German discount supermarket chain Lidl received a sales boost in the UK from its premium ranges over the festive period, however growth was around half of 2017’s figure, handing victory in the Christmas sales battles to rival Aldi.
The group reported on Friday that in the six weeks to 30 December, UK sales rose 8% year-on-year (YoY), while sales for its upmarket ranges jumped 33% YoY and alcohol sales rose 18%.
Lidl said a surprise bestseller across the season, from the range, was its Brioche Burger Buns, of which it sold 100 tonnes.
The supermarket’s speciality fruit and veg also proved popular, with its sprouts trees, Cavelo Nero and speciality broccoli helping to create a 100% uplift in sales of its premium fruit and veg.
However, the sales growth had reduced by 50% compared to the same period in 2017, when Lidl’s sales surged 16%. Lidl’s 2018 performance was also edged out by Aldi, which reported a YoY sales rise of 10% in the period, which was driven by demand for its premium ranges.
Lidl also continued its aggressive pace of expansion across the UK in the closing months of 2018, opening seven stores during the festive season and committing to a further £1.45bn of investment in the UK across 2019 and 2020, including a new distribution centre in Doncaster scheduled to open in early 2019.
Christian Härtnagel, Lidl UK’s chief executive, said: “We have continued to expand our footprint across the UK over the past year, and it is no surprise that this contributed to more customers than ever before shopping with us in December and over the Christmas period.”
He added: “In the context of a tough trading environment facing all grocery retailers, we are particularly pleased with the performance of our ‘Deluxe’ premium range of products, which registered strong sales increases and proved a major draw for new and existing customers. We understand that shoppers are increasingly conscious of cost and for that reason, we not only continued to invest in our low prices – as is seen in our 19p veg offers - but also innovation across our premium range, all to enable our customers to have the best possible seasonal celebrations.”
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Lidl joins the rest of the UK’s large supermarkets as they reported on their Christmas trading this week.
Of the ‘big four’ supermarkets, Tesco PLC (LON:TSCO) took the top spot with a 2.2% rise in like-for-like sales in the six weeks to 5 January, while WM Morrison Supermarkets PLC (LON:MRW) like-for-like (LFL) sales climbed 0.6%.
Slower growth indicative of general discounter issues, says analyst
Patrick O'Brien, UK Retail Research Director at GlobalData, said that the results had allowed Lidl to grab “positive headlines for a growth figure that the Big Four can only dream of”, but the slower sales growth raised concerns around their sustainability.
“Both Aldi and Lidl have been opening stores at a rapid rate though, so l-f-l growth over Christmas will have been low for the German discounters. Lidl increased its store count by approximately 7% over the year, and Aldi by 8.5%. While both are still outdoing Morrisons and Sainsbury’s, it looks very likely that Tesco’s has beaten them both with its UK l-f-l of 2.2% for the six weeks to January 5th.”
O’Brien added: “This struggle to drive greater sales through existing stores is a concern, but perhaps inevitable with small supermarkets, where capacity is reached at peak times, and the shopping experience suffers as a result because of crowding and till queues. There is a wider issue for discount and value retailers generally, with B&M and Card Factory also struggling with l-f-l sales. All such retailers are expanding, but physical expansion is finite, and finding additional sites in the right catchments is not as easy as it was.”