US Insights

Lidl Sets Summer Open for First US Stores

Mike Paglia

Director, Retail Insights

Retail 02.17.2017 / 12:00

LIDL_prodejna_-_Nárožní_ulice

20 stores will open this summer, nearly a year earlier than expected

We’ve been waiting and waiting, and now we know. According to The Washington Post, Lidl has announced it will open 20 stores in Virginia, North Carolina, and South Carolina in summer 2017. News of the soft launch brought with it more details of what the stores will look like. Below are a few excerpts from the Post article with our commentary in italics.

“One thing that is instantly noticeable in the prototype store: It is significantly larger than what is typical for Lidl overseas. With about 21,000 square feet of shopping space, U.S. chief executive Brendan Proctor says, this store is 35 percent larger than some of the chain’s biggest stores in Europe. The company decided to go with a larger format because it thinks that it will need to offer a wider array of items to thrive in the U.S. market.”

Lidl Store Growth Forecast Update

The larger footprint aligns with Kantar Retail’s prediction from last August. That, combined with the larger assortment, bears out an important implication. Though retailers and suppliers might consider Lidl part of the discounter channel, from the shoppers’ perspective, the store will be a small supermarket and needs to be treated as such.

“Lidl is making [many tweaks] to its formula to address the expectations and habits of U.S. shoppers. It is offering chilled beer, for example, and free samples in its bakery department — things it doesn’t do elsewhere but that Proctor says are ‘normal’ here.”

This should be an eye-opener. Lidl is an innovator and is willing to experiment with approaches beyond its comfort zone. Expect a lot of testing and learning as well as a constant evolution of the store.

“Lidl will aim to offer a tightly edited assortment, including familiar brands but also plenty of private-label goods. The current model includes just six aisles, a store layout that executives hope is conducive to easy navigation and flow. Other goods, such as produce, are displayed in islandlike groupings. To make things efficient and to keep costs down, you might see items on shelves in the cardboard boxes they were shipped in.

“As it does elsewhere, Lidl will feature a large section dedicated to non-grocery items. Proctor said that shoppers can expect to see items as diverse as drills, yoga pants and garden lawn mowers in this part of the store, which is to feature a constantly rotating array of items that cycle in about every week. That could be an interesting way for Lidl to differentiate itself in the market, and it could introduce a T.J. Maxx-like ‘treasure hunt’ vibe to the stores.”

This is again consistent with our expectations, but understand that Lidl will not be just a bigger Aldi. Lidl will have a bigger assortment, more categories, and a larger proportion of national brands than its German rival.

While that does create some opportunity for branded suppliers, Proctor’s comment about product rotation underscores a foundational feature of the retailer’s business: Permanent SKU listings are a rarity with Lidl. Instead, the retailer employs an “in and out” approach to keep the assortment fresh and interesting for shoppers. For suppliers, retaining the item slot will be critical to growing with Lidl. Rotating the item periodically to meet Lidl’s expectations is OK, but losing the slot will mean that getting back in will be that much more difficult.

Source: Kantar Retail

Editor's Notes

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