Part of the Germany-based Schwarz Group, the largest retailer in Europe, Lidl’s penetration into the US has been closely watched by retail analysts as a major source of disruption in the industry. Brendan Proctor, president and CEO of Lidl US, said that US shoppers will enjoy “less complexity, lower prices, better choices, and greater confidence.”
Like its main rival Aldi, Lidl stores are known for their no-frills retailing approach by offering a limited range (SKU count) and private label products. As the New York Times reported last week, both Lidl and Aldi have upended Britain’s grocery retail market, “hurting incumbents like Tesco Plc and ASDA, the British supermarket arm of Wal-Mart.”
Hence, director of retail insights Mike Paglia of Kantar Retail Americas told FoodNavigator-USA that Lidl and Aldi combined will be “a one-two punch here in the US over the next several years.”
“Certain retailers will definitely feel the impact more than others,” Paglia added. “Specifically, those that are more conventional and less differentiated (e.g. Food Lion), or intensely focused on low prices (e.g. Walmart) will probably face greater pressure than current market leaders whose value proposition helps them stand out (e.g. Publix).”
Just six aisles, slim selection
The announcements were made at an invite-only event in Manhattan on Tuesday, attended by Lidl US executives and members of the press, where attendees were a able to sample private label products, from snacks to wine, that will hit Lidl store shelves next month.
At the event, the company also announced its plans to open 100 stores across the East Coast, bringing in an estimated 5,000 jobs, by next summer. Stores will be around 20,000 square feet with only six aisles in each, according to Will Harwood, public relations and communications manager at Lidl US.
“It’s really structured to be a very efficient experience,” he told FoodNavigator-USA. “It’s going to be filled with natural daylight…and they’ll carry a carefully curated range of goods. We don’t offer 50 different brands of ketchup, we choose what are the best items.”
Additionally, unlike most Aldi stores in the US, each Lidl store will have an in-store bakery that bakes fresh goods daily. The stores will also carry fresh meats and seafood, but there will be no butcher counter and standby butcher, according to Harwood.
To quell potential assumptions of discounter equals lesser quality or limited selections, Lidl announced that it will offer organic and gluten-free options, as well as a promise that its private label products will not have certified synthetic colors, trans fats, or added MSG.
Additionally, the company also announced that fresh and frozen seafood offered in Lidl’s everyday assortment will be certified sustainable by the Marine Stewardship Council, Best Aquaculture Practices, or the Aquaculture Stewardship Council.
“We are pleased to announce that our entire everyday fresh and frozen seafood assortment will be certified sustainable,” said Boudewijn Tiktak, chief commercial officer at Lidl US. “As a company, we are always working to make better and more sustainable choices attainable to all customers and this is an important part of that promise.”
Kantar Retail: 'Expect Lidl to innovate constantly'
Commenting on Lidl US' latest announcements, Paglia said that the food manufacturing and grocery industries should "expect Lidl to innovate constantly, to stretch the boundaries of offering high quality at low prices, and expand aggressively in new markets."
He also added that similarities between Lidl and Aldi are only superficial."For starters, Lidl’s US stores will be bigger than Aldi’s and will be positioned more as a more small supermarket," he said.
"More importantly Lidl is different in its ability to adapt to varying markets. It really excels at localization and tailoring its offer to local shoppers’ tastes and preferences. Aldi on the other hand, has tried to stretch its offer into better for you items and nicer stores, but it doesn’t stray too far from its tried and true model that’s been quite successful for over 40 years."