Despite big budget advertising campaigns (courtesy of Aldi’s Kevin the Carrot and Lidl Surprises), analysts are claiming that Aldi and Lidl saw disappointing sales over Christmas.
Clive Black, head of research at the stockbroker Shore Capital, predicts sales at Lidl’s existing shops fell by as much as 4% as Aldi’s remained “flat” over the festive period. However, even though the discounters saw sales fall, their market share would have risen in December, according to Bernstein analyst Bruno Monteyne, due to new store openings.
The German discounters struggled primarily due to being understaffed and unable to cope with demand, according to Black. In terms of the latter, he says poor stock levels meant shops looked as “if they’ve been robbed by a load of school kids”.
Read more: Aldi insists customers are ‘not returning to the big four’
Black’s prediction goes against Kantar Millward Brown, which in December claimed Lidl’s turkey-based Christmas ad was the most likely to result in a consumer purchase and backed the discounter to shine. The discounters typically keep their trading performance private.
The ongoing resurgence of big four players Tesco and Morrisons is also thought to have dented sales momentum for Aldi and Lidl. Later this week, the city expects Tesco to report a modest 1% sales rise over Christmas, with Morrisons’ sales up as much as 2.5%. Sainsbury’s is expected to announce a 0.8% fall, although its Argos business is backed to deliver sales growth of up to 2%.
Elsewhere, Marks & Spencer is predicted to post a small rise in clothing sales for the festive period, marking its first increase in more than six years. This would represent a welcome boost for the struggling retailer after rival Next’s poor trading update last week wiped £2bn off its share price in less than 24 hours.
Meanwhile, independent retail analyst Nick Bubb predicts a 3.7% increase in like-for-like sales at John Lewis for the six weeks to 31 December. However, Bubb says this will have come at a cost.
He concludes: “The skewing of sales growth to online will have been expensive [for John Lewis] in terms of fulfilment and distribution costs.
“The worry is also that increased discounting and price matching will have cost John Lewis quite a bit of gross margin, which will have eaten into its profits.”
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Source: Marketing Week
Big four expected to profit as discounters stumble over Christmas