Grocers have been hit by what many have dubbed a “perfect storm” in recent years – and another whirlwind ripped across the market today.
Just when the clouds looked as though they might begin to dissipate – with post-Brexit jitters among consumers easing, business confidence beginning to recover and supermarket sales hitting their highest level for three years – the skies re-opened on a frantic Friday for food retailing.
The first lightning bolt came from the blue.
Ronny Gottschlich, the man who has led much of the aggressive weather front sweeping into the UK from Germany, left his role as boss of Lidl’s UK division.
The collective sound of jaws hitting desks in newsrooms and boardrooms alike caused a ripple of thunder, matched only by the shockwaves Gottschlich’s departure has created across the grocery sector.
Lidl, the tornado that has ripped through everything in its path to establish itself as the fastest growing grocer in the UK, suddenly has a new boss at the helm.
Christian Härtnagel, a man largely unknown on British shores, has taken the reins with the remit of continuing the discounter’s impressive rate of growth.
Gottschlich’s shoes are big ones to fill – and questions are already being asked as to whether Härtnagel is the man to do just that.
At just 34 years of age, he enters the market with no previous experience of UK grocery retailing, although he did spend time as regional director at Lidl Ireland.
But it shouldn’t be forgotten that Gottschlich himself took the Lidl UK hot seat at a similar age, although he had acquired knowledge of the market during his time as a regional director for London and the south prior to taking the top job six years ago.
Whether Härtnagel is up to the gargantuan task or not remains to be seen. But the disruption and distraction that a change at the top can bring could derail a train that has been rattling along full steam ahead for quite some time.
“But while the £1.4bn acquisition of Home Retail Group should help Messrs Coupe and Rogers dodge the eye of the latest storm, it would take a brave man to forecast what happens next in the tumultuous grocery climate”
Aldi, the fierce discount rival that Lidl has blown away in recent months – if Kantar figures are to be believed – will be seeking to take full advantage.
Uncertainty ahead
Among today’s downpour of revelations, Aldi’s new ‘Everyday Amazing’ TV ad campaign is hammering home its quality credentials and British provenance as it strives to build on a successful sponsorship of Team GB’s Olympic heroes and regain the discount crown.
And Asda is on the warpath too.
As revealed by Retail Week, the Walmart-owned grocer has fired a fresh price salvo to ratchet up the temperature on its competitors, cutting the cost of more than 1,000 lines.
The supermarket giant has been going through something of a sales drought, but new boss Sean Clarke hopes the latest round of price investment will spark an Indian summer of success.
While it acknowledges a very important first step, it serves only to mark the very tip of the iceberg as far as Asda’s turnaround efforts are concerned.
The messaging behind a TV advertising push to accompany its “That’s Better” campaign will need to be as clear as Aldi’s, in order to resonate with consumers and freshen up Asda’s thawing appeal.
And improvements in the quality of the grocer’s own-brand proposition must continue at a pace if it is to bridge the gap to Tesco, Sainsbury’s and even the discounters, whose private label quality has left Asda in the shade.
But it was a shadow from Tesco’s past rather than its present that created further unwanted headlines for Britain’s biggest retailer today, as the Serious Fraud Office charged three former executives in relation to the £263m profit overstatement that came to light in 2014.
Tesco may have moved on from the scandal, but more newspaper column inches will do little to aid boss Dave Lewis’s efforts to fully restore the grocer’s reputation.
All of which seemingly leaves the sun shining on Sainsbury’s, which today revealed that it is building on Argos’s tie-up with eBay to roll out 200 new digital collection points across its supermarket estate, adding to the five Mini Habitat shop-in-shops and 30 Argos concessions also in the pipeline.
But while the £1.4bn acquisition of Home Retail Group should help Messrs Coupe and Rogers dodge the eye of the latest storm, it would take a brave man to forecast what happens next in the tumultuous grocery climate.
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