Lidl fine tunes its US stores and value proposition

February 24, 2017 

Food retailers rarely get a sneak preview of what a new competitor is bringing to market, but that’s exactly what an interview with Lidl’s US chief executive Brendan Proctor delivers. The Washington Post article also includes a walk-through of the still “dark” prototype store near Fredericksburg, VA.

Lidl has been working in the US for more than a year, actively interviewing suppliers, selecting store signage, and doing consumer focus groups. Two themes from the interview seemed particularly significant to us. 

Theme #1 Ensuring appeal to shoppers

In contrast to the super-size supermarket experience, Lidl is striving to offer a store that’s big enough to include the range of items that US shoppers expect, but small enough to streamline the shopping experience so that it’s quick and easy. What they’ve come up with is:

• A store with about 21,000 square feet of shopping area, less than half the size of typical US supermarkets, and 35% larger than their typical European store.
• A wide range of constantly rotating general merchandise that adds a treasure hunt vibe (home goods, apparel, even hardware).

Theme #2 Neutralizing the price vs. quality dilemma

“What we’ve seen and heard is that a lot of customers feel they’re being forced to compromise,” Proctor said. “So they’re either getting okay quality at a cheap price or they’re getting good quality and having to pay very, very high prices.”

According to Lidl’s shopper research, many US customers feel they are being forced to compromise. Proctor put it this way, “So they’re either getting okay quality at a cheap price or they’re getting good quality and having to pay very, very high prices.”Lidl plans to address this dilemma by showing shoppers that they can get really good quality at low Lidl prices.

Lidl’s own brand products will play a key role in this effort. Experience suggests that if customers are willing to let go of the familiar national brands and go with the retailer’s own brands, they will be pleasantly surprised.

BMC POV

The track record for European food retailers coming into the US from other countries isn’t good, even for some of the best in the world (like Carrefour, Auchon, and Tesco). Lidl is working hard to avoid that fate.

With 10,000 stores in 27 countries, they have plenty of experience entering new markets. The plan is to open 20 Lidl stores this summer Virginia, North Carolina, and South Carolina, and 80 more up and down the east coast in the following year.

Time will tell if Lidl is able to keep their success strike going. Chances look pretty good, since many of their competitors mainly go to market on price - Lidl should have little problem with them.