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Lidl Commits to U.S. as Focus Sharpens
Details remain light, but a course correction will continue amid strong parent financials.
3 Min Read
As it approaches the close of an eventful first year in the U.S., Lidl is continuing to refine its offerings and explore ways of adapting to shoppers in its newest market, a spokesman told WGB.
“We absolutely feel there is a huge opportunity in the U.S. market, and we’re taking a long-term view of expansion,” Will Harwood said. “We’re continuing to be agile, we’re continuing to adapt, and we’re continuing to look at increasing our flexibility.”
Harwood’s remarks came as Lidl’s parent company—Necksalem, Germany-based Schwarz Group—forecast companywide sales of more than 100 billion euros ($120 billion) during the fiscal year ending next March. In addition to 10,460 Lidl stores worldwide, Schwarz operates the Kaufland chain in Germany. The company posted 2017 sales of 96.9 billion euros, and saw total sales grow by 7.4%. Schwarz made capital investments of 7 billion euros last year, and expects to spend about the same amount (about $8.4 billion) on capital projects this year.
The company did not break down its planned expenditures by country, and Harwood declined to quantify the company’s commitment to the U.S. in terms of new locations this year. Lidl is pivoting on its real estate strategies, seeking a wider variety of store sizes and locations while deciding against proceeding with any number of acquired sites. While it will look to build in denser and more populated areas, it will fall well short of a stated goal to open “up to 100” stores in its first year.
While Lidl has made a competitive impact in the markets it has arrived in, forcing competitors in surrounding sites to lower prices on hundreds of items, its own store traffic and sales have been radically subpar for a store of its size, particularly in smaller towns, sources said.
Harwood said a smaller prototype is in development, but added it was too soon to announce when a store of that size might open. Lidl typically doesn’t comment on specific locations until three or four weeks prior to an opening, but other signals have emerged.
In March, for example, Lidl filed revised site plans with the city of Raleigh, N.C., for a store there, contemplating a 25,400-square-foot store with a 24-foot, 4-inch ceiling height. Plans filed for the same site a year earlier called for a 35,962-square-foot store with a 29-foot, 6-inch ceiling height. The developer of the Staten Island Mall in New York announced that Lidl would be a tenant in that property, which Lidl officials acknowledged would be its first leased site when it opens late this year.
According to Planned Grocery, Lidl currently has 141 projects in various stages of development consisting of 77 proposed sites, 39 in the planning stage, 14 under construction and 11 built but awaiting opening. Some sources indicated there were more than 300 Lidl stores in its development pipeline at one time; but after an initial flurry that saw 50 stores open in a seven-month period beginning last June, new openings have slowed.
Lidl is seeking a “new beginning” in the U.S., according to a report out of the retailer’s home country.
The German trade newspaper Lebensmittel Zeitung, citing interviews with officials of Schwarz Group, said the chain was committed to the U.S., despite reports late last year interpreted by some to indicate the company might abandon its invasion due to numerous initial misfires in real estate selections and sales volumes.
The Lebensmittel report indicates Lidl intends to aim more toward prosperous middle-class American customers, because this type of customer has reacted most favorably to their concept to date. The company intends to hone assortments toward this shopper with more convenience products, the report said.
However, Harwood characterized Lidl’s evolution in more general terms, saying it was simply using the information it has gleaned from its first batch of openings to refine its offerings around what consumers are buying and what they’re asking for. A new Lidl store that opened this week in Richmond, Va., for example, carries the regional brand favorite Duke’s Mayonnaise. The store also includes self-checkout lanes, a new twist from initial stores that had 11 staffed lanes.
