For example - a simple piece of technology measuring when images were actually taken by the team in store, means you can (with the appropriate image sorting) show which categories landed when, by which retailer.

This is important for phasing of seasonal events, IE what lands when, plus the dark art of trade planning which is one of the most important activities a retailer undertakes.

It’s a real skilled job.

Balancing up numerous priorities for the organisation and trying to end up with a promotional package that links to the seasonal events and is relevant without being too expensive.

You have to be aware and close to the customer, you have to be relevant. Plus you have to battle back against traders who want to push margin rich ends and product/prices and also the retail media team who have more signage to display everywhere.

But it’s modern and “media” because it has a QR code.

I digress. Here is the merchant map for 2025 (Christmas) showing who landed what, when and how. Quickest isn’t always the bestest but it’s a pretty good gauge of what was available in store for customers to buy. (and when!)

Merchant Map 2025

901KB ∙ PDF file

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Our merchant map for Christmas 2025.

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We can generate this for other years, events and cross over the entire year, showing you what others did with their seasonal space, and when.

We have 56 (or so) events that we have on file, through Delphi (our seasonal platform) which holds all the new product development, shippers and AI intelligence.

Enabling you to generate your own trade plan, seasonal offering and to ensure you’re learning from the best and not missing a thing in your own offering.

Whether that’s category, or you’re a wider retailer. Kanops can help.

“Discounters”is used across the industry as if Aldi and Lidl were one organisation with two logos, and it hides more than it reveals and does the Germans a disservice.

Indeed “the big four” in UK parlance refers to Tesco, Sainsbury’s, Asda and Morrisons but recently Aldi have overtaken Morrisons, Lidl as well, pushing Morrisons in to 6th place. With Aldi at one point looking as though they were in touching distance of Asda in 3rd.

Despite the two businesses operating the same operating model, limited range, own label led, everyday low price, small box, but they execute it in noticeably different ways, and those differences matter if you are competing with them, supplying them, or trying to work out which one wins if they open in your area.

Just as importantly, they are not even structured the same way as legal entities, there is a lot more to the model than low cost groceries.

Who are Lidl?

Lidl are owned and operated by the Schwarz Group, founded by Dieter Schwarz, who bought the rights to the name “Lidl” when setting up the company in the 1970s. Schwarz Markt would translate as “black market,” which would not have worked as a brand……..(!)

Alongside Lidl, Schwarz Group also operate Kaufland, a chain of large format stores across Germany and Central Europe, which also landed in Australia before withdrawing due to local competition, quite a fierce story there.

Since their inception, Lidl have expanded well beyond their German base and are present across most of Europe, into the UK and Ireland, and of course the United States.

Crucially, however, Aldi are not structured in the same way.

Aldi split into two separate companies decades ago (Nord, who do own Trader Joe’s and cover Central Europe and Scandinavia with barren stores and a low key atmosphere and Sud, who run the UK, Australia, the US and Southern Europe, an altogether more modern operation), Lidl remain one organisation. In full.

One buying operation, one scale.

That matters for many reasons. Lidl truly benefit from their size across so many markets in a way that the two Aldis, each buying separately, do not quite match. There is talk of Aldi merging some elements of their operation to further drive scale, but it seems that Aldi Sud are more content with centralising a lot of their buying and back office operations in Central Europe.

But there remains an opportunity if the two were ever to mesh together to further drive efficiencies.

The key thing to know is that both Aldi and Lidl are privately owned. They will happily run at a loss for years to establish a foothold in at territory, circling zero margin as they build momentum and their flywheel then starts to take hold.

They are in it for the long game, rarely do they exit territories (it does happen, as we highlighted in the first note..) but rarely.

Because of their long term view!

That is a key reason why the UK retailers struggled to get a grip of them, in Ireland as well post the financial crash as customers adjusted to a world without cheap credit and one that was uncertain, to say the least.

In the UK, quarter to quarter PLC owned retailers alongside privately owned Asda (Walmart, albeit starting to focus on the US) were caught cold by the long term approach from both Aldi and Lidl.

A perfect storm then with the financial crash in 2008 leading to Aldi and Lidl becoming very mainstream, very quickly. Thus their tried and tested discount machine starts to really move.

When entering a new territory, both Aldi and Lidl adopt what I would call a chameleon model: the same core range, store design and operating disciplines, with signage, sourcing and advertising adapted for local relevance.

Local Meat, local Produce, big on farming agreements and being a good vendor (pictures of farmers in store) and membership of the national trade bodies, and the food accreditation marks that reassure a customer bewildered by a store full of brands they have never heard of.

Award winners help, and these are advertised slavishly across the store and across product too. Surprise and delight customers!

Red Tractor in the UK, Bord Bia in Ireland, USDA in the States. Plus sponsorship or support of the German retailer (remember this!) local team, so Team GB (Olympics) are sponsored by Aldi, with Lidl sponsoring the Scotland football team.

Same animal, different colours. But the same strategy, over and over and over. Simple, repeatable. Neutralise the German heritage, almost convince customers you’re a local grocer with supply stories, local sourcing, long term agreements, job creation, investment of £/$X billion over x years.

The differences that show on the shop floor (but similarities are obvious outside the store….)

When you walk stores - as I do, aisle by aisle, both retailers are roughly the same in approach. There are more differences now, than before but they both aim for a standard “box” from a planning perspective and site requirements.

Preferably with car parking (ample is needed) and a dock leveller for the wagon and the same template for wagons to be offloaded (often, the wagon comes overnight and the driver offloads at the store and drives away).

A small(ish) warehouse as they aim for cross docking and then one touch replenishment across the piece.

Initially (and still now) both Aldi and Lidl located stores near larger competitors to feed off the secondary footfall (and save on location planning! Just build nearby!) but the land requirements were still the same. They don’t mind smaller retail parks, or sharing with others.

They have become more flexible over time, especially as land is harder to source in the affluent areas where they wish to open. However any move from their core model does impact their operating model (lower store size means fewer facings & more in day replen).

But it’s a trade off.

Indeed some of their stores became so busy, Aldi (particularly) would then open up a store nearby, not necessarily one that was on the radar so to speak, but rather to take the pressure off a nearby existing store….. Which says a lot about their growth in those days.

Their choice of “box” can mean they swerve the requirement to commission local surveys around trade impact, traffic and the like as they fall below the statutory requirement to do so. However, some local authorities insist on this, anyway.

Whilst the externals for both are roughly the same - building larger stores now than they were at the start. Remember that chameleon approach. They adapt!

Lidl when faced with one of their older stores (like Aldi) always prefer to move to a better location nearby however where this isn’t possible, they simply flatten the store and build a newer one in its place.

Whilst they share many similarities around location planning, site acquisition and preferences of location (note that there has been attempts at Aldi Local and Lidl seem to flexible to open as the basement tenant of a University halls of residence eg) those are the exception, rather than the rule.

The in store execution differs in five ways that a customer would notice, and competitors should be aware of too…..

Lidl range more brands

Lidl are happy to hold leading brands permanently in the assortment, both for reassurance and to provide a price comparison against their own label.

Aldi historically ran cleaner, with brands appearing mainly through special buys, although that has softened over the years.

