Food discounters are blurring the lines between discount and convenience more than ever, with store formats, urban locations and payment methods playing pivotal roles.

For more information see upcoming Mintel Report Food and Non-Food Discounters – UK, September 2019 and Convenience Stores - UK - June 2019

What we’ve seen

  • Aldi has rebranded its high street stores to Aldi Local and has introduced self-checkouts in six stores

  • Lidl is due to open its first central London store in 2020

  • Jack’s launched in the UK in 2018 with a scan while you shop mobile app

  • 49% of discount shoppers agree that discounters offer a quicker shopping experience than other retail stores

  • 33% agree that food discounters should offer a ‘scan while you shop’ mobile app

What each of the UK food discounters is doing to drive convenience

Aldi’s smaller format stores in high footfall locations have always been set apart from the rest of the estate with the inclusion of bakeries, a smaller range, and in most cases, the absence of a car park. In March 2019, Aldi launched its first sub-brand fascia ‘Aldi Local’ at the opening of its new Balham store. Since then, the fascia has been rolled out to six existing stores around London and a new store in Camden. Building on its strategy to deliver convenience, Aldi has introduced self-checkouts at three of its Local stores. We anticipate that Aldi will introduce more self-checkouts, and as such it will need to ensure the correct balance between efficiency and service. Mintel's latest discount consumer research indicates high levels of satisfaction for customer service (76%) and ease of checkout (81%) among those who shop most often at Aldi. 

Aldi’s closest competitor Lidl introduced self-checkouts in 2014 and now has them in approximately 150 stores. Undoubtedly they will feature in Lidl’s first central London store due to open in 2020. Located on Tottenham Court Road at a former Sainsbury’s site, this store marks its first within London’s zone 1. Over the next five years there are plans to open a total of 40 London stores, however how many of these will be quite so central remains to be seen.

Jack’s is the latest player within the food discount sector. With only 10 stores it is growing slower than expected, and it is unclear what the expansion plans are going forward. However, what is interesting to note about the Tesco venture is that it launched with a mobile scan-as-you-go option to offer a quicker shopping experience. Consumer research from Mintel Report Food and Non-Food Discounters – UK, September 2019 shows that one third (33%) of discount shoppers agree that food discounters should offer a ‘scan while you shop’ app. As the lines also blur between food discounters and supermarkets, it is likely that Aldi and Lidl will explore faster checkout methods in the future.

Figure 1: Jack's Smart Shop app
[graphic: image 1]
Source: Tesco/Mintel

Lidl introduces SCAN&SHOP and opens smallest store

Food discounters adopting a more convenience-focused strategy is not just a development we are seeing here in the UK, but in Europe, America and Asia also. In Europe, Lidl, in particular, is making strides in this space. In Portugal it has introduced SHOP&GO: an app that allows shoppers to scan products as they go via their smartphone. When they have finished their shop, a QR code appears which speeds up the checkout process. In March 2019, it introduced mobile payment with the local app MB Way, used by other retailers.

Beyond Europe, Lidl has opened a unique concept store at its US headquarters in Virginia. The store, which opened in March 2019, is the discounter’s smallest store at 1,000 sq ft and the first to be completely unmanned with only three self-checkouts. Given its concept is based on convenience the store has been named ‘Lidl Express’. The store offers a compact grocery offer and meets various food-to-go missions with a coffee station, breakfast items, and some ready meals. There are no plans for any more of these Express stores; however, it serves as a useful testbed should Lidl decide to roll it out in the future.

Aldi adapts to China market with WeChat social media platform

Having tested the Chinese market with an online presence since 2017, in April 2019 Aldi went from online to offline with two debut stores in Shanghai. Aldi has adapted its offer to the local market by incorporating the popular social media platform, WeChat. The app offers a scan & go mini-program that allows shoppers to scan bar codes and then pay with either WeChat Pay or Alipay, saving them time by not having the queue at a till. Digital payment technologies are playing a greater role in driving convenience as explored in Mintel Trend Seamless Spending. The trend identifies how transactions are becoming increasingly effortless, with a simple tap, scan or swipe to do the job. Taking its convenient concept one step further, the We Chat mini program offers a one-hour delivery service within a three-kilometre radius of its stores.

Figure 2: WeChat Mini Program
[graphic: image 2]
Source: ALDI/Mintel

What it means

  • Discount brands must be more forward-thinking in terms of payment methods. In time, consumers will expect them to offer more modern technologies that are quick and instant, creating the shortest path to purchase possible. Latest innovations in this space that are already being used are fingerprint and facial recognition.

  • Discounters should look to other retailers for inspiration. Grocery retailer Carrefour has opened a small automated store in Brussels that offers 24-hour access and features vending machines along with automated payment systems. Staff-less stores will become the norm in future where voice assistants and AI screens will serve as an alternative to sales assistants.

  • Technology will play a bigger role in physical stores. Casino Group has brought to life its version of a futuristic shopping experience by mixing the physical and digital in a 24-hour supermarket. Inspiration can be taken from its multi-lingual voice-activated screens and electronic labels which shoppers can scan to receive product and sourcing information.

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