I referenced a Nil’s Pratley opinion piece in the Guardian on Tesco’s new budget store, Jack’s, last weekend. I’m returning to it as the comments are worth a look on their own. In amongst them is this pearl of wisdom.
What Aldi/Lidl are doing well is taping into the change in incomes and what “middle class” means now and that, basically, people aren’t really middle class.
We have a much smaller genuine middle class (2 holidays a year, 1 skiing, then 2 weeks in the sun over seas, new cars that they own, large house with minimal debts…) than we used to have and now there’s really just a much larger upper working/lower middle class who like to think that they can live the life but know that they really cant so actually need shops like Aldi and Lidl so that they can buy wine (as they can’t afford to from Majestic or whomever where it’s bought by the case, as a real middle class person would) and meat that they can claim is fancy still (not from a proper butcher, like real middle class would) to pretend that they are living well, but at a cheap price. (1)
Spelling errors aside, this observation is interesting. Is the middle class ‘brand’ sliding down as a consequence of aspirational executive types? I’ve noticed this amongst car manufacturers in my little hobby. The old executive companies; Mercedes, Audi, BMW etc, now produce small bland euro-boxes starting at very reasonable prices on solid finance deals. One argument is that this is a consequence of EU directives dictating all manufacturers reach a certain efficiency target. Others would say it’s good business sense, as the aspirational lower middle classes want ‘the brand’ and therefore will pay slightly more for a comparative bland euroboxcar with a three-pointed star than one from a Korean microwave manufacturer. That’ll be the (demise of) Daewoo (2, 3)?
Extend this line of logic out to supermarkets, and Aldi/ Lidl allows people to feel they lead a middle-class lifestyle; the food is more affordable so a bottle of wine, halloumi, olives and smashed avocado on toast dahling is less of a luxury item. The treats associated with middle class life can be every day. And to be fair, I’ve seen Bentleys being filled up with the weekly shop at Aldi, because you don’t stay rich buying Waitrose essential vermicelli nests (4, 5).
So if the lower middle-class have decided that Lidl and Aldi’s budget kale smoothies are a taste of the good life, where are the upper middle-class off to? The trendy local deli and the Riverford food box, or the organic inner-city farming co-operative (I regret nothing)? The hotly anticipated pop-up keralan-fusion van? Some other half-cooked, over-spiced ‘superfood’ containing slop cooked by an unwashed fake-prison-tattoo-sporting manbun-topped ‘entrepreneur’?
It seems they’re actually off to buy something of quality. Because that’s what they’ve always done. That’s what brands used to mean. There’s an excellent anecdote about the demise of Rover from when they were owned by BMW in the 90s. When BMW built seriously well-engineered cars (the same ones that can now be found drifting round empty retail car parks at night). The story goes that engineers were discussing a part at a meeting in Germany, and the question around the table was “How can we make this better?”. Those same engineers came back to Rover in Birmingham and were asked “How can we make this cheaper?”.
And now everyone is asking, “How can we make this cheaper?”, to squeeze every inch of profit from the ‘Brand’. But that’s not sustainable, because cheaper quite often means poorer quality, and engineered obsolescence and throwaway white-goods don’t fit with the fashionable sustainable movement. See the rise in repair cafe’s as an example (6). Miele may not be in every home on the rabbit-hutch new estates with financed-Mercs on the drive and 0%-interest Samsung american fridge-freezer in the kitchen, but it maintains it’s market share because it sells solid products. And you can buy spare parts and have them repaired. And they last 10 years.
How the hell does this relate to Jack’s? Lidl and Aldi buck the trend. They’re not focused on brand, they’re focused on reasonable quality for a value price. Tesco bosses also have to learn that lesson, and not sell Jack’s as a budget brand. Brands are dead. Long-live quality without a badge.
Have a great weekend,
- Mike Ashley ‘restructures’ HOF (7)
- Musk continues winding up ‘the man’ (8)
- Half of 20-somethings have no savings finds the ONS (9)
- New data from the Halifax shows the housing market stutter, with fewer houses available (10)
- The same data also shows house prices falling (11)
- Aston Martin floats, and then sinks (12)
- FTSE 100 name Unilever decides not to transfer it’s HQ to Rotterdam (13)
- Window shopping at the Paris Motor show (14)
- Weenie adds her September update to the list (15)
- Ermine goes off on one about FIRE in the news (16)
- TEA has a fantastic guest post from The Humble Penny’s Ken (17)
- Which Monevator picks up on in a contentious weekend reading post (18)
- Along with a post from The Accumulator with the portfolio update for us to digest (19)
- UKVI reviews Diageo (20)
- Ben Carlson at A Wealth of Common Sense on what happens if we keep going on our current run (21)
- So much for the Bond Bubble (22)
- A bevy from Mr and Mrs YFG, first on anxiety and working in law (23)
- Then some random thoughts from Mr YFG (24)
- And then some path to FI lessons learned from Mrs YFG (25)
- MsZiYou with an interesting post on approaches to budgeting, and the value you pay attention to (26)
- She also does a bit on the news (27)
- And, in a busy week, it’s easy to miss the net worth update too (28)
What I’m reading:
The Windup Girl by Paolo Bacigalupi – Fantastic world building in this dystopian Hugo & Nebula award winner.
Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor.
Enchiridion by Epictetus – Bedside reading for a bad day