Most notably recently in the UK where brands have appeared in the core assortment, albeit in mixed trays. Aldi have also started to add core brands to their assortment as long as they’re mixed like this (IE one SKU but 3 variants within).

Lidl range more, full stop.

A typical Lidl carries around 10 to 15 per cent more lines than a comparable Aldi in their core range (IE standard shelves) with the stretch mostly in Chilled and core Grocery .

Both Aldi and Lidl special buys carry far more Core Ambient and Beers/Wines, Household etc than they ever did before too, so the core numbers may differ.

But there’s little doubt you can now get a lot more in Aldi (and Lidl) than you could previously when you factor in the near permanent special buy brands.

Lidl bake in store.

The bake off Bakery, sited at the entrance, is the focal point of most of the Lidl formats. The customer walks in to the sight and smell of Pastries and Breads baked from frozen several times a day, at prices significantly below the wider market.

Aldi trialled in store bakeries and chose not to roll them out; pre packed Bakery does the job in their model without the labour, they continue to tweak around the edges, but stop short of rolling a full Bakery offer.

This may explain Lidl’s growth (alongside loyalty) in Numerator/Kantar data, but the Lidl bakery is incredibly popular regardless.

Aldi Nord in Germany (IE) do have a full Bakery, whereas Lidl seem to have them almost everywhere, another marker for the larger, one chain, one model.

Lidl are in loyalty, Aldi are not.

The clearest difference between the two more recently has been the adoption of a loyalty card and associated technologies.

Lidl have Lidl Plus which is phenomenal in its success, bear in mind Lidl are still EDLP (albeit running more promotions than Aldi) but still, their heart is EDLP.

Lidl offer free things to customers with Lidl Plus, alongside points, 5x point multipliers on products. Gamification is a key part of things, alongside (of course) gaining data on customers and their buying habits.

Alongside this - it makes it far easier to stretch spending with customers by offering £5 off £50 etc via the app on a targeted basis. We never see the depth of this (as wider market analysts) so it’s hard to grasp how big the additional discounts are.

But it’s far easier to be hyper personalised with a loyalty app like this.

Then there are Lidl Plus deals (IE Save £x or similar for Lidl Plus customers) and also enabling loyalty customers to use Scan & Shop (via the app) and also join a waitlist for hard to buy robot lawnmowers too.

There are many benefits to being a Lidl Plus customer, beyond just some lower prices and deals, for sure.

They have made being in the scheme popular and use extensive gamification and rewards to keep customers interested, alongside the core money off.

Spin to win being a favoured “game” they use.

Lidl are generally more flexible on property.

Lidl have historically been happier to take awkward sites, the basement of an apartment block near a university in Ireland, for example, and are as willing to close a store for six to nine months and rebuild it entirely as to retrofit.

Aldi have run their own format trials, but their estate is more uniform, there is an Aldi Local format in London but this trial hasn’t gone any further as of yet.

Whereas Lidl will open up all over, running smaller stores alongside their larger preferred formats.

Perhaps this is related to their beginnings in London, where you have to be flexible on property and locations.

The “store of the future” arms race

Both chains fuelled their UK and Irish growth from the mid 2010s with “store of the future” formats. Moving away from the austere environments to warmer signage, softer perimeter colours, more space for fresh food, modernised exteriors, and in Lidl’s case the Bakery by the door, self checkouts in and customer toilets too.

This mattered more than it sounds, before, stores were austere, too small for the trade and were in some cases, actually harming the efficiency of the model, such was their growth in Fresh Foods.

The store environment was the last remaining reason for a middle class customer not to switch. Once the stores were larger, more modern, with a bigger car park and easier to get around, then the product, price and service did the rest.

The refit programmes rolled backwards through both estates as fast as capital allowed… Stores were rebuilt, or moved to a better location nearby.

The refit an expansion programme was capital intensive but due to both chain’s approach and private ownership, it made things far easier.

Aldi responded to Lidl’s format with their own pilot; stronger signage, a new aisle flow, and a focus on Baby, Cosmetics and Fine Wines, and rolled it across the UK. Again, the key focus was the size of the store, moving out of their core footprint in to a larger size to accommodate more facings for the faster moving trade and larger car parks and the like.

Neither chain lets the other’s format sit unanswered for long. That, too, is part of the story: the sharpest competitive tension in UK food retail for a decade has arguably been between the two discounters themselves.

Lidl’s own identity, in summary

Pulling the strategic differences together, Lidl’s identity within discount comes down to:

• More brands, held permanently, and compared openly against own label with the core brands added without a one sku / three variants necessarily.

• A slightly larger range, 10 to 15 per cent over Aldi, weighted to chilled and ambient with depth of choice - IE brands.

• The in store Bakery as the fresh food halo.

• More promotional in store marketing, including more multibuys and Super Weekend / XXL deals inside an EDLP framework.

• Charity and sourcing partnerships chosen for credibility: national accreditation schemes, recognised charity partners, sponsorships that put the brand next to trusted institutions. Lidl tend to sponsor European Football, for example.

Aldi, by contrast, are similar but have a tighter range, less frills (IE No Bakery or loyalty) and fewer promotions versus Lidl across the store.

But both are flexible in their approach.

The so what

If you are a larger retailer, the lesson is that you are not defending against one playbook but two.

Aldi will always beat you on cost discipline and price perception; Lidl beat you on theatre, freshness cues, value in your face and the customer champion halo.

A defence tuned to one, gives share to the other. They need to be fought on all fronts and the easiest way to do this, is to focus on your own operation and the unique elements of this.

Not trying to out Aldi, Aldi. Or out Lidl, Lidl.

If you are a supplier, then the two need approaching differently too: Lidl’s permanent brand and the mixed case opportunities (once the chain reaches maturity in the territory) and promotional special buys offer a route in that Aldi’s cleaner model mostly does not. However that is starting to change, albeit slowly.

Part 3 goes inside the own label architecture itself, the value, core and premium tiers, because that is where the discounter margin actually lives, and it is the part of the model the larger retailers found hardest to copy.

Also crucially, we can start to see where the UK grocers got it wrong, then where they got it right and started to use the discounter model against the discounters and how that growth has been slowed in the UK market.

Get in touch to see how we may help you.

We have almost 1.3m images now, they’re varied, from 2009 to present day and more than just the same bay over and over again without any context of the next aisle, the ends or the wider marketing campaigns at the time.

Therefore this treasure trove of history can be used, to great effect, with our AI tooling to start to generate analysis, comparative sets and identify trends with our AI brain “Cartwright” well equipped to help identify opportunities with training on 36k of my emails and thousands of documents, plus 100,000 tweets too!

Recently we walked the full Tea and Coffee run at Sainsbury’s. Seventeen bays, end to end, from Everyday Tea through to Coffee Sachets.

We photographed every bay, as we do through our visits, then sat down and read every facing, every price, and every promotion with our AI tooling and models.

The great thing with AI is that it learns quickly and you can tailor things rapidly if you know what you want from the analysis. We’ve trained our models to recognise facings, shelf edge labels, signage, retail media, gaps, lows, the list goes on.

So what do we see?

Well, over 1,000 facings. 42 separate suppliers and 9 sub-categories all sharing one aisle.

