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Lidl shows how discounters gain from cost-of-living crisis

Lidl sales were up during the pandemic (Steve Parsons / PA) (PA Wire)
Lidl sales were up during the pandemic (Steve Parsons / PA) (PA Wire)

To misquote a supermarket rival’s slogan, Every Lidl Helps.

The discount grocer, which published its financial results at Companies House today, is rolling out another 15 stores between now and Christmas at a remarkable rate of virtually one every other day. Two of those are in the London area at Borehamwood and East Acton.

Less than three decades after the then unknown German-owned store chain opened its first UK branches in September 1994 there are few corners of the nation that its breezy blue red and yellow logo has not reached. Next year its store estate will pass the 1000 mark.

The results published from Lidl GB are long out of date, covering the period up to the end of February — and the retail world has changed out of all recognition since then with food price inflation galloping to a 45 year high of 16.4%. Lidl is showing a pre-tax profit of £41.1 million on sales of £7.8 billion, a tiny margin that would not be tolerated by shareholders of its quoted or private equity-owned competitors.

But Lidl GB, a subsidiary of the vast family-owned Schwarz Group, can afford to play the long game. Its market share has risen 1,1 percentage points over the past year to 7.2% and CEO Ryan McDonnell has 10% — and overtaking Morrisons — in his sights over the next few years.

The cost of living crisis — such a curse for most retailers — is a boon for the likes of Lidl and its German rival Aldi.

Every day that the squeeze on living standards goes on is a day when more shoppers switch their loyalty to the discounters. And may never return.