This post is part of the Ten Items or Less blog.
Let’s put it this way: I’m not going to drive for seven hours the next time time I need a gallon of milk, but the next time I happen to be in the Southeast, I’m going to remember to pack a cooler and some ice.
For now it appears the biggest winner in the Southeast Grocery Wars are shoppers. They needn’t work too hard to find a bargain, or a nice new store, wherever they go. A big reason for this was anticipation of the German hard-discounter Lidl whose American debut late last week prompted my long drive to Virginia Beach.
Lidl's Italiamo line of specialty Italian imports — available while they last.
My initial impression of Lidl is that it is a very handsome store from the outside. We’ve all seen the professionally shot pictures of the storefront a million times, but I have to say I pulled into the parking lot, stood there with my phone and snapped one off that looks almost as good. If you were driving by you’d want to stop and see it. If you lived in the surrounding neighborhood, like Ann Knowlton, you might be so curious as to arrive at 4 on opening morning to be the first shopper inside.
That might not seem like a big deal, but it is if your competitive set includes Dollar General, Food Lion, Save-A-Lot and Walmart — none of which are about to receive best-dressed store awards. If nothing else, the stakes for attractiveness of discount storefronts just went way, way up.
Walking the store with Lidl officials pre-opening, with all the shelves fronted and the produce arranged, the high-arching white ceiling and giant glass windows flooding the store with light and energy, it felt like very much like an “Aldi for Millennials” as some have described it. The pricing signage is just a little louder, the floor space—and head space—just a little more open, than at Aldi, and a waft of aroma from the bakery didn’t hurt the atmosphere.
Certain things, particularly some of the packaging on nonfood items, struck me as peculiarly foreign. I knew better than most what I would discover in Lidl and still found men’s leather dress shoes in a grocery store — even at the tempting price of $34.99 — weird.
In some categories, choices challenged the definition of limited assortment: If you were shopping for pasta, for example, you had basic private brands, the upscale Preferred Selection line and also, Lidl’s imported Italiamo line — these unique products like 18-inch spaghetti at 99 cents — appears intended to compete with imports you might find at a specialty store. Italiamo was available “while it lasts” and is scheduled to be replaced on shelves by imported Greek items under the Eridanous brand this week (you’ll see Spanish, French, Mexican and Asian in coming weeks). The idea at Lidl is to keep it interesting.
Shortly after the crowd piled in I had to run off and file a story, but before I left I encountered Ann again, this time with her cart loaded with four 30.5-ounce coffee tins ($3.75 each), among other things. Ann had told me she typically shopped at Walmart, Aldi and Food Lion but declared, “This is my new favorite place now.”
The massive produce offering at a nearby Kroger Marketplace, along with a price message. The in-store bar had nary single empty seat on a Thursday afternoon.
I made a quick trip to three nearby competitors that afternoon confirming the observation that Coastal Virginia has entered a new golden age of bargain shopping. A monstrous new Kroger Marketplace with Quick List drive-up parking slots, an in-store bar (every seat occupied on a Thursday afternoon), and signs promoting own brands and new pricing investments (We’ve Lowered Prices Again!) were everywhere. This store opened less than a year ago.
New investment in the market was also visible from Aldi. The store I popped into opened in December — one of several new flags planted in the region over the last several months. Though more than busy enough for the three checkers on duty, Aldi was quiet and steady in all the ways Lidl was loud and exciting: I didn’t actually measure this, but for a store that looked and felt considerably smaller that Lidl, Aldi’s fresh produce appeared at least as wide in variety and more abundant than its neighbor. It’s wine and beer also appeared well-stocked and well-priced.
When I returned to Lidl for a second look in the late afternoon, every one of the 160 parking spaces was occupied and I had to parallel park along the edge of the lot. I had meant to pick up a few items for the long drive home including a few of those 89-cent pineapples I saw merchandised at the entrance (it’s rare when I can find a pineapple here in New York for less than $2.99) but when I got there they were gone, along with the massive display of $2.49 watermelons that were alongside them. Despite what officials said were 50 to 60 employees on hand — I’d guess that’s considerably more than optimal for a hard-discount model — the store looked extremely shopped, emptying produce boxes were droopy, but 11 checkout lines were still ringing up orders.
Aldi stocked plenty of wine and beer while Food Lion competed — at least on price.
Here’s a secret though: If you wanted an 89-cent pineapple, you only needed to drive a few blocks along the very same street, where you’d find them at a Food Lion. Although the store had some of the “Easy, Fresh and Affordable” elements visible, and the employees were polite and attentive, compared to its new neighbor it was dark and nearly deserted. There was plenty of parking.
Prices Up — To Compete
Kroger late last week said earnings would come in less than initially anticipated for the fiscal year in part to pay for investments in online shopping, higher employee wages and additional hours in service departments like deli. Amazon late last week said it would buy Whole Foods in a deal presumed to accelerate the integration of e-commerce and physical stores through grocery.
Can someone remind me where we saw these initiatives before? Oh yes, it was Wal-Mart Stores, which if not exactly left for dead three years ago, was among the biggest allies of its opponents owing primarily to indifferent pricing, a bad reputation for fresh food and service and an under-realized e-commerce offering. Its remarkable resurgence reflected bets on the very same things Kroger and Amazon appear to be going after now.
It’s also worth keeping in mind these were anything but small bets out of Bentonville. The employee wage-and-training initiative cost Walmart $2.7 billion; it’s acquisition of Jet.com, $3.3 billion. The sobering message for anyone now falling behind is that you can fix it, as long as you have $6 billion lying around.