Of course, this is just one store, there are larger and smaller assortments, but the point of the analysis is that it’s what your customer experienced in this store, on this day.

We can add more store sizes to run a fuller comparative.

The next comparative we are running is retailer v.s retailer. IE how does Tesco compare to Sainsbury’s? What are the commonalities and differences?

What is the % of range that’s own label? Then Cartwright can advise on where the specific range gaps are - IE you’re under represented in Coffee Beans, then he will see that, plus the historical picture.

No planogram (we can generate them) No EPOS data, no loyalty data (although we can overlay both in time!)

Just what the customer sees. The true availability, the facings, the plan, the set up. the signage, right at the time on the shelf edge.

The images are excerpts from the report that our system generates.

Own label leads. Just.

Sainsbury’s with their own label ranges takes 19.7% of the category overall0.

ABF sits at 16.2%, (they own Twinings) and Nestle have 14.7%.

A 3.5% gap across numerous categories. Not unsurprising and if anything, positive for the customer.

That is a lead you defend every week and forms part of a wider strategy for Sainsbury’s to ensure their own label sits in and offers the customer value and quality.

The top three suppliers hold just over half the overall shelf between them, which is expected given trade spend and popularity of these brands.

The other half belongs to 39 other suppliers. This is a heavily contested category with challenger brands, new to market sub categories and trends across the piece.

The aisle average is meaningless though, it’s more about the space split and who owns what in the customer flow as you look at the category end to end.

Stand in front of Bay 1 and you are looking at a wall of Twinings. ABF at 100% here, complete with retail media to support the investment. Well done!

Own label does not exist here, the first bay the customer sees, there is no own label.

Move to Bay 4 however, and the own label holds 82% of the bay. Speciality Tea, almost entirely By Sainsbury’s.

Then Bay 11, Coffee Beans. Lavazza is at 46%, Taylor’s of Harrogate at 15%, Costa Coffee at 13%. Own label has zero facings here in this bay, but plenty on the adjacent one.

Own label’s share swings from 0% to 82% across seventeen bays.

Two of the nine sub-categories are genuinely contested with various brands featured. Seven are decided with dominant players.

If you plan against the average you are wrong in both directions, therefore the strategy has to be to pay to anchor a bay, or ensure you get the best in fixture space in the category.

The sub-category picture:

**Speciality Tea** (Bays 4, 7) -- own label leads at 55%. Dominated.

**Coffee Beans** (Bay 11) -- Lavazza at 46%. No own label. Dominated.

**Everyday Tea** (Bays 1-3) -- ABF at 41%, Yorkshire Tea at 27%, PG Tips at 21%. No own label. Controlled.

**Instant Coffee** (Bays 14, 16) -- Nestle at 43%. Nescafe owns this fixture. Controlled.

**Ground Coffee** (Bays 12-13, 15) -- own label leads at 28% but Lavazza and Taylor’s contest. Contested.

**Hot Chocolate** (Bay 8) -- own label at 26%, Nestle at 17%, Horlicks at 13%. Eleven suppliers. Contested.

**Coffee Machine Pods** (Bays 9-10) -- Nestle leads with Dolce Gusto, Mondelez contests with Tassimo at 44% of Bay 10. Controlled.

**Coffee Sachets** (Bay 17) -- Mondelez at 37% (Kenco), Nestle at 31% (Starbucks, Nescafe). Controlled.

**Fruit and Herbal Tea** (Bays 5-6) -- ABF at 52% (Twinings). Dominated.

Nine sub-categories. Nine different competitive games. One aisle.

Of course we can go deeper and split categories further to reflect other trends that sit within a bay, such as Cold Brew and the like.

The price story (and promo!)

Own label runs at £3.49 on average. Branded runs at £5.03. A £1.54 gap.

Own label sits 44% below the brands on a price average.

Lavazza averages £8.99. Nestle averages £5.68. ABF averages £3.87.

The price architecture is visible from the aisle before you pick anything up.

26% of facings carry a promotion. 57 separate multibuy deals across the run. This is a fixture where price is doing the selling, not just range, we know Coffee and be a hi/lo category and this plays out.

We also know that this price read changes…

The great thing is, that you can re-run this analysis 6 weeks later, with a new promotional cycle and then replicate the analysis, building up a pattern of trade.

Of course, Kanops can also go back in the archive to sweep everything Tea and Coffee related and work it in to the category intelligence.

Meaning you can get a comprehensive view of price and promotion on any category.

Showing what the space split were like in the past, what price points and deals were active. Leading to a true measure of inflation, and shrinkflation….

Using the past to predict the future……

So what would you do?

If you are Sainsbury’s with their own label strength: forget the averages, it’s a strong category for them in terms of own label.

The own label has a strong presence and the ability to keep these lines on sale without replenishing in day is the key here, so the space split is explained by this, there are many factors that go in to space allocations.

The contested middle is where the category is decided, other brands are given over to brands for commercial reasons, but the customer is never far from the mind. It’s unlikely Sainsbury’s would give a bay over to a poorer selling Tea, but Twinings.

It does make sense.

Massing facings in the contested bays is important to gain visibility, however remember that the space allocation is also operational, no store wants “dead space” whilst fast selling lines are being filled in day.

The shelf is won bay by bay, not on the averages, Commanding strong shelf location (eye level etc etc) is important in the relevant bay.

If you are sitting in a category team looking at this from head office: then the questions change again. Sainsbury’s respect their own label, so where are gaps to get in authoritatively without impacting operations or being told no, due to sales rates or range count, even?

Indeed, promotions are important too, so expect an element of cannibalisation but ensuring that your place in category is justified and well backed, always helps.

Our methodology

I/we photograph shelves and we have done since 2009. Millions of images across 100+ retailers worldwide, every week, covering the full store. Whether that’s foyer, aisle, seasonal, chilled, ambient, wherever.

Not scraped, not licensed, not fixed infrastructure. I walk in and photograph what the customer sees, it’s the only dataset in existence that has this depth.

This analysis reads every facing from those photographs: product, brand, supplier, price, promotion and writes up a commercial read of the category.

One store, one category, 17 photographs here. The same read runs across retailers, across time, across events to provide a comparator.

That is what seventeen years of continuous observation gives you. Depth that nobody else has, because nobody else started in 2009.

**Next time:** the same category at a different retailer. Same method. Different answer. Then a comparative!

Want to join our pilot programme?

You can work with me directly as we work together with our images (or yours as well) to shape the category of the future, looking at what's gone before it. Alongside our best practice from around the world too.

Just get in touch to express your interest and you can help shape the tooling too.

kanops.ai

Part 1: what is a “discounter?”

This is the first of a multi part series.

There are not many markets where Aldi, and/or Lidl (or often, both) are not able to co exist and take market share from their larger peers. Denmark did see Aldi retreat after 10 years and 400m euros lost, selling out to REMA1000, ironically a discounter in their own right and strong across the Nordics.

Denmark is a market that is heavily discount oriented already. Salling Group (Dansk Supermarked as was) own Netto, which is a huge discounter in Denmark and the surrounding territories, and the Danish Coop alongside REMA also operate discount stores. That made it just too difficult for Aldi Denmark to take root.

Aldi Denmark was owned by Aldi Nord, the less glamorous sibling of Aldi Sud (who we have in the UK, USA and Australia amongst others), which did make the shopping experience a little more Eastern European than their glam sibling.

