In this edition of PLMALive! Christopher Durham provides insights on two of the new Lidl stores
Now that Lidl has entered the US, attention is being focused on what the German retailer is doing and how much impact it will have. For the record, Lidl opened its first 10 stores in mid-July along the East Coast.
The retailer is hoping to win over Americans with their discount prices, modern stores and carefully-curated private brands. Its first stores are going to be concentrated in the Southeast, but 90 more locations are planned for the coming year.
I made the drive from my home outside of Charlotte, NC to Lidl’s new stores in Greenville and Spartanburg.
These are well-designed stores. The modern, European influence is evident in the décor and merchandising. The distinctive angular architecture creates a bright open and airy store that, when combined with the low shelving, is a very nice shopping experience.
Private brand dominates the store, easily exceeding 90% penetration. It is so dominant that when national brands appear, they feel out of place and unnecessary. Lidl then expands its private brand portfolio with category-focused brands or package designs.
At its core, the portfolio is dominated by a national brand equivalent mid-tier that’s most surprising feature is that it is unbranded. The front of the pack is devoid of any name or logo.
But they aren’t attempting to trick the customer, or keep the branding a secret. When the customer flips the package over, it carries the Lidl distribution clause, website and the “Lidl Love It! Guarantee!”.
Within the mid-tier, there are two large ranges of both Gluten Free and Organic products designated by unique designs for each with the Gluten Free or Organic designation featured prominently on the front of each pack.
The premium tier is represented by products which features “authentic flavors from Lidl’s European heritage.” The bottom tier, Essential, includes a small selection of basic/extreme value products: coffee, condiments, salad dressings and the like.
But the portfolio tiering is only a small part of the story. Lidl also features Italiamo, an impressive collection of authentic Italian-made products.
The rear of each store is dominated by the “Lidl Surprises” area, which is a series of dump bins with exclusive private brand products that change every Monday. In the first few weeks this included everything from private brand yoga wear to grills; all good quality, high-value items that undoubtedly bring in high margin and generate excitement.
Finally, there is cleaning, HBC and beer. This is where the store feels the most like an Aldi, its closest competitor. They have clearly adopted a similar strategy and created a large portfolio of category-relevant, credible-sounding brands that fit squarely into the expected space in each category.
Lidl’s tagline in the US is “Rethink Grocery,” and that is exactly what its entry into this country may do.