Aldi and Lidl will overtake Tesco ‘within five years’
THE former UK boss of Lidl is predicting that German-owned grocery discounters will overtake the market leader Tesco within five years.
Ronny Gottschlich, who ran Lidl’s British operation for six years until 2016, also cast doubt on whether the new private equity owners of Morrisons and Asda will stay the course.
Lidl and Aldi have been busy opening hundreds of stores across Britain – an average of about one a week each – as cash-strapped shoppers switch from much more expensive supermarkets.
The two discounters, both privately owned German companies, have gained £2.3billion of annual sales from the Big Four, which also includes Sainsbury’s, according to market research firm Kantar. The Mail on Sunday revealed last week that Aldi had overtaken Morrisons as Britain’s fourth largest supermarket chain, based on Kantar’s fourweek data.
But Gottschlich thinks the discounters have much further to go. He said: ‘Aldi and Lidl will overtake Tesco by 2027 at the latest and will grow their combined market share – currently at 16 per cent – to 20 per cent within the next year and a half.’ Gottschlich, 47, also suggested that the owners of Morrisons and Asda will struggle to get the expected returns on their investments as the two Yorkshire-based retailers were saddled with huge debts in highly leveraged private equity takeovers.
Asda was bought last year by the Issa brothers and buyout firm TDR Capital in a £6.8billion deal. Morrisons fell to US private equity group Clayton Dubilier & Rice in a £10 billion swoop earlier this year.
Gottschlich said it would be difficult for private equity owners to make the kind of profits they target – margins of 4 to 5 per cent.
He pointed out that if Lidl’s owners, the Schwarz family, make a margin of just 2 per cent it adds up to €2.8billion (£2.4billion) a year. ‘As a family you cannot spend that amount of money,’ he added.
A Morrisons spokesman said: ‘Customers don’t really care about market share statistics. They care about value, quality, provenance and service and that is where our focus is going to remain.’