Whilst Denmark shows one side of things, it’s the exception, not the rule. Both Aldi and Lidl are formidable across the territories in which they operate. Both are privately owned so happy to play the long game, running at near zero margins.

But it showed that whilst the discounters are formidable competition, they are not unbeatable. Indeed, we have seen a noted slowdown in share growth on Numerator (Kantar as was) in recent months for Aldi UK, whereas Lidl have kept growing.

Both retailers are aided by Numerator not splitting out new space, so retailers can “win” Numerator quite easily by opening lots of new space. If the local panel customer goes to an Aldi because there’s a new one in town, then of course that adds to the hypothesised Aldi market share number. Numerator do balance this effect out, but there is little doubt that in a market where new (larger) space has been very rare from the larger retailers, discounters opening stores at a rate of knots did have an effect.

The UK, for example, has seen a complete about turn in food retailing circles since the Great Recession in 2008 saw EDLP (every day low price) discounters become customer champions and achieve rapid growth every year until relatively recently.

But also, to be fair to Kantar, their figures did reflect the mood of the nation. Aldi and Lidl were (and are) very popular and have a loyal following, with customers delighting in the low prices and cheaper products (brand equivalent) in store.

They were not new to the market. Aldi were first established in the UK in 1990, Lidl followed four years later, and they sat alongside the likes of Kwik Save (RIP) with a similar model, albeit not as refined or globally exposed.

Netto, owned by Dansk, was more common for us Northerners, where the crime of taking a Netto bag to school was punishable by near death in the playground and school hall, such was their poor reputation for quality.

Aldi and Lidl bobbed along unremarkably in the 90s and noughties despite the growth (and growth) of Tesco, the Morrisons takeover of Safeway and the demise of both Somerfield and Kwik Save, alongside woes at the Co-operative who acquired Somerfield.

Both Aldi and Lidl continued to open stores, very quiet stores(!), near their larger competitors and operate an unremarkable business where often someone had to finish filling the Beer aisle before serving you at a checkout.

Then once the associate served you (one of the four customers in store) they signed off their checkout and went off to complete their shop floor task. All part of the brutal efficiency that Aldi and Lidl aim for, of course, but to ordinary customers it was a place you went to save money. You shopped there because you had to.

Not a place to shop because you wanted to.

Which is a dangerous place to be for any business, let alone a retail one.

However, larger retailers were almost dismissive of the threat and arguably put more focus on how to combat Walmart taking over Asda, and what would happen with Morrisons when they became a national force, than they did about the discounters taking any form of market share from them.

Why revisit this now?

I first wrote Discount for America in 2019, when Lidl had landed on the US east coast, Aldi was already well dug in, and the question was whether the model that had upended the UK, Ireland and Europe could do the same across the Atlantic.

Seven years on, the answer is more interesting than a yes or a no, and it deserves a proper look.

Since I wrote this in 2019 - Aldi US continues to expand rapidly, following their playbook of how they operate in almost every other territory they have operated in. Rapid expansion, privately owned, happy to run at near zero margin.

They’re aiming for nearly 2,800 stores by the end of this year (2026) as it converts 220 acquired Southeastern Grocers (Winn-Dixie and Harveys) stores (after selling a tranche back to a new company) alongside their ongoing new space programme.

In contrast, Lidl US has taken a much more restrained approach, operating around 200 stores on the East Coast after scaling back initial aggressive projections, trimming corporate overhead, and pivoting to a modest, high-density regional re-plan under new leadership. The challenge for Lidl appeared to be that they picked the wrong areas to both open, and expand in to.

The Eastern seaboard with Virginia as their HQ is an expensive area for real estate, plus the competition in the States is concentrated both locally, and nationally too.

Despite growth, online, COVID and AI. The discounters have barely changed their model much. Sure there are tweaks, more branded range in the central aisles, but the core mechanics continue apace.

So before we get into how Aldi and Lidl differ, how they range, how they operate and what the larger retailers did about it, it is worth being precise about what a discounter is.

Most people think they know.

Most people are describing a supermarket with lower prices, which is not the same thing at all.

Just like Rugby League, and Rugby Union whilst being the same, are in fact played differently.

Discounters are in the food retail game, but their rules of operation are vastly different to those of a Tesco, or a Walmart for example.

What a discounter actually is

A food discounter offers limited choice in exchange for lower prices, and it achieves this by keeping choice to an absolute minimum.

This is the whole model.

Everything else is a consequence of it.

A typical Aldi or Lidl trades from around 8,000 to 15,000 square feet (their largest stores) with somewhere between 2,000 / 2,500 core lines. The number differs due to central spaced branded products on a rotating special buys, but also due to the way they feature choice within an SKU.

They will sell one dessert style yoghurt = 1 SKU but that tray will feature 3 flavours, each sold under the same SKU. So 1 product, becomes 3. Albeit sold on a single tray (3 facings).

There are numerous examples of this, which is why the CMA (UK’s Competition Market Authority) recently ruled that Aldi and Lidl probably sell nearer to 4,000 SKU’s when this way of operating is taken in to account.

In comparison. A large Tesco carries north of 25,000+ products.

The discounter does not range multiple tiers within a category as a matter of course; there is typically one tier, the mid tier, pitched against the leading brand on both packaging and quality.

A value tier and a premium tier do exist in the UK now, but they exist where a gap needs plugging, not as a default across the store, either to stretch the margin (Premium) or to close a value gap (value tier).

The basic discount model runs like this:

• A limited, predominantly own label range across Fresh, Ambient, Household and Beers, Wines and Spirits.

• Low priced, high quality products under their own label.

• Few brands, if any at the start but more as the chain grows volumes.

• Limited ranging means high efficiency and low cost: the right shelf space and less replenishment in day.

• Volume grows through more customers, more sites and more sales.

• Better buying prices through greater volume give greater margin, lower prices, or both.

It is a virtuous circle and it is worth drawing out, because it explains why discounters behave the way they do on range, on new products and on space.

Own label is the lock (and key) for customers.

The benefit of an own label centric model is loyalty, without the frills of a loyalty card (although Lidl do have a loyalty card now, Aldi, do not).

If the customer prefers a Lidl brand, the customer must visit Lidl, because that product is not stocked anywhere else. Same for Aldi. Whilst leading brands are more of a part of the mix these days in Aldi and Lidl, they are a sideshow to the main event.

Aldi and Lidl treat their own brands exactly as a brand owner would: strong packaging identity, shippers and signage in the brand livery, seasonal variants in Laundry and Sun Care, and a marketing budget spent comparing itself to the leading brand and advertising any award win, imaginable.

The brand equivalent claim is not a side note; it is the reason the customer accepts the reduced choice as a marker of a business focused on value.

Reduced choice, deliberately

Within a category, the discounter will typically range one type of Croissant and one type of Tortilla Wrap.

Where they need to offer variety without breaking the model, they use a mixed case: one SKU of Coffee on the system, three variants in the box. Or Yoghurts, as above.

The customer rummages.

This is also why categories that are built on choice, such as Free From, Home Baking and Organics, remain a too difficult for the model.

There is not enough room on the shelf, and not enough lines on the system, to make the range compelling.

