Study Highlights Widening Appeal of Hard Discounters

Promoter scores increase across variety of missions
Photograph by WGB Staff

Hard discounters expanding in the U.S. are putting a lot more than pricing pressure on traditional competitors. In many cases, discount shoppers also prefer the shopping experience over supermarkets and are more likely to recommend the format to friends.

Those findings come from a study of more than 17,400 consumers conducted by Bain & Co. and ROIRocket, revealing that hard discounters lead in customer advocacy out of all grocer types for three of the four main shopper journeys, based on the Net Promoter Scores (NPS), a method for gauging customer advocacy.

hard discounters figure
Graphic courtesy of Bain & Co.

The study also found that shoppers are willing to add Lidl or Aldi stores to their shopping options wherever they become available, justifying the ambitious U.S. expansion of the German counterparts. As many as 30% of shoppers at mass and traditional grocery stores also regularly shop at Lidl and Aldi, Bain said.

The figures were especially strong for Aldi, which the survey indicated was gaining customer acceptance along with its move to expand assortment to premium tiers. Its consumer advocacy rose to 55% in 2018 from 46% a year earlier and outperformed in the two areas that according to Bain customers care about most: “best everyday low prices” and “best value for the money.”

Consumer advocacy is a predictor of future success, because promoters—or a company’s biggest fans—tend to spend more, purchase more frequently and devote a higher share of their overall spending to retailers than do detractors, or consumers giving company a low rating. Aldi had the third-best NPS of 25 retail brands in the Bain study, while Lidl ranked 12th in that group. Bain did not identify the companies in the provided rankings but said the group included supermarkets, mass merchants and warehouse clubs, and excluded convenience stores and dollar stores.

Lidl, which entered the U.S. less than two years ago, is still tinkering to find a profitable model, but has captured 3% or greater share in five of the seven markets studied in summer 2018, gaining spending from traditional grocers, Bain said.

“Lidl and Aldi are just beginning to flex their competitive muscles,” said Mikey Vu, a partner with Bain & Co.’s retail practice and a co-author of the report. “What we're seeing is that U.S. grocers can effectively stand up to these hard discounters, but that they need to remain vigilant and innovate in strategic areas to keep their edge.”

Bain said the continued success will further pressure grocers to invest in convenience and use advanced analytics and other technologies to improve operational efficiencies.

Another recent study from Retail Feedback Group also made note of the growing influence of the discounters in grocery.


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