Economics of…Lidl

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It is difficult, in the current economic climate, not to sing the praises of the German supermarket giant Lidl. Aside from their creative knock-off brands and the bargain-bucket feel of their interiors, Lidl has gone from being the store of the Chav to a smart-shoppers paradise. And guess what? After six years of ‘umming’ and ‘arring’ over the topic, Bath has thrown off its middle-class chains and succumbed to the store, with a brand new Lidl opening in mid-February next year.

Recent statistics suggest the supermarket’s time has come. Since the beginning of the year, Tesco has seen its value split in half whilst Morrisons saw its pre-tax earnings drop by half in the first six months of this year. All of the ‘Big Four’ – Sainsburys, Morrisons, Tescos and Asda – are in a state of turmoil, according to the Office of National Statistics, but why has our addiction to these brands decreased?

Perhaps the main reason is price? Believe it or not, but the supermarkets which so often present themselves as the peak of competitiveness aren’t exactly that. Generally speaking, stores have a 30% minimum mark-up on all products, much higher on fruit and veg. Joanna Blythman, author of anti-supermarket book Shopped, makes point of this: “Once you know that Lidl can sell three pomegranates for £1.25, why on earth would you stump up £1 each elsewhere?”

The beauty of the free market means that consumers have the right to find the cheapest option. We may begrudge it a lot of the time, but when you can buy a half litre of Aldi-brand apple juice for 50p, we normally pipe down. Lidl and Aldi have recognised this, gleefully cashing in where our other supermarkets have failed us.

Naturally, there are significant impacts to our race-to-the-bottom attitude towards food prices. Stories of farmers struggling to keep up with the demands of supermarkets are common; eggs, pigs and chicken are often sold at a fundamental loss. So expansive are supermarkets’ control of the market that 90% of cheese in Britain is sold to them, 85% of potato products and 75% of bread.

And of course, it goes without saying there is an impact on animal welfare and the environment. Pressure for increased produce means farmers are ever squeezed to farm more animals which means less room and less attention. Of course, we are then suckered into believing all the products are natural by some coke-addicted marketing exec.

But, still, despite the significant effects on the environment, on community and on the planet, we still eagerly anticipate the opening of a shop which is as guilty as any other supermarket. Is it because we’re arseholes? No, not really. Is it because we’re poor? Kind of. The truth is that we’ve distanced ourselves sufficiently from reality and this is capitalism’s greatest trick. As the tentacles of open-market liberalism spread over the world, we are so disassociated with anything ‘negative’ that morality has almost nothing to do with our commercial choices.

It would be nice to think that the decrease of Britain’s ‘Big Four’ was to do with a grassroots movement to reignite the ‘farmer’s market’ spirit or support our local stores, but the reality might be a little more cynical. We might simply have found a better price.

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