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Lidl: A significant threat to U.S. retailers

Lidl: A significant threat to U.S. retailers

On the heels of Aldi’s announced aggressive expansion plans, including their move into California, comes the long expected confirmation of Lidl’s U.S. entry. These two retailers are the two best representatives of the powerful and successful discount format that has made significant inroads throughout Europe. In the U.K., as one example, the two have combined to more than double their market share in the past four years and now approach 10% of the market.

Aldi’s steady, measured approach to the market has worked well for them and they have nicely adapted the format to the U.S. to brighten the stores, improve the shopping experience and offer an impressive range of high quality private label that has expanded to meet consumer tastes, including healthier products, gluten-free offers and a gourmet line.

What can we expect from Lidl? I happened to have visited one just the other day in the Netherlands. While they have already suggested that the U.S. format might be different than the European model, there a few common points that we should expect:

  • The assortment will be heavily private label driven with a quality range at extremely low prices. Lidl tends to carry more SKUs than Aldi but will still have a very limited range.
  • Lidl might carry more national bands initially. They have done this in the past in market entries as a way to accelerate consumer acceptance of the format
  • I was very impressed with perishables quality. While limited in scope, the product and packaging was excellent. An in-store bakery was an added twist as well.

After Tesco’s disastrous experience with Fresh & Easy, I would expect Lidl to act with appropriate caution. That said, their format is a proven one and the similarities to Aldi might make it less daunting to earn consumer trial.

As always, competition is fierce in the U.S. and success will not come easy. But, Lidl should be treated as a formidable threat.

How do you think U.S. consumers will react to Lidl?

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