Will small stores be central to Lidl's success?

Dive Brief:

  • Lidl, a German supermarket chain, is planning to open 150 stores along the eastern U.S. seaboard, The Philadelphia Enquirer, the German Embassy and Progressive Grocer reported. The company told Progressive Grocer it is “actively preparing several sites” in greater Philadelphia, and property records show it recently spent $2.88 million on two adjacent plots covering nearly four acres.

  • While some question the sense of choosing a site within blocks of a Walmart Supercenter and a Shop Rite supermarket, the move demonstrates that Lidl is not fearful of facing down competitors.

  • According to a Lidl U.S. spokesperson, the regional headquarters and distribution center opened last August in Cecil County, MD is capable of serving multiple states.

     

Dive Insight:

Assorted major U.S. markets have been seriously shaken up in the last few years as old food-retailing players pulled out and new ones fought to gain footholds.

Germany-based Lidl is planning to blanket the greater Philly area and others with stores, and German competitor Aldi, which already has some 1,500 stores in the United States, has announced plans to open hundreds of stores within the next couple of years. And that doesn't take into consideration expansion plans from the Trader Joe's franchise owned by Aldi Nord, one of two Aldi divisions in the country. Trader Joe's, which already has 440 stores, has announced it will accelerate its store-openings schedule.

Twenty-eight years ago, France-based Carrefour opened one of the largest-ever U.S. food stores, a 150,000 square-foot behemoth in Philadelphia. It survived a mere two years. Both Aldi and Lidl focus on stores that are smaller than 20,000 square feet. The public has said it doesn't want huge stores unless they are Sam's Clubs or Costo.

The Aldi/Lidl model is increasingly winning fans and followers. It's likely that those small formats, with prices as much as 20% below Wal-Mart's, soon will have the measurable chunk of the U.S.'s $5.32 trillion retail food market they've been seeking.

And things move quickly, As recently as five years ago, this month, Aldi wasn't even a blip on the radar of the Philadelphia Business Journal's list of that area's top 20 food retailers – a list that included 7-Eleven, Target, Walgreens and CVS.

Filed Under: Grocery Marketing
Top image credit: Mateusz Giełczyński