To add them, despite demand, would lead to the model breaking and the efficiencies around lower headcount and quicker, one touch replenishment would not be achievable.

Non food is the treasure hunt

The centre of the store carries a rotating set of non food events, changing once or twice a week, whilst this used to a main event, it has slowed in recent years with the wider slowdown in non-food amidst a push to online.

Aldi did offer special buys (Non-food) and Wines online, but this ceased last year due to costs and falling customer demand..

It’s not uncommon to see Gardening, Horse Riding, Soccer, a Polish food week, a DIY week in one aisle, both Aldi and Lidl are far tighter on the non-food cycles these days and they manage this well.

The stock is limited to keep clearance down, the leaflet drives interest, and the customer comes for the chainsaw and leaves with a basket of food is diminished these days, due to their wider popularity, he still exists.

This is the one part of the discounter offer that behaves like a hi/lo retailer, and it is deliberately fenced off from the core range.

Notably in recent times, both Aldi and Lidl have added shelving and baskets for their core food space to add rotating brands, some linked to events like the World Cup, others there to drive additional basket spend in store.

No frills, and price stability as a feature

There are no confusing promotional mechanics around complex multibuys or spend £10 in this category for £1 off. Nothing like that.

Lidl are arguably growing closer to that, with their loyalty card and rotating deals, multibuys and their gamification of their app. However, both discounters still operate on a pure EDLP (every day low price) philosophy with no high ticket items or confusing price tiers.

Lidl do run some multibuys and they both run periodic Produce deals that have been successfully copied elsewhere, but the underlying model is focused on simplicity, tight assortments and everyday low price.

That gives the customer something the larger supermarkets could not offer through the boom years of discount: price security. One week you could go to Tesco and the same shop, 4-6 weeks later could vary by £30 due to promotional reliance.

A limited range at a stable price means the customer can predict the basket cost before leaving the house, knowing that they’ll not have to compromise.

Smaller store, faster shop

Because the range is small and so is the store, and a customer can be in and out in twenty to thirty minutes.

Not a full shop in the same way that a larger superstore would offer, but a fast one.

Against a 100,000 square foot out of town superstore, that is a real competitive advantage, and it is the one that made discounters attractive to time poor, affluent customers as much as to price sensitive ones.

They have even encroached in to convenience territory due to their location selection in suburban areas and offering long opening hours (closing at 10pm) whilst offering plentiful free car parking too.

Why a customer shops with Aldi, or Lidl

Ask the question in the 1990s and the answer was: because they had to.

Ask it after 2009 and the answer changed.

Austerity, wage freezes and the collapse in consumer credit made the discounter mainstream, and they grew in popularity, quickly.

Once the middle classes arrived, the newspapers followed with “star buy” Wines and British sourced Meat at a fraction of the established price elsewhere.

Shopping at Aldi and Lidl became a badge of honour rather than a secret. I got this for cheaper here than Tesco / Sainsbury’s etc.

Particularly strong was their Fish, Meat and Produce. Own label dominated categories that offered no deviation. A cucumber is a cucumber, after all. But Aldi and Lidl were significantly cheaper and offered no puzzling multibuys, just a low price.

and it was a low price they held true.

Strip out the economic cycle and the discount offer to any customer, in any demographic, comes down to a short list:

• Price. Truly low, and stable.

• Simplicity. 1,500 to 2,000 lines (plus rotating lines) versus 25,000.

• Time. Twenty minutes versus an hour or more.

• Provenance. Lower, stable price without lower welfare or sourcing standards.

• Newness. A different middle aisle every week.

The larger retailers eventually understood this.

What they did about it, and whether it worked, is the subject of the final part of this series and it’s going to be a real ride through the ages.

What’s coming

Part 2 looks at how Aldi and Lidl differ, because “the discounters” is a lazy phrase and the two businesses execute the same model in noticeably different ways.

From there we work through own label tiers, Fresh, the centre of the store, the treasure hunt mentality and the front end, before closing on the UK reaction, the US reality and the laws of the discounter as they stand in 2026.

Strap in, it’s a tale for the ages.

I grew up with Ken Morrisons polishing the apples at Enterprise 5 (the largest store in the estate) on a Friday night, stores that were unbelievably well run, with product everywhere at great prices and deals aplenty.

Today? Well, to say they are a shadow of their former selves is being extremely polite.

Stores that were once the best maintained in the market are run down, there’s no atmosphere in stores, the colleagues look knackered, counters are abandoned and often there are stores with more colleagues than customers.

Bear in mind that this is a business cutting head count too.

Blue pallets of stock litter the shop floor as Morrisons continue to fill “in day”, these pallets serve only to block the aisles. This means that the store is never “finished” and cleanly presented.

Thus, it all ends up looking like Morrisons is a poorly run supermarket on a Friday evening, but for 7 days a week.

Last year, I walked into a “show store”, this is where retailers “set up” a store to showcase something for others in the business. This time, they had brought all the “poor stores” over to make them see where they were going wrong on aisle congestion and the like.

One could tell it was a “show store” as the shelves were tidy and well presented. So immediately, this set up wasn’t reality.

The stores invited scored poorly for “ease of shop” or similar for their own customers.

So, the show store had parked the pallets neatly in aisle, and the shop was perfect in any case, so there was less pressure and the whole day was designed to show the “bad” stores how it should be done.

Such set up days prove nothing.

It isn’t how that store operates day to day, so fundamentally it was a waste of everyone’s time.

The question I asked myself (which incidentally, no one at Morrisons had done) was: surely the answer is to not have the pallets on the shop floor in the first place?

It can’t work, there’s not enough space for them and why would anyone voluntarily choose to replenish in the trading day anyway?

Well, it’s one of Rami’s decisions. The CEO has implemented this alternative replenishment plan (SRP) to fill more in day and seemingly ban most of the colleagues from going in the warehouse too.

Yes, really.

The general barometer for retailer performance like-for-likes. i.e. quarter to quarter and year on year, how are you performing? Are you like for likes (or comps) up?

Yes, it can be affected by the weather, new space, VAT and events like Easter taking place at different times of the year.

But in a short-term industry like retail, they are useful.

No measure is perfect, after all.

However, it can be pretty easy to improve your like-for-likes by adopting short-term tactics, like fuel vouchers, or £10 off £40.

Whilst everyone would be aware of these “pump and dump” tactics, the like-for-likes would be improved over that quarter. The challenge is then annualizing these figures but let’s worry about that in time……

Where Asda have been negative on both Kantar data and their own like-for-likes for such a long time now; it can be almost hard to work out if a low negative score is good enough anymore.

But they are starting to turn things around, at the shelf edge at least.

Yet Morrisons continue to turn out positive like-for-likes each quarter, despite the shopping experience worsening on every trip.

Market St is being slowly wound down and 50% of the store lighting turned off in stores I visited recently. Saving about eleven pence but doing untold harm to the shopping trip.

Is a meagre rise in the quarterly number good enough?

No.

Not when you consider that their main rival, 9 miles away in Leeds (Asda!) have been negative 6 (and more) for two years plus. Slumping to a near billion-pound loss and recruiting all manner of former Asda executives to kick start the recovery.

