Do Lidl stores need a reset in the US?

Has the Lidl Honeymoon Period with US Consumers Come to an End?

By Stephen Fuchs on Email @StephenWFuchs

When Lidl opened the doors to its first U.S. stores in June, Germany’s prized discount grocer was met with eager customers waiting to check out what all the hype was about. The market looked prime for Lidl, and with the move being years in the making, the company appeared to have a pretty good understanding of the market it was about to enter. So confident that in its first year, the company said it would open at least 100 stores across the country. Now, as the chain continues to open these stores with a little less fanfare, we are beginning to get a closer look at the initial success thanks to a new report by inMarket research, and it is becoming clear that Lidl has a little more work to do.

inMarket data shows that Lidl had an impressive round of openings in June, taking 11-percent of the traditional grocery market in nine key markets throughout Virginia, North Carolina and South Carolina, and this sudden takeover certainly caused some competitors to sweat a bit.

“it was completely crickets”

It turns out though that the surge of shoppers hasn’t been sustainable for Lidl. By August that number dropped below 8-percent, and analysts have begun to point out some key missteps in the company’s rollout.

Christopher Mandeville, an analyst for Jefferies & Co., found that some locations were so poorly located that “it was completely crickets” as only two shoppers walked through the doors within a 15-minute period at one of Lidl’s Richmond, Va., locations. The fact that the store is tucked away behind a strip mall is in part to blame.

Another, Ali Dibadji from Sanford C. Bernstein & Co. brokerage, believes Lidl has it all wrong when it comes to choosing which products to highlight throughout the stores. He found that the company’s European roots were evident by the placement it gave to products like badminton sets and cycling shoes — products that would be a hit back home — instead of items U.S. consumers would be interested in. Dibadji also believes that Lidl went too far pushing an enormous selection of organic offerings while failing to make sure the more conventional products were available to shoppers, and says that “they need to reset” if the company hopes to be successful in the States.

“they need to reset”

Expecting a massive chain to enter into a new foreign market without any hiccups would be unrealistic, as even industry giants like Walmart have had to learn this as they expanded internationally. Perhaps Lidl does need to reset a bit, and it is still early enough in the game to do so. It has its pricing strategy down, now it just needs to find out what it will take to break shoppers from their store habits.

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Sources: Wall Street Journal

Photo: Lidl

Stephen Fuchs
Stephen founded German Pulse and LGBT Germany out of a passion to introduce Americans to a Germany that goes beyond beer and polka (although with enough beer he has been known to polka it up a bit). He's a coffee addict, lover of wine and good times, a hit in the kitchen and editor of TV commercials. You can follow him on Twitter (@StephenWFuchs) to find out a lot more.
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