Updated: Alamance County eyed for distribution hub as discount grocer Lidl prepares to enter U.S.
N.C. Commerce Park, planned near Hawfields in Alamance County, is said to be contending for a distribution hub for German grocer Lidl. The park is already slated to host by 2016 a perishable foods distribution center for Wal-Mart, as well as a facility serving Sam's Club stores.
- Lloyd Whittington
- Managing Editor-Triad Business Journal
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Alamance County is vying for a huge distribution center that could help Europe’s biggest discount grocer enter the U.S. market.
Germany-based Lidl, which operates nearly 10,000 stores globally and is a direct rival to fast-growing Aldi, is considering locating a distribution hub in Alamance County, according to multiple sources. While also scouting the Triad and beyond for retail store sites, Lidl is said to be considering a distribution center “of comparable size” to one planned by Wal-Mart in the up-and-coming N.C. Commerce Park at Hawfields.
To put that in perspective, Wal-Mart’s perishable grocery distribution center, planned on 186 acres, will span about 450,000 square feet and cost about $85 million. Also planned there is a 77,000-square-foot distribution facility to serve its Sam’s Club stores.
Late Wednesday, Lidl’s real estate affiliate, MGP Retail Consulting LLC, provided a statement: “As has been reported, Lidl is in the early stages of preparation to operate in the United States. We are taking steps toward that effort. However, we’re not able to comment on any particular transaction at this time."
The spokesman did not refute the details reported in this article, saying only that he was unable to comment or provide any additional details at this time.
Mac Williams, president of the Alamance County Chamber of Commerce, who is said to be shepherding the deal, declined to comment.
But rumors have been swirling that another grocer, other than Wal-Mart, is considering locating in N.C. Commerce Park, and earlier this month, officials with Alamance County, Mebane and Graham approved $100,000 each for site work for the 1,200-acre park along Interstate 85/40. Their investment is part of an intergovernmental effort to provide $12 million of utilities and infrastructure to the site. The governments also agreed to designate the chamber to work with property owners to negotiate options to sell their land.
At the same time that Alamance officials are advancing that park, Lidl appears to be advancing towards its long-awaited push into the U.S. and, more locally, into North Carolina. Lidl’s real estate affiliate, MGP Retail Consulting, on Feb. 27 registered as an LLC in North Carolina, a prerequisite for many business dealings in the state.
And MGP has during the past year or more been requiring confidentiality agreements from local brokers it talks with about potential sites, sources say. Company executives tasked with leading the company’s U.S. entry already are based in the McLean and Arlington, Va., areas, though they could be getting a more permanent home. According to public recordspublished by the Washington Business Journal, a sister publication, a deed was recorded on March 3 in which MGP Retail Consulting acquired a property at 3500 S. Clark St. in Arlington, Va., for $56.59 million. LoopNet and numerous other sources identify that property as National Center 1, an office building located in a mixed-use district a few blocks from the Potomac River.
Back in 2013, analysts reported that Lidl planned to enter the U.S. market in 2015 with 100 stores, primarily along the East Coast. But in April of last year, Klaus Gehrig, CEO of Lidl’s parent company, Schwarz Group, told German newspaper Heilbronner Stimme that it would be 2018 before Lidl would open its first U.S. stores.
Does the talk of a distribution center in Alamance County mean Lidl is moving on a more aggressive schedule to enter the U.S.? Perhaps, or maybe the company is allowing ample time to get distribution channels and stores in place. Consider that Wal-Mart’s distribution center, officially announced in late 2013, isn’t expected to open until 2016.
So who is Lidl? You can get a pretty good idea by looking at its rival, Aldi. Also based in Germany, Aldi entered the U.S. in 1978 and, according to a March 14 article by The Economist, now operates 1,375 stores across the U.S., plus another 435 under its Trader Joe’s brand. In addition to its Trader Joe’s store in Winston-Salem, Aldi operates 11 other Triad stores.
Both Aldi and Lidl operate no-frills stores with smaller footprints and more limited selection than traditional grocers. Aldi, for example, typically operates in about 17,000 square feet.
But while Aldi is already established here, Lidl is a bit larger in Europe. Citing data from research firm Planet Retail, The Economist reported that LIdl has 3.8 percent of the grocery market in Europe, vs. Aldi’s 3.3 percent. LIdl’s owner, the Schwarz Group, also owns another brand, Kaufland, and is, according to The Economist, Europe’s biggest retailer.Supermarket News in 2014 ranked Schwarz Group No. 6 among the world’s food retailers, with an estimated $98.3 billion in sales.
One question is the number of jobs that Lidl’s distribution center might create, and whether it’s more likely to employ dozens or hundreds.
Between 500 and 550 jobs are anticipated by 2019 at Wal-Mart’s Hawfield’s perishable food distribution center, the need for which was driven in large part by the company’s aggressive growth of Neighborhood Market grocery stores. But Aldi, whose model is more comparable to Lidl, operates a distribution center in Salisbury that employed 155 as of the most recent major employers guide from RowanWorks, the economic development office for Rowan County. That facility, at 1985 Old Union Church Road, distributes merchandise to Aldi’s stores across the Carolinas and Georgia. It seems that facility might also be due for changes. A building permit filed in mid-February by A.M. King Construction LLC called for commercial alterations totaling $344,782.
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