They remain negative (although, one would hope the volumes are recovering given the significant investment in the shelf-edge pricing and set up).

Yet Morrisons, just a few miles away, have barely made any inroad in that time. All this despite the business being in “turnaround.”

That is a bigger worry.

Morrisons talk about two things EBITDA and NPS.

The first – EBITDA is fine for a business that is laden with debt and focused on deleveraging. It is beloved by the CEO and the company for its ability to make interest payments disappear.

Given the propensity of the business to talk about EBITDA over volume growth, or other more familiar metrics, tells you all you need to know about the business and the strategy.

The debt situation is well documented - MFG (Motor Fuel Group), an entity owned by Morrisons owner CD&R (Clayton, Dubilier & Rice), acquired Morrisons’ petrol stations and attached forecourt shops in 2024.

This enabled Morrisons to pay down debt but also meant that MFG benefitted from a retail estate with lucrative locations in supermarket car parks.

MFG are investing heavily in new technology for EV charging and concessions too.

This was a very good deal for MFG, a chance they would never have otherwise.

MFG have wasted no time in investing heavily in electric charging points and adding Greggs (amongst others) to the petrol station offer.

This weakens Morrisons in two ways:

The fact that third-party competitors (like Greggs) are now in the petrol offering means that foot traffic could be reduced, or at least, Morrisons products are not purchased but a third-party concessions product are.

Morrisons are unable to (or at least will find it very hard to) run fuel incentives (i.e. save 5p a litre) if the market was to go in that direction.

Asda still have ownership of their petrol stations (almost the reverse of the Morrisons deal, where Asda ended up with a significant number of additional petrol stations via the EG and then the Co-Op petrol station acquisition) and Allan Leighton himself has said this is important, being competitive on fuel is a footfall driver in itself.

Amidst underwhelming sales performance, a key challenge for Morrisons is that they have confused themselves, and by definition, their customers.

The 2^nd metric that’s beloved by Morrisons is NPS (net promoter score) where essentially, everyone responds to surveys and the business gets a great pulse of what is happening.

The challenges with NPS are numerous; a key one is that responses are not exhaustive; you will get polar opposites of the landscape which can be good, or bad. You tend to get more people complaining than complimenting as we know.

Plus, the system always ends up being gamified in some form or another. Stores start to ask for feedback, offering incentives of a chance to win vouchers if you put highly satisfied. Whether the customer is highly satisfied or not.

Obsessively focusing on just a few metrics means that the business autonomously moves in the direction, all businesses are guilty of this, but Morrisons with its roots in close, autocratic control for so many years are one of the most guilty.

Morrisons has many strengths and points of difference. Market Street and the vertical integration – factories, bakeries and abattoirs - for so many years the envy of retail with Morrisons unique ability to switch on production and drive sales at the drop of a hat.

This now looks overwhelmingly like a laggard in an era of food price inflation and input shocks like the war in Iran and Ukraine before that.

When Sir Ken Morrison incepted Farmer’s Boy and the other vertical integration facilities in the 70s and 80s, expanding this further in the 90s. His aim was to cut out the middleman and pass the price benefits on to the customer: their best price.

Very evocative of Sam Walton, with Walmart.

The challenges with food production are numerous, but in this economic climate, you face into volatility on energy and must take the cost price increases almost straight away.

Whereas other retailers who deal with wider own label suppliers (as examples) can manage cost price increases on oil and other inputs through their negotiations and phase anything in.

But if you are Morrisons. You are negotiating with yourself.

You can’t pass the price increases on, otherwise you end up raising your own prices faster than anyone else.

There isn’t enough of a benefit for customers to discern “we pay more for this because Morrisons makes it themselves” and in any case, the Morrisons store environment is not one that lends itself to premium retailing, at all.

It’s a marketing challenge in part (IE how do we tell the story to customers) but also, it’s a trading and retail challenge too. IE if counters are closed like the below, for no discernible reason, it’s not helpful. Or acceptable.

This means the margin is under even more pressure.

Not to mention that the core of the Morrisons business faces falling volumes, in part due to competitors but also one cannot escape the impact of their own efforts.

I know they can (and do) sell to others (Myton Foods, that is the Morrisons manufacturing arm.) But that is not enough to prop up the core of the business not performing where it needs to perform.

Which then makes the vertically integrated structure increasingly questionable, with the business not growing volume or looking likely to, either.

The numbers really don’t make any sense for the vertical integration any longer.

What you do with this side of the business is a question in itself.

In the 90s, you can read the annual reports of Morrisons where Ken and the board talk about near-zero food price inflation. This, of course, was greatly helpful for Morrisons when they were expanding and owning their own facilities, especially with the volumes of the business they used to do back then as they grew.

There was a laser focus on execution, availability, shop standards, trading and driving sales. Their return per square foot was astonishing.

But for Morrisons in 2026. You’d scarcely believe it was the same business.

Sir Terry Leahy is the chairman, a retail titan.

With his inception of the Clubcard in the mid-90s for Tesco, surely it means that the loyalty scheme for Morrisons should be at least competitive in the market?

It’s nowhere near.

Also, when Sir Terry visits stores, he must see what the rest of us see?

A business that has stopped investing, stopped growing and almost celebrating a goalless draw by just trading each day, rather than being on the front foot and offering an alternative for customers to other retailers.

The Morrisons More Card is the most confused loyalty scheme perhaps in the history of retail.

Not all prices are loyalty prices for a start, which is different but also confusing.

There is a points scheme that’s barely relevant or understood.

Morrisons seem intent on repeating the mistakes of Tesco in the 2010s by operating bizarre coupon and collector-scheme ideas. One last year for Pyrex dishware saw volumes sold off, this year it’s crystal(*) glassware….

But these schemes just reward the existing customer base (If they are bothered enough) and certainly, not one customer is crossing the road to collect stamps for such items.

Asda are the counter-example on loyalty.

Allan Leighton has got that business off retail media as a drug and off loyalty pricing too.

One can only admire the singular focus: the central aisles turned to Rollback overnight in January 2025, back to a focus on price, loyalty reduced to money off GM to aid clearance. A strategy!

Morrisons, by contrast, can’t decide.

The More Card is on some deals but not others. They did, for a time, put it on buy six at 25% on wines the industry’s major deal but then sometimes turn it back off.

More points on own label, it’s now unclear if that’s still happening, if so, what does it turn in to, redemption wise?

The loyalty scheme, like the business, is incredibly confused, and that confusion passes straight to the customer, via the stores.

Turning to Asda as we look at price in general. They’re becoming competitive once again with a clarity on their offer around loyalty pricing, low prices and x for y deals.

Another string to their bow by focusing on price rollbacks alongside near-permanent multibuys in selected categories – such as cooking sauces, ready-to-drink alcohol and Cereals.

These are well signposted in the revamped bays and offer simplicity to the customer.

Such deals reward the customer for buying three or six, which then as a drumbeat for value, starts to persuade and train the customer that they can save with Asda each week.

This of course is nothing new. It’s the same strategy that Darren Blackhurst and co. adopted in the mid-2000s and is something that served them so well, alongside the SKU rationalization alongside it.

Morrisons are trying similar but often end up being uncompetitive versus Asda because they try to do multiple in aisle deals which then just confuses the offering and makes them look expensive.

