In July, Germany’s discount grocer and Aldi competitor Lidl broke ground on their first U.S. distribution facility and headquarters in Virginia, and after taking market share from some of the top grocers in Europe, U.S. stores are expected to bring competition stateside in 2018.
Lidl’s entrance into the U.S. may seem like an attack on their German counterpart Aldi, but it is the more established chains such as Walmart that have more to worry about.
Mike Paglia, director of retail insights for Kantar Retail, told Business Insider that “grocery retailers should definitely be concerned, especially those who are currently struggling or whose stores are more conventional”.
The competition will be a win for the consumer, but retailers will be forced to lower their prices, and without having the efficient cost savings tactics built in like Lidl, and rival Aldi, the change could prove to be challenging.
“Walmart’s Neighborhood Market could feel the greatest pressure of all, as Lidl stores will be of similar size, highly price competitive, and highly fine tuned to offer a relevant, convenient store experience,” Puglia told Business Insider.
When Lidl entered the UK market, they quickly made an impact on the competition, with the CEO of the UK’s second-largest grocer Asda calling it “the worst storm in retail history.”
Lidl’s concept is very much like Aldi with their limited inventory of mostly private-lable items, products stored on the shelves in their shipping containers, and the bring your own shopping bag policy.
Its U.S. stores will be about one-fifth the size of the standard Walmart and the are at least four locations in the Richmond, Virgina are that the company has its eyes on for its 2018 launch.
Lidl US spokesman John Froman is optimistic about the upcoming expansion, saying that the stores “will have a unique offering that is unlike anything else in the market.” European locations are known to also carry furniture, appliances and most recently fashion items, but Froman would not say what their full product assortment would include in the U.S.