German Discount Juggernaut Lidl Set To Open First U.S. Stores; Competitors Brace For Impact
Lidl will likely have long-term success but could face a shaky start.
Originally published on Forbes.com.
We are just a couple of days away from the June 15 opening of Lidl’s first stores in the United States - six locations in North Carolina, and the German chain is doing its utmost to shed the Aldi “me-too” image. Meanwhile U.S. supermarket executives are booking their flights to visit these stores to see just what they may be facing as the low-priced giant gears up for a larger roll out over the coming months and years.
Lidl is pulling out all the stops to differentiate itself here in the U.S. from the fierce competition from Aldi that the chain faces in Europe. A few weeks ago in New York City, Lidl's CEO introduced its products, both fresh and packaged, to the food consumer and trade press. The presentation and foods were extraordinary, according to press reports, and unusual for a company that traditionally shies away from the press.
To consumers, one of the most impactful factors that will further differentiate Lidl from Aldi is the glitzy and modern exterior design of the U.S. stores, clearly setting it apart from its more plain and boxy competitor and its low-price image.
It appears that Lidl, although still hitting hard on its value message, is attempting to augment this with an array of fresh and prepared foods that up until now Aldi has not been focused on. Lidl has also learned from its European employee practices and is taking a much more high-profile recruitment positioning, even offering career guides and videos on its website. “We need people like you to make Lidl possible. We're hiring movers and shakers with a can-do attitude to help put our brand on the map. Looking to make a move or start your career with a rapidly growing company?” It doesn't sound like the Lidl that Europe knows.
This week the company announced that German-born supermodel Heidi Klum will be selling her fashion line exclusively in Lidl stores during their “fashion weeks” throughout the year, a move with precedence and success (no word on whether she will be severing her relationship with Bloomingdale’s, which currently sells her lingerie). Back in the day, Joe Antonini, one of U.S. retail’s best merchandisers, (not necessarily one of the best CEOs, some would correctly argue), signed Charlie’s Angels star Jaclyn Smith to a deal that brought her fashion line and lots of cache to the retailer who was best known for cheap and drab hard goods; an announcement that garnered lots of trade press. Also another indication that Lidl wants to change its dour EU image for one here that is trendy and appealing to a different demographic. A demographic that loves food, wants to stay on trend and demands good value – younger Millennials and Generation Z characteristics.
Another move to endear themselves to these two generations is its positioning in wine. Last month Lidl won 104 medals (including 5 best of class, 6 double gold, 17 gold, 64 silver and 17 bronze awards) at the Indy Independent Wine Competition, which followed winning 101 medals at the LA International Wine Competition earlier this year.
There is certainly one elephant in the room that no one here is talking about, but may be a huge thorn in Lidl’s launch. The stores that are opening next week are in what I would call Trump Country. Trump garnered all 15 electoral votes and 50.5% of the popular vote in the state. Voters that turned out for a candidate that promised to “Make America Great Again” might take some winning over for the German chain, and the growing tension between our administration and German Chancellor Angela Merkel doesn't help.
The big question is, will Lidl be a success, or follow in the footsteps of Tesco’s Fresh & Easy.
I do believe Lidl will have long-term success but could face a shaky start, based strictly on the communities the company has chosen to launch in and the current global political climate. The strategy to launch in areas far away from rival Aldi, at the time, was a good one – but not taking into account the demographics and politics of these areas may be more problematic than they thought. Walmart, Amazon and just about every other grocery retailer is testing smaller format stores and while on the surface this may seem like a thorn for Lidl, it will be their positioning of their own store brands that will resonate with the younger generations who see no difference between the more expensive national brands and their value driven high quality store brands. Lidl was able to research Aldi’s customer base, product selection and merchandising and develop their own strategy. Tesco did not have that advantage.