Former Head of Sales Organisation, Lidl Ireland and current Managing Director, McKee's Foods
Paul spent over 10 years at Lidl Ireland/ Northern Ireland, joining as a District Manager in 2008. He was Executive Head of Sales Operations for Lidl Northern Ireland, responsible for 38 stores totalling 9 districts and turnover exceeding £200m. His career at Lidl included a one year secondment to Lidl Ireland’s Head Office with responsibility for all Sales related projects for 195 stores across 4 regions. Paul is currently Managing Director of McKees Foods, a 4th Generation family butcher and bakery business with over 50 employees. Read more
Paul, could you help us set the scene for our conversation today with a sense of Lidl's history in Ireland and the market it entered? Could you include a feel for the market structure and the existing competitive landscape, which Lidl found itself in as it was opening?
Lidl entered the Irish market in 1999, in a place called Cookstown. That was in the heart of Northern Ireland, right bang in the middle. If you were to imagine Northern Ireland as a circle, Cookstown would be in the very middle. That was serviced from Scotland and it was very much dipping its toes into the water. The market back then would have been unaware of Lidl. It was an unheard-of German discounter. People would have believed all the products, whether that be the milk, the meat or the tins of beans, all came from Germany. A certain amount of that was true, but also a large amount of that wasn't true. The perception would have been very much of a discounter, offering rock bottom prices, rock bottom quality and if you were spotted in a Lidl car park then you might be having financial difficulty. It certainly wasn't a cool or hip place to be seen.
Then in the year 2000, they entered the Irish market and it would have been a period of rapid expansion, get a site, get four walls put up, get some pallets in and start trading. The evolution of the model and the shopping proposition has very much changed in those 20 years; it is night and day. In terms of the core model, that is unchanged. There have been little tweaks to it here but the absolute fundamentals of cleanliness, friendliness, availability and good customer service have not changed. They're in a position now where they have 200 stores going from strength to strength as far as market share is concerned, so it absolutely is working. When you consider that initial customer perception of the brand back then, to be where they are now 20 years later, is pretty good going by anyone's estimation.
It is pretty serious growth. How well do you feel the incumbents understood the model and what they were really up against?
The internal employee would have understood the model because, in terms of our conversation here today and the examples I can cite and stories I can tell on the explanation behind that, we are talking about something that is exceptionally simple. I remember in the interview I had to join the company, it was made clear to me in the following terms: Do you know what Paul, you don't need a degree in nuclear science to work here, you just need an exceptional attitude and be willing to work hard and add value every single day you are here. In terms of understanding the model of, not necessarily as simple as, pile it high and sell it cheap, people did understand what they were trying to achieve in those days.
How would you account for Lidl's impressive growth – going from a near zero in 2000 – to 12.7 market share today?
The major breakthrough was in 2010, when Lidl introduced a marketing campaign based around Northern Ireland called “Proud to Serve You”. What that campaign essentially did, was communicate to the customer a bit more detail about who Lidl was, what they stood for and what they could offer. A large part of the repeat customer, in the early days, stemmed from people going into Lidl out of curiosity. It was more of a, what's this all about, as opposed to, I'm going in for the Bellarom chocolate or the Strathvale meat. What “Proud to Serve You” achieved for the Northern Irish consumer was the understanding that Lidl had been around for over a decade by that time.
We sourced our milk from Omagh and that milk was sourced from Omagh from day one, not later. We bought beef from Northern Ireland, it's Northern Irish beef, and then they coupled that with some taste tests and various awards that were won. All of a sudden, you started going from a reasonably successful model and business, to people now having huge amounts of credibility with it and understanding that this was local food made by local people. The wording of quality was also important and carefully worded, so that whatever the item might be, sparkling water, olive oil, chocolate or cereal, it was never pitched as, this is the best cereal that you can buy in the United Kingdom. What it did communicate very well, however, was that this cereal, or whatever the item was, was as good as, if not better than its comparative.
Whenever you compare the price of like for like, whether that be Kellogg's cereal versus own brand cereal, these were coming out as well as Kellogg's but at a fraction of the price, so that really ramped it up a gear. If I was to pinpoint one particular game changer in the Northern Irish market, that would be it. The difference between the Northern and Southern Irish markets was the absence of ALDI as a competitor. In the South, there is more of an understanding about the German discounter, due to the similarities. It is not exactly the same but there are definitely similarities. ALDI have bent on a few things whereas Lidl have absolutely stuck to what they are about.
Could you go into more detail about what the two hard discounters are doing differently in Ireland?
ALDI set out that this is all our own brands, so there was no going in for Cadbury's chocolate or Kellogg's cereal. Lidl said, we're going to offer you two types of cornflakes, Kellogg's or our own Crownfield brand. It is your choice to pay £2 or £2.50 for the branded one or £1 for the unbranded one. We are not going to offer you 17 different types of cornflakes. We will offer you our own brand and an alternative, and that brand will be as cheap or cheaper than Tesco or ASDA. The own brand will be so eye-wateringly cheap that you are not going to be able to ignore it, even from a trying perspective. Once you try something and realize, you understand and become a fan or hero, and you will not move away.