Hard discounters Aldi and Lidl could thrive in the UK after the third-largest player, Netto, disappears from the high street.
Some observers, however, warn the pair still face stiff competition from traditional supermarkets. Planet Retail global research director Bryan Roberts said Asda’s Netto buy “weeds out the weakest player in the discount market” and “gives Aldi and Lidl the chance to thrive”.
He added: “Netto was always behind the other two as its private label is disappointing and it has dismal housekeeping. Taking it out of the equation will be helpful to Aldi and Lidl.” According to grocery research body IGD, Netto’s UK sales for 2009 were £745m, while Lidl’s were £2.10bn and Aldi’s £2.16bn. Netto has been growing slowly, from 165 shops in 2006 to 196 today. By contrast, Aldi and Lidl have each added 100 shops in the same period, totalling 420 and 530 respectively. However, Kantar Worldpanel research director Ed Garner warned that the “Aldi effect”, which saw middle class shoppers flock to discounters during the credit crunch, won’t return.
He said: “Once the novelty wore off, many shoppers went back to their traditional supermarkets and the discounters have been losing share since.
“Also, when the Netto shops are converted to Asda, their shoppers will probably stick with Asda, which means less money for the discounters.”