Own-brand premium products drive success for Aldi and Lidl at Christmas

The UK’s two major discounters reported significant success over the festive period, with a focus on both pricing and product having driven sales.

Aldi and Lidl have reported record-breaking Christmas periods continuing the encroachment of the discounters into a retail market once dominated by the ‘Big Four’ supermarkets.

Lidl has cited the success of its own-brand luxury range for driving the discounter’s best Christmas period to date. It recorded a 12% increase in overall sales across the festive period, with an 11% uplift in sales of its own label premium products. That equates to around 4.5 million more people shopping with the supermarket during December year-on-year.

Its range of sparkling wines was credited with driving much of that success, with sales of its Montaudon Champagne Brut doubling in December. Meanwhile, Prosecco sales were up 45% year-on-year.

It suggests that the move towards premium own-brand ranges – which paid dividends for Sainsburys late last year – is a product strategy that discounters can take advantage of.

Ryan McDonnell, Lidl GB CEO, says: “Deluxe proved to be a standout winner this Christmas with record-breaking sales as we saw customers not only start their festive celebrations early but trade up to premium lines across all categories.

“As we look ahead into 2024 and even higher footfall, we remain relentlessly focused on continuing to do what we do best – which is always offering the highest quality on the market for unbeatable value.”

Notably, non food-related products also saw an increase in sales. The brand’s Christmas merchandise – mostly clothing, though with some homeware – contributed to the sales success, with branded jumper sales “soaring” by 40% relative to last year, while Lidl Christmas socks sales also increased relative to the previous year.

Price and product

Lidl outperformed Aldi in terms of sales over the Christmas period, though the latter discounter also recorded a strong performance. Aldi reported 8% growth for the four weeks to 24 December, recording sales totalling £1.5bn. In its recorded results, Aldi specifically called out its ‘Specially Selected wagyu rib joint’ as being a favourite for consumers.

The discounter’s UK and Ireland chief executive Giles Hurley has also made explicit the extent to which its pricing strategy contributed to that success.

He says that Aldi will continue to cut prices further in 2024, saying: “As we look ahead to 2024, our promise to customers is that they will always make significant savings on every shop with Aldi because we have the lowest grocery prices in Britain.”

Tash Van Boxel, retail analyst at GlobalData, explains that Aldi will likely keep a focus on low prices relative to its competitors even in the face of slowing food price inflation. She says: “With Aldi’s customer base continuing to grow as shoppers switch to the discounter for essential and non-essential shopping, Aldi is expected to continue this momentum into 2024, with price drops reinforcing its popularity among consumers and strengthening its position as the fourth largest grocer in the food and grocery market.”

The two discounters have been increasing marketing spend in mediums including television, in an attempt to land the message of lower prices and take market share from other supermarkets.

Aldi and Lidl have continued to record increases in market share over the past year, with the latest retail statistics from Kantar demonstrating that increase continued into the tail end of last year.