Morrisons do price-match Aldi and Lidl (whereas Asda do not) and they have a low-price everyday style moniker that presumably is designed to trade against Asda, B&M and other leading grocers in the Ambient space.

You’ll see pairs of scissors in the middle aisles and in the central space, which is Morrisons’ core price campaign of Price Cuts, like Rollback in its 12-week rotating nature.

All of their price campaigns are valid; but are lost amid all the other noise in aisle.

This means their work is wasted as customers are unable to discern what the value proposition is.

Speaking of noise – we then come to Retail media.

I’ll do more notes on retail media in the coming months.

The industry has a real problem with it I feel.

At its best – it’s a very useful income generator, allowing the retailer and their associated data arms to benefit nicely.

At its worst, a retailer becomes hopelessly addicted to money for signage and effectively a real-estate company that happens to sell food.

That is where it would put Morrisons at this stage.

Asda were also addicted too.

If we look back to ’23 and the dark days towards the end of 2024 when the financial people were running the business, Asda were a mess.

This explains why things have been so difficult, for so long. Momentum is crucial.

The central aisle was overtaken with branded messages, space just sold to the highest bidder.

Then when signage isn’t the answer, all that happens is the teams selling retail media are blamed. Unjustly so for me.

The operators, traders and leadership in charge of the organisation are to blame for not having a stop point, for no one saying, “stop the madness,” and no one saying, “what are we doing here?”

Where does it end?

They all walk the stores and see the emergence of more floor stickers, “aisle take overs” and foyer displays, various hanging signs and other pieces of pollution in store.

Customers in listening groups are often quoted by retailers, “customers have told us this, customers have told us that.”

But no customer, to my mind, has ever said: “we want to see more sponsored messaging. We want to see more competitions, please, a chance to win, simply scanning my loyalty card.”

No.

Retail media is beloved by marketeers, but in reality, it’s just commercial income wrapped up in a new name.

Much like The Big Short, the famous film charting the financial crash in 2008.

At the end of the film, it’s pointed out that a “collateralised debt obligation” is coming back in a new wrapper, “a bespoke tranche opportunity” highlighting that the lessons haven’t been learned.

If we think back to 2013-2014; before Dave Lewis came in, Tesco were in a very similar situation as well.

They were selling space off to the highest bidder: branded flags everywhere, archways on the cereal aisle from Kellogg’s, suppliers just spreading their messages in a competing, busy market. Great!

However, the market is very difficult because of the strength of the discounters, again, a future note will look at how the discounters and leading brands are working together.

Commercial income was seen as a major problem for Tesco. 36 different ways to book additional income that was beyond selling product.

Stepping aside from Tesco’s financial reporting issues; it was clear that the business had become overly reliant on these mechanics.

Retail media or commercial income (as it was then) was wrapped up in volume deals: “if we sell this space,” or “if we do this end focusing on Heinz,”

The end may not be relevant to the customer, or it may be a poor offer (Save 20p when buying 3 etc) but “we can put some signage up and everyone loves that” and its easy money almost aiding the quarterly figures.

The challenge, like anything, is that there is a stage this becomes too much.

When a business focuses on retail media or indeed, even starts to allow it in stores, there must be guardrails. But who is responsible and strong enough to say, “we need to take some signage out of this aisle, or are we doing too much of that?”

Often there isn’t anyone doing so. Mainly because the revenues are firstly immediate (much needed in some cases) and secondly, it’s significantly easier to stick signage everywhere versus selling food or trying to develop a new range and build a business around that.

Suppliers will pay a lot for “retail media” and because it’s now wrapped up in loyalty data and digital opportunities, there’s a great deal of excitement around the business and indeed around other retailers too.

However, I go back to what I’ve always said.

It’s the same with store labour (which is another note in time)

Take retail media and take Allan Leighton coming into Asda. Rather than keeping all the branded signage because the business needed the money, he turned it off — and went back to Asda Price and Rollbacks.

The business had stopped telling customers anything about Asda; it was just selling space to the highest bidder and wrapping it in “Retail Media.”

Tesco was the same. Without Dave Lewis turning the taps off on commercial income, they’d never have got the volume growth and the recovery they eventually did, because they were forced back onto trading.

I maintain Dave Lewis’ turnaround of Tesco isn’t talked about enough, probably one of the greatest turnarounds ever seen. Not quite Sam Walton’s build of Walmart, but it’s a similar story. Again, one for a future note.

Getting Asda off that drug of “easy money” forces the traders into a new world: sit down with the brands and suppliers, write the joint business plans, build a strategy for the customer and grow the category.

Yes, with Aldi and Lidl at the door and everything else that entails, it’s harder than it was but the job is to grow the category, and hopefully wider growth and recovery follows.

Retail media advertising has a part to play. But it just cannot be the be-all and end-all.

My biggest concern with retail media is that because the money is always needed, the gap gets bigger quarter on quarter. Unacceptable becomes acceptable.

It’s my biggest issue with the “high value” tagging in stores; those folks in shrink never stop. High value is £15 one week; IE we tag all items that are £15 or more. Then the quarter after, under pressure on shrink, rather than deep dive and work out the internal controls that contribute.

They take an easy option, let’s tag anything over £10. Remove from sale anything over £15 and put it behind checkouts. Customer experience is worsened but the shrink team never have to answer for their crimes.

See also, the store labour and productivity team. Calling the hours cutters “productivity” is a joke in itself. But that’s for another note. It’s all short term, unfocused hopelessness.

Anyway(!)

The conversation for retail media teams and traders - “Right, let’s put a few more floor stickers down.” We’ve got the end of the quarter coming up.

You can almost do what you like in the aisle!

But once the space is sold, it’s sold you’ve run out of floor to sticker and for the next quarter, next year, then you must annualise those figures.

Then what?

Assume for a minute Tesco announced they’d gone ultra-competitive on price and started a bit of a price war versus Asda.

If you’re Morrisons, you sit down with the suppliers: “Right, Heinz, we need some price action, we want some help, because we’re 10% more expensive than those two.”

Heinz (e.g.) knowing they’ve got the retailer over a barrel on the retail media money say “well, we’ll have to channel it out of retail media and give it to you in price, because we can’t do both.”

The retailer (Morrisons e.g.) already addicted to that income, can’t afford to say yes to that.

So, the retailer makes itself less competitive through its own actions.

That, for me, is why retail media is fundamentally a bad idea, it changes the focus, the business goes from taking some risks and innovating to safety first, number focused retailing. Customer at the bottom of the pile.

I go back to the main thrust of my argument: who is in charge?

Who says, “enough is enough, we need to row back”?

Until someone shows me there’s a failsafe in the retail media overload, I am against it.

I don’t care how good the loyalty data is, how effective people think the signage is, eyeball trackers and the rest.

The ability of retail media to infect the trading floor, the trading strategy and then the wider business to make a retailer less competitive by chasing short-term money, is proven.

It’s been proven time and again.

So back to Morrisons.

They’re in this space already.

Signage is on the rise around the store, and the business is being run for the short term.

It’s very hard to see how they get off the retail media drug the way Asda have.

But off it they must come, to be competitive and being competitive is harder for them, with market share down and like-for-likes barely positive.

