Many customers pay close attention to prices. This brings in companies like Action, Tedi and Woolworth. The non-food discounters can distinguish themselves as local suppliers – at the expense of Aldi and Lidl.
Pens, T-shirts, scented candles, batteries, slippers: the discounter Action advertises these and other items in its current offers. Nothing spectacular, just a lot of ordinary – but the Dutch company is quite successful with this.
The so-called non-food discounters such as Action, Woolworth, Tedi, Pepco and Kodi specialize in selling goods that cannot be consumed. They stock household and stationery, home textiles, fashion and decoration, toys and multimedia, leisure and sporting goods.
Customers are increasingly buying such products from these chains and less from the rummaging tables at Aldi and Lidl, as new figures from market researcher Consumer Panel Services (CPS) GfK, which is part of YouGov, show. Between the first half of 2022 and 2024, non-food spending by consumers in Germany at non-food discounters increased from 2.6 to 3.2 billion euros. In the same period, the sales of food discounters such as Aldi and Lidl with non-food fell from 4 to a good 3.5 billion euros. They were almost overtaken by Action & Co.
How can this be explained? “The non-food discounters have become more professional. They have managed to establish themselves as serious local suppliers,” says retail expert Christian Koch from CPS GfK. The development can also be attributed to the strong expansion of Action, Tedi and other retailers. “The new market participants are perfecting what Aldi and Lidl started. They are offering a significantly broader range at very low prices,” says Werner Reinartz, professor of marketing at the University of Cologne. With the regularly changing product selection, customers would get “a treasure hunt shopping experience”.
The companies do not shy away from established business locations: Tedi, for example, wants to open eight interim branches in former Galeria locations for the Christmas season. The temporary stores are planned in Darmstadt, Hildesheim, Reutlingen, Pforzheim, Kempten, Siegburg, Schweinfurt and Wuppertal. However, how long they will stay there is unclear. However, the company does not rule out “long-term use”.
Thousands of items for one euro or less
Inflation has weakened recently, but buying sentiment remains poor. According to a recently published study by the retail research institute IFH, consumers continue to pay close attention to prices and offers. This gives non-food discounters a boost.
Action offers 1,500 items for less than one euro, while Tedi and Woolworth each have more than 3,000 for one euro or less. “This means that the approximately 30 percent of households in Germany with budget restrictions and their needs are well addressed. The price motive is at the forefront of purchasing,” says retail expert Carsten Kortum. The professor at the Baden-Württemberg Heilbronn Cooperative State University was responsible for the non-food sector at Lidl for several years in a senior purchasing position.
Due to the economic situation, groups of buyers who previously had no access to them are also willing to try out discount goods, says a Woolworth spokesman. At the discounter KiK, half of the product range is now non-food. The share should be expanded. Customers here are significantly less price sensitive, said KiK boss Patrick Zahn in August to members of the Business Journalists Association in Düsseldorf.
Action: 150 new articles every week
According to Kortum, Action in particular is shaking up the non-food business in Germany. The sales per branch are significantly higher than at the others. And this despite the fact that Action carries fewer products than Woolworth, Tedi or KiK. The discounter has 6,000 items in its range, only a third of which are permanent. 150 new ones are added every week. There is always something new for customers to discover, says Kortum. In addition to non-food items, the chain also specifically offers everyday goods such as cleaning products, hygiene products and confectionery. These increased purchasing frequency because they were consumables rather than durable goods and had to be repurchased regularly.
Another advantage of discounters like Action, Tedi and Woolworth: customers have significantly more choice than at Aldi and Lidl. Most of the time there are own brands, and occasionally there are also branded products. The chains have different focuses, some focus more on household or decoration, others on textiles, DIY supplies, garden or furniture. Some also offer a small selection of non-perishable foods.
With these low prices, can companies guarantee that production takes place under acceptable conditions? Action says they take the supply chain law seriously and require suppliers to meet minimum standards in areas such as forced labor, health, safety, pay and working hours. “Our quality team strictly controls our products to ensure compliance with the specified limit values,” explains Tedi. The others express similar opinions.
Discounters want to expand further
The discounters are competing to expand. Action currently has 2,700 branches in Europe and 550 in Germany. The aim is to open up to 1,400 new locations by 2026. Tedi has 1,900 of its 3,200 stores in this country. The medium-term goal is 5,000. Woolworth also wants to grow. There are currently 750 stores, most of them in Germany. They say they want to build a branch network of around 5,000 locations across Europe in the coming years. KiK is also targeting the same brand. The company currently has 4,200 stores, 2,400 of which are in Germany.
For Aldi and Lidl, the loss of market share in the non-food sector is painful. The products, which are advertised twice a week, have brought discounters higher customer frequency and margins for years. According to Kortum, depending on the product group, these are up to twice as high as for food. Other retailers are also struggling to assert themselves in the non-food business. Tchibo recently complained about falling demand for consumer goods, and the Deko chain Depot filed for bankruptcy in July.
The food discounters are looking for the right strategy when dealing with the competition. Lidl recently went on the attack; in July, the company attacked Action head-on in an advertising campaign. This involved comparing your own white paint with that of your competitor. The price was the same, but Lidl wanted to show that its own product was better. This was controversially discussed in the industry. Retail experts are convinced that Lidl has done itself a disservice. This was an accolade for Action, says Kortum.
Source: Stern
