No Surprise that Lidl’s Not a Sure Thing

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No Surprise that Lidl’s Not a Sure Thing

By Jim Dudlicek - 10/09/2017

(Above: Lidl store in Greenville, S.C.)

I was in Greenville, S.C., in June, visiting a new store opened by Lowes Foods, one of the leading practitioners of experiential shopping. It happened to be the same week that a Lidl store was opening across town, in the first wave of the German hard-discounter’s U.S. invasion.

The difference between the stores was night and day. Lowes was a veritable Disneyland of sights, sounds and aromas, from its quirky rustic decor to extensive prepared food offerings to an on-site microbrewery. Lidl was Spartan by comparison - limited assortment, price driven. I remember thinking Lidl was like Aldi if Whole Foods designed it.

And the place was jammed. In an area where one had to pass a host of other stores including Aldi, Bi-Lo, Fresh Market, Publix, Walmart and at least one sister Lowes location, folks were flocking to Lidl.

A few months later, it appears the novelty has worn off. And I have to say, I’m not surprised.

After an initial shift of traffic to the new kid on the block, things have slowed down at Lidl in Virginia and the Carolinas, and the indigenous players have recovered their market share.

Call me a cynic, but I get suspicious of any company, regardless of their success abroad, that’s so confident of victory they’re shopping for real estate halfway across the country before they’ve even opened the doors on their first locations, which happen to be in some of the most competitive, overstored grocery markets in the country -- a country where its biggest historic rival has had a 40-year head start.

As reported by The Wall Street Journal, in June, Lidl was drawing 11 percent of consumer visits to traditional grocers in nine markets in Virginia, North Carolina and South Carolina, according to data that Los Angeles-based shopper marketing consultancy InMarket shared with WSJ. Within two months, Lidl's share of that traffic fell below 8 percent, even as the retailer was opening more stores in those states.

"With the quick falloff, I'd be concerned if I was them," Cameron Peebles, InMarket’s chief marketing officer, told WSJ.

So far, Lidl has opened 37 stores in five states, with plans for up to 100 along the East Coast by next summer.

"This is designed for us to learn and adapt and be nimble," Lidl spokesman Will Harwood told WSJ. "It's not about whether our model works in a market, but what we do to adapt to that market."

Lidl will have to start adapting quickly if it intends to live up to the lofty expectations thrust upon it by most pundits in the months leading up to its U.S. launch. Most traditional grocers have already been adapting to better compete with Lidl, Aldi (which aims to be a big as Kroger in five years), Walmart, Amazon, dollar and c-stores, and even restaurants, along with their mainstream supermarket peers down the street.

Hard discount-limited assortment grocery is certainly a growth category, but in this racket, nothing is a sure thing except, perhaps, a perpetual state of market disruption.

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