Will Lidl’s fresh approach to the U.S. grocery market prove successful?
I visited five Lidl stores in Virginia last month, three in the Norfolk area and two that had just opened in Richmond. I’ve seen Lidl operations in Germany, The Netherlands, Britain and most recently Ireland, but these new stores are different. Like their European cousins, store brands account for 90% of the retailer’s products and prices were generally lower than the more traditional grocers in the two markets (I also visited nearby Food Lion, Kroger, Aldi, Farm Fresh, Walmart and Trader Joe’s stores). Unlike many of the company’s stores in Europe, the U.S. outlets are less confined and much brighter, plus they are laid out to be more convenient for the American shopper.
The U.S. Lidl stores are about 20,000 square feet, which is one-third larger than the retailer’s biggest stores in Germany, but less than half the size of most of its full-line supermarket competitors. This smaller footprint is designed to take advantage of the industry trend toward convenience and quick customer response and was validated by a series of focus groups.
Unlike its arch rival Aldi, the Lidl product mix includes national brands. Also unlike Aldi, Lidl is aggressively pushing its fresh lines, highlighting local produce and a respectable selection of fish (fresh and frozen), meat (mostly beef, but also a few lamb and pork selections) and chicken. Finally, and perhaps most distinctive from Aldi, there is a fresh bake unit that makes products throughout the day, including very tasty croissants and baguettes.
The stores also carry limited-time general merchandise items in a section called “Lidl Surprises” and covering categories as far ranging as power tools, fitness gear, watches, apparel, appliances, toys and furniture. There were croquet and badminton sets available during the opening week of the Richmond stores, as well as juice squeezers, shower curtains and a wide variety of back-to-school items.
While the current product assortment was thoroughly scrutinized to present a total offering that meets the needs and wants of the shoppers in each market, the company’s leadership is quick to note that products will be added and deleted to optimize the assortment.
My grandfather, a passionate supermarket retailer for more than 30 years, used to quip that his job was to make it as easy as possible for shoppers to buy from his store and as hard as possible to buy from his competitors. Lidl appears to have taken this mantra to heart.
DISCUSSION QUESTIONS: What are the biggest competitive advantages Lidl brings with it to the U.S. market? How will Lidl do with its launch of stores in the U.S.? How do you expect other retailers to respond?