Lidl’s expansion plans in the US
A new wave of European grocery stores is about to invade the US.
The German supermarket chain Lidl is gearing up to open stores in dozens of cities along the East Coast, spanning from New Jersey to Georgia.
Lidl wouldn’t reveal how many stores it’s planning to open, but sources told the commercial real-estate firm CoStar that the company will open as many as 150 US stores by 2018. The company currently has 10,000 stores in 26 European countries.
Lidl has already snatched up leases in dozens of US cities, according to local-news reports, and it’s seeking store managers in areas including Burlington County, New Jersey; Richmond, Virginia; Charlotte and Raleigh, North Carolina; Greenville, South Carolina; and Augusta, Georgia.
The chain’s US headquarters is in Arlington, Virginia, and it’s building warehouses in Cecil County, Maryland; Mebane, North Carolina; and Fredericksburg, Virginia.
Lidl and fellow German supermarket chain Aldi — which has 1,300 stores in the US — are best known for their rock-bottom prices.
Both chains rapidly expanded in the UK over the last several years and completely upended the country’s grocery market, sending its largest supermarket chains into a crippling price war.
In the most recent quarter, both Lidl’s and Aldi’s sales skyrocketed, increasing by 13.8% and 11.5%, respectively, according to data from Kantar Worldpanel.
Meanwhile, sales declined at the UK’s four biggest supermarket chains. Sales dropped 1.3% at Tesco, 2.4% at Morrisons, 1.4% at Sainsbury’s, and 5.9% at at Asda.
This has been an ongoing trend for the last several years, with Lidl and Aldi growing their market share at the expense of the so-called “big four” supermarkets in the UK.
The biggest reason for Lidl’s success is its cheap prices. Lidl is the cheapest supermarket in Britain, according to the Daily Star.
Lidl’s US stores are expected to be between 30,000 and 36,000 square feet, which is about twice the size of an Aldi store, but still much smaller than a traditional supermarket like Kroger, which averages about 165,000 square feet.
Like rival Aldi, Lidl keeps prices low by limiting inventory to a lean selection of private-label items, versus traditional supermarkets that tend to carry several different brands of a single product.
Lidl also invests far less in customer service and merchandising than traditional grocers.
Most of the stores’ products are displayed in their shipping cartons to make restocking quick and easy. That means fewer workers are needed on the sales floor.
Lidl additionally saves money by requiring customers to bring their own shopping bags and bag their own groceries.
The chain offers a wider array of merchandise than Aldi.
In addition to groceries, Lidl sells appliances and furniture, and it debuted a women’s collection in August 2014 that sold out within the first three days. The collection included a faux leather jacket costing 14.99 euros and chiffon blouses.
Since then, the retailer has launched a men’s collection, a line of handbags, and a fitness brand.
But Lidl will have a lot of work to do to catch up to Aldi in the US, which now has more than 1,300 stores in the country, with plans to open another 600 within the next couple years.