Lidl becoming the highest paying grocer in the UK

Lidl has pledged to increase its minimum hourly wage from £10,10 to £10,90 (£11,30 -> £11,95 in London). This makes the German discounter the best paying grocer in the UK.

How can the discounters pay more their employees and at the same time charge lower prices?

Revenue per employee for major grocers

One could imagine that the grocers with lower prices would also have lower wages. However, Lidl and Aldi are among the best paying grocers in the UK. As the cost of living crisis is gripping the country, all grocers have been increasing their minimum hourly pay levels.

One obvious answer for the higher wages lies in the efficiency of the operations.

As the stores are designed for highest possible efficiency (small assortment, barebones layout…), the discounters don’t need to employ as many people as the big multiples (Tesco, Sainsbury’s…) to make the stores work. The smaller assortments also enable the companies to keep the head offices smaller.

This leads the discounters to have much higher levels of sales per employee (same applies to Costco vs Walmart in the US, see former blog post here).