They’re negative in reality, once you allow for inflation.

So how does the Morrisons hope to recover?

Their focus on EBITDA won’t get them there. There are many issues with it, it assumes Capex is free, or somehow unnecessary = that retail isn’t a Capex business.

Which we know is untrue: it is! You must spend on the estate, and not just refits but store maintenance, car parks and the rest.

As Warren Buffett put it: “References to EBITDA make us shudder; does management think the tooth fairy pays for capital expenditures?”

Look at the retailers performing well or performing at all. They’re investing in store refits and improving the store environment.

Store environment, or atmosphere is a difficult thing to get across, or explain, even with images.

It’s so hard to encapsulate what it means, but anyone who’s visited a busy store will know, people are happy being there, serving customers, the shop is in a good state and people are working purposefully.

When stores reopen post refit; they have a good atmosphere too, a halo, if you will. Pride in that their store is the best version of itself, that the company has spent a few million on their location.

Colleagues and management get a spring in their step, and customers respond to the new environment and, hopefully, spend more in the process because the store is well maintained and product is available.

M&S are a great example of a business that’s reshaped its entire image around new store environments, taking inspiration from the likes of Australia and the USA.

Few would argue M&S against the fact that they run some of the best stores in the market.

Go to America and Walmart are spending billions of dollars on store refits and by extension - the environment and atmosphere. Target also; because they recognise a well-maintained, modern store is a better place for customers and associates alike.

It drives sales.

Morrisons down the years would have outspent their competitors on store environment; Market Street, maintenance and equipment. Stores were clean, bright and welcoming and car parks were well maintained

Walk the stores today and the opposite is true.

Car parks with more potholes than tarmac and stores that slowly but surely, are starting to crumble.

My own visits have found chillers with signs saying, “to be repaired in two months’ time.”

Refrigeration breakdowns stepping aside from the current heat are commonplace even in winter and the whole store, wherever you go, generally looks run down.

Another red flag at Morrisons is the level of clearance stock.

We’ll look more at Morrisons in the coming weeks, but there are several flags here to someone who’s walked stores for over 20 years.

Clearance bays (Ambient specifically) are a great way to judge how a store is run.

It’s where the sins are hidden particularly in grocery, where markdown can be slow and sales even slower.

The move to electronic shelf labels will mean the buyers have to take the margin — which the buyers never like doing and can often “hide in the weeds” and blame the store for not changing the labels when they do apply the markdown.

But in Morrisons - they look to be preserving margin by pushing almost all discontinued and other random stock into clearance areas that are steadily growing across the store.

You can sense it walking the store and I could sense it last year; the clearance areas are full and only getting fuller.

Some stores have dedicated areas with more bays added each time, a long way from the days of a single bay when space was at a premium. Those days look almost old fashioned now — the mark of a business preserving margin and focusing on EBITDA, one that won’t take clearance action, or aggressive clearance action, to clear stock through.

That’s in stark contrast to Asda, who are embarking on a clearance and SKU rationalisation programme, knowing they have to reset the planograms to support their new volume-focused plans.

Asda need to clear the delisted stock which is expensive to do. High volumes are held in store already and slow sellers are slow by definition, or they wouldn’t be discontinued. It’s one reason the losses have run higher at Asda: they have to reset their business, and clearance is a necessary evil.

Tesco had the same problem back in 2015. Discontinued and legacy stock sitting in the stores (or on the stock file, or both) with the business too afraid (or not permitted) to write it off because it would add to a shrinkage bill that must be kept under control to hold the profits where they are.

Like anything in life, retail or otherwise, you can’t defy gravity forever. Actions have consequences, and second order consequences are the hardest for people to follow, because they flow directly from the first action.

The first action, here, seemingly, is to not reduce clearance stock quickly or deeply enough to sell it, rather keeping it on shelf.

As noted -Morrisons’ move to fully electronic labels will be interesting, because there’ll be no hiding place for the buyers to blame stores for not acting on clearance; no keeping the old paper labels on due to task overload or the like.

The electronic label shows the current price and brings 100% accuracy / compliance, so in theory it’s very easy for buyers, traders or operators to see that clearance action hasn’t been taken centrally.

This is a growing problem for Morrisons, and one I’ve watched play out in plenty of retailers before. Sainsbury’s, under Mike Coupe, started to slow clearance levels towards the end to hold the margin but, like anything, you have to act at some stage before the mountain grows out of control.

Stores aren’t given the labour to manage clearance; because the assumption is that stock is cleared through bar the stragglers. But the bigger the clearance area, the harder it is to keep on top of, and the bigger the store job becomes, it has to be counted, maintained, tidied, re-merchandised with new lines added etc.

At some stage the medicine has to be taken, and a fire sale (almost) needs to occur.

Pull all of these threads together and it’s a business optimising for the short term, there is no doubt, even with the focus on EBITDA over volume, retail media over range, margin preserved through clearance rather than cleared, all while the estate, the offer and the proposition erode beneath barely positive like-for-likes.

Confused is how the customer experiences it. Short-termism is what causes it.

A goalless draw “celebrated” each trading day, when the business should be chasing the win.

This note is the map. The detail in retail media, Market St, trading, operations, and where all this leaves Morrisons follows in the notes to come.

PS – the announcement (nay proclamation) that reopening formerly closed counters this week sums things up. Market St in “our DNA.”

They need to do a lot more than just reopen closed counters; they need to put The Street at the centre of things once again.

They were able to close counters because they close down by stealth, the actual number of counters being reduced is worse than the headline closures.

I remain unclear what’s worse, the fact they are reopening them to self-acclaim, or the fact that they were closed in the first place.

More to come on Morrisons, and the market in the coming weeks.

Every week my team and I walk the aisles across UK grocers, and beyond and write up what’s really happening in store and on shelf.

Not what a strategy deck says should be happening.

But what the customer actually meets at the shelf edge.

Two rules:

1. The store is never named.

2. One store is one store too many.

You can derive a lot from the store visits.

I feel that many people view stores as an entity (sales, or cost) but so few people actually see the stores, and the people, for what they are.

My insight, sharp eye, ability to decode and spot trends and events is now sharpened by Cartwright, our retail AI no less.

He’s trained on millions of our own store images and years of my writing, thousands of my reports, 99,000 tweets and 39,000 emails.

We will start to share some of our AI based insights too.

AI is enabling us to reach scale far quicker than we could have in the past, at a lower cost too.

For this service - it’s a way to share insight at pace without having to build a community, offer YouTube channels and LinkedIn Live.

Substack has it all.

Free subscribers get the weekly headlines and a taste of the insight.

Paid subscribers get the full read: every retailer, the insight, the share of shelf and pricing updates, my take on what it means, and the whole archive to boot.

To start with, and to recognise so many people have helped me down the years, and we’ve perhaps even worked together.

Claim your Manager’s Special.

Subscribe before 30 June and lock in 40% off a yearly sub, for life.

Just £120 a year instead of £200, for as long as you stay.

After that it goes to full price, and early subscribers keep their rate for good.

If you want to go further, the Keyholder tier adds video analysis and quarterly deep dives into retailer performance as well.

That’s priced at £300 per year.

Either way, welcome.

Hit reply any time, it comes straight to me.

Trade well.
Steve