Remember when popping into Aldi or Lidl felt like a quirky detour? You might have gone in for milk and walked out with a wetsuit, a chainsaw, and a surprisingly decent bottle of wine. Fast forward to today, and it’s a different story. These once-niche discounters have gone full mainstream - and they’re giving the traditional big four a serious run for their money.
Back in 2009, Aldi and Lidl were the underdogs. Now? Aldi has over 1,000 stores in the UK. Lidl’s not far behind. Together, they’ve captured more than 18% of the UK grocery market, up from less than 6% in 2010 (Kantar, 2024). Aldi UK topped £15billion in sales last year, with Lidl hot on its heels.
This growth hasn’t just shaken up the market - it’s forced the likes of Tesco, Sainsbury’s, Asda, and Morrisons to rethink everything from pricing to product strategy. Because Aldi and Lidl aren’t just cheap, they’re engineered for efficiency.
So what’s their secret? Here’s a closer look at how they’ve built a business model that delivers consistent value, and why it’s got the rest of the industry scrambling to keep up.
Buying British, at scale
Aldi and Lidl source a huge chunk of their fresh produce, meat, and dairy from UK suppliers. Aldi alone gets over 75% of its fresh products from British farms. Lidl works with more than 650 UK suppliers through long-term contracts.
The difference? While the big four also buy British, they rely more on imports to offer wide ranges especially for niche or international products. That added variety means added cost - more logistics, more customs paperwork, more complexity.
According to DEFRA, traditional supermarkets source just 50-60% of their fresh food from the UK.
Europe-wide buying power
Aldi and Lidl don’t just buy smart, they buy big. Operating across multiple countries, they negotiate pan-European deals, especially for own-label goods.
Lidl for instance, uses its scale to drive supplier costs down by as much as 20% (IGD).
Compare that with UK supermarkets that operate more locally, with national buying teams - they might score more deals on big-name brands, but they can’t match Aldi and Lidl’s scale when it comes to private label.
The private label play
Over 90% of what you see on Aldi and Lidl shelves is private label. That’s miles away from the 40-50% you see in the big four. With full control over manufacturing and ingredients (and no brand premiums), they keep costs down and margins healthy.
Fewer products, bigger volumes
Here’s where things get clever. Aldi and Lidl typically carry around 2,000 SKUs per store. That’s a fraction of the 30,000-40,000 you’ll find in Tesco or Sainsbury’s.
Take Crisps as an example. Lidl might offer four/five flavours. That’s it. No endless wall of options. But this simplicity means more volume per product, longer production runs, and lower costs. According to IGD, Aldi and Lidl see twice the SKU turnover rate than traditional supermarkets.
Simple packing, fast re-stocks
No flashy designs. No bespoke packaging. Aldi and Lidl keep it minimal , standardised boxes, basic graphics, and shelf-ready packaging that speeds up restocking. According to WRAP UK, they produce 30% less packaging waste per SKU than their competitors.
Traditional retailers invest heavily in premium packaging and branded displays. It looks nice - but it costs.
Run lean, stay fast
Aldi and Lidl stores are designed for speed and efficiency. With fewer SKUs and standard layouts, employees can be cross-trained to handle everything from deliveries to checkouts. According to Retail Economics, they run with 30-40% fewer employees per square foot than the big four.
Aldi’s checkout speed? 22 items per minute. Industry average? 13 (Which? 2023). Long conveyor belts and multi-barcode labels help make it happen.
A tighter supply chain
Fewer products mean a leaner, more centralised distribution model. Trucks are packed more efficiently. Warehouses are smaller. Transport Intelligence estimates their logistics cost per pallet is up to 15% lower than traditional stores.
In contrast, bigger supermarkets juggle tens of thousands of SKUs and restock more often - especially for niche items, also pushing costs up.
No frills in-store
Fancy planograms and loyalty programmes aren’t the name of the game for Aldi or Lidl. They keep it basic: shelf-ready cartons, minimal signage, no clubcards. It’s intentional - and cost effective. According to Retail Gazette (2023), they spend up to 70% less on in-store marketing and loyalty than their big four rivals.
Real world example: Flavour rationalisation in yogurts
In the yogurt category, Tesco might stock 80+ yogurt SKUs. Aldi? Just five or six.. That means longer runs, fewer ingredients, simpler logistics - and lower prices. Mintel estimates this kind of flavour rationalisation can shave up to 18% of production costs.
It also means better forecasting, faster restocks, and less waste. Win-win.
Final take: Price leadership through structural discipline
Aldi and Lidl didn’t just slash prices, they reimagine the entire grocery model. Discipline and simplicity, at scale. It’s not flashy, but it works. And in the cost-of-living crisis, it’s what consumers are asking for.
For traditional grocers, the challenge isn’t just to compete on price - it’s whether they can rethink their operations from the ground up.
For the rest of us, Aldi and Lidl’s model is a masterclass in operational focus. Whether you’re in retail or not, there’s a lot to learn here about doing more with less - and winning in the process.
