers.

Role models for our time

Amid the misery, it’s important to celebrate what’s good in retail and that’s what we’re doing this week with our list of 100 stores you simply cannot miss (page 22). In hard times, innovation, creativity and service stand out more than ever and it’s remarkable how the very best stores – notably Apple, Whole Foods, Ralph Lauren and the John Lewis Partnership – were chosen again and again by their fellow retailers. They are excellent models, for bad times and good.


Read Tim’s The Retail Week column today at retail-week.com