German grocery chain puts brakes on U.S. expansion
Walk into any Lidl grocery store across Germany and customers will see aisles of products ranging from fresh produce to outdoor furniture and casual apparel.
The German supermarket chain has dominated the European grocery industry in recent years, but its ambitious expansion in the United States has been anything but inspired, industry analysts say. The popular discount grocery chain rapidly opened stores last year along the East Coast, with its U.S. headquarters in Arlington, Va.
The grocer had lofty plans to open stores in states outside of the East Coast, including Ohio and Texas. After submitting a land development application to build a store in Beavercreek, the chain halted the project just months later. Sandra Pereira, associate city planner for Beavercreek, said the grocer only
had a contract and never owned the land.
“We haven’t heard anything from them since they withdrew their case,” she said.
Beavercreek isn’t the only city that the grocer abandoned. The chain stopped construction on some projects around the U.S. In December, it stopped construction on its second New Jersey store due to “budgetary constraints,” accordi ng to local media. T he News Leader reported that Lidl was backing out of a planned store in Staunton, Va., because the company was no longer interested in building in smaller markets.
Grocery industry expert Brittan Ladd says the slowed expansion has more to do with failed execution of strat- egy in the U.S. The chain was seen as an immediate contender with grocery giants like Kroger and Walmart before falling short. While Lidl has opened more than 50 stores in the U.S., it hasn’t been able to keep custom- ers coming back, he said.
A study from digital mar- keting company Catalina found that Lidl has been able to lure customers in with low prices and its odd store model concept, but they don’t come back as longterm consumers. Ladd said Ohio markets might not be the right fit for the grocer at all.
“I don’t believe the Mid- west is the best location for
Lidl stores this early in its expansion in the USA,” Ladd told this news organization.
“I strongly recommend that the company expand into
Texas due to the number of
Lidl stores the state could support. Lidl should perfect its stores and operations in
Texas and then expand outward into adjoining states including Mexico eventually.”
A Lidl spokesperson told and started in 1973 in Lud- have shoes and clothes in this news organization that wigshafen, Germany — just 25 bins that sit next German the company has “secured miles south of Frankfurt. In chocolate candies and sites for future growth,” but the 1990s, the chain started canned soup. the company’s focus con- expanding outside of GerLidl carries mostly its own tinues to be along the East many. It is known for its dislabels — about 90 percent of Coast. The company did not counted prices on food prod- its products are private label comment on why the appli- ucts, its private labels and and the stores partner with cation to build in Beaver- innovative store layouts — local and regional farms and creek was withdrawn. and it even sells “fashion- suppliers for fresh products.
Lidl operates more than able but casual” clothing. Lidl also describes its stores 10,000 stores in Europe, The quirky store concepts as carrying “more than just
■ Reporter Kara Driscoll is reporting from Berlin, Germany during her Arthur F. Burns Fellowship. The fellows work for two months in a host media organization of their choice, learning about news operations in a foreign setting and, in effect, serving as foreign correspondents. Readers can expect to see stories in the next two months about German topics that have an impact on the Dayton region.
■ Email kara.driscoll@coxinc.com with story ideas and questions. food.” Lidl sells everything from Halloween costumes and clothes to wine, cleaning products, frozen foods, organic products and pet accessories.
Lidl’s rocky start doesn’t mean American consumers won’t buy in when it comes to foreign grocery concepts. When another German grocer Aldi reaches 2,500 stores, it will be the third largest grocery retailer in the U.S. and it could seriously compete with Kroger and Walmart. Aldi has added several stores in the region in the past two years, focusing its growth in suburban areas like Beavercreek, Englewood and Fairfield.
“There are no other European grocers aside from Lidl and Aldi that I believe can expand into the USA,” Ladd said. “I do believe the Schwartz Gruppe, parent company of Lidl, could potentially launch the Kaufland brand. The big threat is Alibaba. If Alibaba were to acquire Kroger or Albertsons ... Alibaba could introduce its Hema stores and create a new retail model for groceries and general merchandise.”
If Lidl plans to win in the U.S., the chain will have to create a store format concept and a product assortment that will keep customers coming back, Ladd said.
“Aldi, Trader Joe’s and even major grocery chains have determined that they will not allow Lidl to win on price so Lidl must offer more than just savings to customers,” he said.
A Lidl spokesperson told this news organization that the company has “secured sites for future growth,” but the company’s focus continues to be along the East Coast.