retail competitive landscape, or they’ve planned a few flanking maneuvers that have not yet been announced,” he says.
Unlike British operator Tesco, which entered the U.S. with high
hopes for its new self-service fresh-oriented format called Fresh &
Easy, only to fail miserably and subsequently retreat, market observers
believe Lidl is here for the long haul.
“I don’t think Lidl will be at all like Fresh & Easy,” says Henry Ho,
It is a bitter rivalry indeed. Just four days before Lidl made its U.S.
debut, Batavia, Ill.-based Aldi USA revealed a $3.4 billion capital invest-
ment that would give it 2,500 outposts across the country by the end of
2022 – a move the company said will vault it to become the third largest
U.S. grocery chain by store count. The chain currently operates more
than 1,600 stores and expects to have 2,000 in operation by the end of
next year. Earlier this year, it announced a separate plan to spend $1.6
billion to renovate 1,300 stores.
“We think the hard discounter sector is going to grow four or five
times faster than the overall market,” says Randy Burt, partner in the
Consumer and Retail Practice of A.T. Kearney, a global strategy and
management consulting firm based in Chicago. In addition to Lidl and
Aldi, Burt includes the domestic Save-A-Lot in the hard discounter
group. “We think Lidl will take a fair amount of share over the next
five years when you look at how aggressively they are entering. Aldi has
already shown success with the hard discounter model, and the way
Lidl is going about it, makes me think they are a threat that should be
taken very seriously for conventional grocers, mass merchandisers and
club players that get a lot of their dollar volume from grocery or food.”
“Lidl is a big deal,” adds Burt. “They will have staying power and the
question is not whether they are going to take share from existing food
retailers, but who they are going to take share from?”
Dr. David Rogers, president of DSR Marketing Systems, based in
Northbrook, Ill., notes that like Aldi, Lidl has very deep pockets and
is privately owned. “That makes them a bigger threat than Tesco was
because Tesco had to report and answer to its shareholders. Lidl does
not. So, if they want to lose money for several years, they can go ahead
and do that,” he says.
“Lidl’s pride will not allow them to withdraw from America if they
are losing money,” Rogers continues. “They have private ownership and
are at war with Aldi. They have a plan for growth, and even if they are
not initially successful, I think a plan for withdrawal is out of the question. Keep in mind, it took Aldi close to 40 years to become successful
Lidl, Rogers notes, will be positioning itself as being a little more
upscale than Aldi.
“Lidl will have the baked-in-store bread to give that aroma, which
causes people to get hungry and buy more. It is just good psychology,”
he says. “Lidl is about 85-percent private label, which is a little less than
Aldi, which is about 90-percent. Lidl has a few more national brands PH