Lidl US by the Numbers: German Discounter to Account for Nearly $14 Billion and 800 Stores by 2025E
Source: Danielle Dolinsky, Tuesday, Dec 13, 2016 Print

While Lidl has announced its US entry for 2018, it’s possible we will see Lidl’s first US stores as early as Q3 or Q4 of 2017. In 2016, Lidl has already started construction on 3 US distribution centers on the East Coast and has reportedly expressed interest in more than 80 store sites. In addition to submitting applications for sites, Lidl has also already hired a number of employees specializing in purchasing, packaging & design, digital marketing, and real estate, and is continuing to search for store managers in locations along the east coast. As Lidl’s entry quickly approaches, RNG has projected the German discounter’s US growth.

Lidl Projected to Add More than 100 Stores and Generate $1.2B in First Full Year of Operation
1/24/2017 Source: RetailNetGroup
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Based on Lidl’s current timeline, RNG expects 15­20 stores to open in the latter half of 2017. By the end of its first full year of operation in 2018, we expect the discounter will have more than 100 stores, with most concentrated in North Carolina, and generate an estimated $1.2 billion in sales. With 3 planned distribution centers, Lidl will easily be able to support 300 stores in the 8 states where it is currently seeking property. At 36,000 square feet, these stores will be much larger than a traditional European Lidl store, and they will likely include many of the “store of the future” concepts that Lidl is testing elsewhere.
Lidl Will Grow Its Store Network Quickly and Immediately Pressure Competitors
We expect Lidl to expand quickly after its first store opens, adding more than 100 stores each year and eclipsing the $6 billion sales mark by 2021E. Lidl’s growth is projected to continue to outpace both Aldi’s and Trader Joe’s, especially as Lidl explores new US geographies like Texas. Aided by its expertise in operating small stores and its 3 established distribution centers, Lidl should be able to quickly ramp up its store network to compete with Aldi and Trader Joe’s. By 2025, Lidl could generate upwards of $14 billion in sales, a feat that only 8 US grocery players achieved in 2016.
Grocers Most Concentrated Along the East Coast Will Be Most Exposed to Lidl’s Arrival
1/24/2017 Source: RetailNetGroup
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While it will take longer for Lidl to reach the scale of many of the larger US grocers, its initially small network will not prevent Lidl from disrupting the already­competitive grocery channel. Grocers like Acme (Albertsons) and Food Lion (Ahold­Delhaize) have the vast majority of their stores concentrated in the 8 states where Lidl is planning to open stores, making them the most exposed to the threat of a new low­price grocery alternative. Even grocers like Ahold and Shop Rite, which operate half of their store networks in Lidl geographies, will be susceptible to Lidl’s arrival in the near term. Retailers with small percentages of their store networks along the east coast, including Safeway and Kroger, will have time to learn from more exposed retailers and strategize responses to Lidl’s impending threat.
Conclusions & Implications: Lidl will significantly outpace competitors as it ramps up growth through 2025E. It is forecasted to have sales larger than Trader Joe’s by 2025E, but will likely still lag behind larger grocers and discounters in the next few years. Based on Lidl’s historically aggressive growth patterns and construction on 3 US distribution centers, the discounter will grow its store network quickly, especially in its first few years of operation. By 2025E, we expect Lidl to have more than 800 US stores.