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Netherlands: Discounters strenghten their position in high competitive Dutch market

Groceries are becoming more and more expensive and consumers are price buyers more than ever. Three iconic discounters celebrate. Not just because of the growing clientele, but because each is celebrating an anniversary. Aldi sees Abraham (50 years) in the Netherlands, Lidl Netherlands had a crown year in 2022 (25 years) and Action is already 30 this year.

Aldi came to the Netherlands in 1973, 24 years before Lidl opened its first Dutch store in 1997. Within fifteen years, Lidl overtook Aldi in terms of market share and today Lidl is almost twice the size of Aldi. The total supermarket turnover in the Netherlands was €46.2 billion in 2022. The 440 Lidls have a turnover of €4.7 billion, compared to €2.5 billion for the 485 Aldi stores.

Aldi still maintains the cheaper image than Lidl, according to Olivier Hagenbeek, Director of Consumer goods at pricing consultancy Simon-Kucher. "Aldi has the real discount image, while Lidl previously added luxury products and more fresh," he says. "Aldi lags behind Lidl in that respect, but benefits from this now that many price-conscious consumers find Aldi the cheapest."

Supermarket geographer Jeroen van der Weerd calls Aldi 'the only discounter in the Netherlands'. “Lidl has started to compete more with supermarkets such as Vomar, Dirk and Hoogvliet, which profile themselves as advantageous, and with slightly more luxurious formulas such as Dekamarkt or Jumbo. Albert Heijn would rather have Aldi than Lidl as a neighbour. It was the other way around ten years ago.”

Whether this stronger discount profile explains the fact that Aldi gained market share last year, while Lidl lost market share, Hagenbeek doubts. “Market share is about sales, but both Aldi and Lidl have passed on less cost increases than other supermarkets where inflation drives sales. Then it seems like a decrease, but the volume sold gives a different picture.”

Floor productivity

“The floor productivity (turnover per square meter, ed.) is much higher at Lidl than at Aldi,” says Van der Weerd. “Aldi has expanded and modernized many stores in recent years. At first this reduced productivity, but this allows Aldi to better meet customer requirements, which means that turnover per square meter rises again.”

According to Van der Weerd, floor productivity is under pressure at Lidl. “More than half of the Lidls are too small to do justice to the retail formula. That makes those stores less attractive. In that case, consumers prefer to opt for larger stores from competitors such as Dirk, Nettorama or Aldi.”

House brands

"The half percentage point of market share that Lidl lost last year partly ended up with Aldi, but mainly with cheaper private labels from Albert Heijn and Jumbo," says Kitty Koelemeijer, professor of marketing at Nyenrode Business University. “These and other supermarkets are often cheaper with their own brands than the discounters. This prevents price-conscious customers from running away to Aldi and Lidl.”

Yet that is precisely what happens, says researcher GfK. Because of inflation. “At the beginning of 2021, 66% of Dutch households went to Aldi or Lidl, and that rose to almost 70% at the end of last year,” says researcher Norman Buysse. “Due to corona, the discounters lost many customers due to their limited ranges, who preferred to do all their shopping in one go. After corona, inflation led to an accelerated return to the discounters. Due to inflation, the customer base is growing at almost all supermarket formulas. Consumers visit more different formulas, not just Aldi and Lidl. They are looking for the best price.”

Stock trader

That could even be Action, the non-food discounter that, in addition to products for personal care and household products, also sells limited food, especially snacks and confectionery. With only non-perishable products, Action operates differently from supermarkets, which are much more complex with fresh and frozen products. "Action started as a stock trader, you can't run a supermarket on that," says Koelemeijer. “Supermarket customers must be able to assume that they can meet all their daily needs. That is not the case with Action. They mainly rely on a surprising and changing range.”

According to Hagenbeek, Action does not need the predictability of supermarkets. "Action's range is less stable, that's the big difference," says the price expert. “The agreement between Aldi, Lidl and Action is that you first have to reach critical mass before you open stores abroad.”

Lightning fast

Dutch customers of Aldi and Lidl benefit from being major international players. Action has grown rapidly since the first store in the Netherlands in 1993, before crossing the border to Belgium in 2005. The founders sold Action in 2011 for €500 million to the British investment company 3i Group. Since then, the discounter has grown at lightning speed and now stands at £10.3bn (€11.7bn) in the UK's books. In 2022, Action had a turnover of €8.9 billion through 2,263 stores in ten countries. The chain operates 407 stores in the Netherlands. The Dutch turnover remains secret.

Discounters want to grow quickly, to spread costs over as many stores as possible and to benefit from economies of scale. According to Hagenbeek, this reduces the risk of competition. “Aldi and Lidl sell limited ranges that they buy in huge volumes. Competitors don't have that. Not even Action's competitors, such as 'Op = Op Voordeelshop' or 'Mega Food Stunter'. They didn't make it because they got bogged down with the number of stores and available range. Then you have investment costs without sufficient income.”

Supermarkets along the border with hands in hair: in Germany it is much cheaper

selling fresh food is not easy for newcomers, who also have to take into account food safety laws and regulations. Action has nothing to do with this and is therefore the most susceptible to competition, according to Koelemeijer. “Established names such as Kruidvat and Blokker also trade in batches and you can also buy socks at the Jumbo,” she says. “Then you also have formulas such as 'Die Grenze', 'Normal' and 'So Low' that nibble on Action.”


Action has grown in the Netherlands and must mainly rely on international expansion, the experts agree. But that does not mean that there is no work to be done in the Netherlands. “Action faces the task of modernizing the store network,” says Van der Weerd. “Just like Aldi and Lidl, both of which are expanding their stores. In local markets, Aldi regularly exchanges two small stores for a larger location in a visible and easily accessible location. This helps to serve at least 20,000 customers per store.”

According to him, Lidl takes a different approach. “It looks more broadly at the settlement area and develops shops together with homes. Lidl also profiles itself as a meeting place for the quality of life in the neighborhood and district. Lidl needs stores for this where you can do your shopping on at least 1400 square meters. This now applies to 66 of the 440 Lidls in the Netherlands.”

Source: De Telegraaf

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