Europe's major grocers are increasingly being squeezed by discount retailers. Germany's Aldi and Lidl have both seen strong growth outside their home markets. As Hayley Platt reports that's prompted a change in style and strategy.
It might look like any other smart London bistro. But 'Deluxe' is a pop-up - in town for just one month. And unbeknown to the diners, everything on the menu is made using produce from the discount supermarket Lidl. SOUNDBITE: Annette Fowler, diner, saying (English): "We literally knew nothing other then out son and girlfriend had booked us a table here for today." German discounters Aldi and Lidl's strategy of pile it high and sell it cheap has proved a winning combination for both. They've also managed to remain notoriously private - until now. Arndt Pickhardt is Lidl's UK Marketing and Advertising director. SOUNDBITE: Arndt Pickhardt, Advertising and Marketing director, Lidl, saying (English): "We've realised that communication with the customers is absolutely key for success, so therefore the latest campaign involving social media, involving customers opinion is definitely something that we're going to continue in the future." Lidl's current Christmas ad in the UK takes aim at upmarket retailers. Planet retail's Stephen Springham says both Lidl and Aldi are beginning to see the benefit of publicity. SOUNDBITE: Stephen Springham, Senior Retail analyst, Planet Retail, saying (English): "They're very different businesses now then they were when they first came here 20 odd years ago. Just a few weeks ago Aldi put out a statement on how many stores they're going to open, how many jobs they're going to create. That's very much a UK PR thing." The discounters have 8% of the UK market but their share is growing. Lidl's seen sales growth this year of almost 14 percent. Aldi's doubling the number of UK stores over the next 8 years. And Lidl's set aside £20 million pounds for advertising. SOUNDBITE: Stephen Springham, Senior Retail analyst, Planet Retail, saying (English): "The big four are going to come back stronger so this is certainly their moment in the sun but they are going to have their challenges ahead and they're not going to have everything their own way in 18 months 2 years time." This restaurant won't be around then. But David and Annette did enjoy their lunch - particularly the price. They were expecting to pay £56 for their 3 courses. The Lidl surprise is that it's less than half that. Deluxe charges only what it costs to buy the ingredients from a Lidl's store. ///