than Aldi, and I think you’ll see them using them initially as they enter
the United States because they recognize that people don’t know them
or their private label. I wouldn’t be surprised to see them enter with
about 20-percent national label and then perhaps scale that back over
time,” Rogers says.
Charting a ‘Red Ocean’ Strategy
According to Ho, Lidl is taking a “red ocean” strategy in the U.S.
“Red ocean means that they are going after the same customers. They
are going to go into North Carolina and go after the same customers that
shop Food Lion, Publix, Walmart and the like. It is a pretty bold market
share grab strategy, versus a ‘blue ocean’ strategy where they would go
and serve an underserved category of shoppers that no one else is serving today,” affirms Ho.
The blue ocean strategy was undertaken by the dollar store players
a decade or so ago, when they set up shop in small, rural towns and
eliminated the need of having to drive 15 or 20 miles to go to a Walmart
Supercenter for every shopping trip, Ho says.
“Lidl’s strategy is to go head-to-head right away,” he continues,
adding that the initial Lidl stores are being built right near Walmart
Supercenters. “Walmart is combating them and Aldi by doubling down
on prices. It is going to be a great thing for consumers.”
Ho believes most communities can support both an Aldi and a Lidl,
much the same way they do a CVS and Walgreens, which tend to open
directly across the street from each other.
“The reason Lidl wants to be right there next to Walmart is the same
reason Walgreens is there,” Ho says. “The consumer is going to ask her-
self is she wants to deal with all of that traffic, the parking and the long
lines at Walmart. She’ll just pull into the Walgreens to pick up her milk,
etc. Today Walgreens is a convenience store in addition to a drugstore.
You’re going to find that Lidl is going to get into the traffic patterns of
the Walmart shopper too, and really make them question if they really
want to go to Walmart.”
A.C. Kearney’s Burt, meanwhile, feels some smaller towns may have
trouble supporting both an Aldi and a Lidl. “I think there are a lot of
metros that can support both, but when you get into the B and C coun-
ties, that’s probably not something that will be viable.”
But because the hard discounter category will be growing faster
than the overall grocery category, Burt says traditional retailers will be
impacted most of all.
“If they are going to grow faster than the rest of the market, then
they are taking share from somebody,” observes Burt. “I think hard discount is going to impact conventional grocery, mass merchandisers like
Walmart and Target that do a big business in food, and the club stores
like Costco, Sam’s Club and BJ’s.”
Even though they operate limited assortment stores with only a few
thousand SKUs, Lidl officials believe they will be a success in the U.S. by
selling top-quality products at rock bottom prices, and using German
precision engineering to keep the overhead low.
“We have a curated range because we focus on a smaller range of product,” says Lidl’s Proctor. “We’re not carrying multiple SKUs of the same
ACROSS THE POND
American retailers wanting to gage Lidl’s
chances of success here may wish to look at
the U.K., where the German hard discounter
has been competing with domestic chains
including Marks & Spencer, Tesco and Wait-rose, along with Walmart’s Asda division and
fellow German arch rival Aldi.
Field Agent, the Fayetteville, Ark.-based
crowd sourcing company, recently sur-
veyed 736 shoppers across the U.K. and
found that Lidl trails Aldi and Asda for the
affection of U.K. shoppers. But while shop-
pers like Asda’s product selection, they prefer
Lidl’s and Aldi’s prices/value.
According to Field Agent officials, to be
successful in the U. S., Lidl may have to take
a different approach than it is taking in the
U. K. U.K. shoppers believe Lidl and Aldi are
cheaper than Asda, but in the U.S., Walmart is
such a force that it can afford to undertake a
prolonged price war to maintain market share.
Dr. David Rogers, president of DSR
Marketing Systems, based in Northbrook, Ill.,
visited Lidl when in England earlier this spring,
and believes, “They are definitely positioned
a little bit higher than Aldi. They claim in
Britain that they are lower priced than Aldi,
but people don’t see it that way. Aldi is really
outdoing them in the U.K., which Lidl is very