- Lidl has placed a lot of stock in areas that don’t necessarily resonate with American shoppers, analysts from research firm Bernstein found in recent shopper focus groups, according to Food Navigator. Lidl puts organic products front and center in its stores and also emphasizes clean labels, locally sourced and free-from product selections. But the firm’s shopper research revealed that consumers tended to care more about the in-store bakery and fresh produce.
- “Lidl will be a very real threat for small scale grocers that lack differentiation or operational efficiencies," analysts from Bernstein wrote in a note. But it’s not a foregone conclusion that the retailer will succeed in the U.S., especially without some key changes.
- Lidl opened its first U.S. stores last month. Over the next year, the discount retailer plans to open 100 locations along the East Coast.
Even though Lidl is seeing initial success in the U.S., Bernstein notes the German discount chain has a lot to learn. Analysts described the discounter's offering as a cross between Aldi's prices and Harris Teeter-like quality and service levels, reflecting Lidl's core promise of value and execution. Focus groups revealed, however, that shoppers weren't crazy about carefully curated clean label and organic offerings. They also weren't convinced they could get everything they needed for a complete shopping experience, implying weak loyalty to the small-format stores. Some believed the wine selection was too high end.
Lidl's new U.S. stores are quite different than its European counterparts, analysts from Bernstein wrote in a briefing note earlier this month, according to Food Navigator. But with more than 10,000 stores in 27 countries, the soft discounter has a formula for success. That formula, according to company executives, is to deliver quality merchandise at low prices and to adapt to consumers and their desires in each country where it does business. The latter point will be a key as the retailer moves forward.
Lidl — whose plan all along has been to adjust its assortment and merchandising as it goes along, and whose operational model allows it to quickly do so — will learn from its initial store openings. The issues mentioned by Bernstein aren’t huge problems. The retailer should be able to accurately shift its assortment and pricing as needed now that it’s immersed in the States and getting real shopper feedback. Just one look at how the retailer has succeeded in other markets it’s penetrated — the U.K., for one — should put any questions to rest. “We’re agile as a retailer,” Lidl US CEO Brendan Proctor said at an event in May. “We’re able to adapt and learn from the markets we’ve gone into. … Personally, I believe one of our strengths is adapting to the customer’s needs and what the customer wants, and greatly curating the range around that.”
U.S. consumers are learning from the experience, as well. Much like U.S. shoppers have adjusted to the Aldi model over time, so too will they likely adapt to what Lidl offers. However, if Lidl doesn't make necessary changes, the discounter may limit the number of customers who’ll give it a chance.
Today’s shoppers are fickle. And unlike some past generations, they’re not loyal to any single store but instead opt to shop around to meet all their grocery needs. Research firm Magid has found that half of American grocery shoppers visit three or more stores to buy food and household supplies. With so many grocery options to choose from these days – both offline and online – shoppers are less willing to give a retailer too many chances to “get it right.”
Lidl, therefore, must make the most of the lessons learned from its early store openings and adjust accordingly while it's still early in its U.S. rollout. The retailer plans to have 20 stores open this summer, and a total of 100 stores over the next year. It will be interesting to see if, and how, the offer evolves as they open.