Lidl and its fellow discounters have changed the face of Britain’s supermarket sector. They’ve gained market share in a way established operators could only dream of and they’ve done it in a mature, low growth market.
Britain’s supermarkets are a sharp bunch. Tesco, despite dumping its chief executive, is bringing out bargain ranges; a strategy it has vowed to stick to. Sainsbury’s has invested in bringing one of the original discount brands, Netto, back to Britain. The ground war is in full swing but so is the propaganda battle.
Yesterday, Lidl, a privately owned German firm, disclosed its British tax payments following persistent rumours and questions by its British peers about its contribution to the Exchequer.
It turns out that Lidl pays roughly the same rate of tax as its publicly listed counterparts. However, the questions won’t end after this disclosure. Lidl’s reputation is under attack.
Morrisons, the firm that seems to be having the hardest time coping with the discounters’ onslaught, was straight on Lidl’s case. They welcomed the transparency but called for more.
Supermarkets have faced many crises in the past, their communications teams are intelligent and battle hardened. It’s clear that they feel that the discounters aren’t engaging with their stakeholders and so the supermarkets are going in to fill the void. Expect questions on topics like the quality of supply chains, the squeeze on suppliers, food waste and environmental impact or the nutritional content of own brand food to all be coming down the line.
This forced disclosure by Lidl is yet another example of the importance of reputation and its potential operational impact.