Lidl will open its first stores in the US later this summer, some months earlier than anticipated.
First year to see 100 stores open
In an interview with The Washington Post, Brendan Proctor, Chief Executive at Lidl US, revealed that it will open 20 stores this summer in Virginia, North Carolina and South Carolina. These will form the initial wave of around 100 stores which will be opened over a 12-month period. We expect that the retailer will build out its network relatively quickly as it reviews the learnings from the first stores, developing a portfolio of 200 to 300 stores over the first three years.
US stores to be third larger than European footprint
The interview also revealed that Lidl’s US stores will be around a third bigger than its European stores. With a selling area of 21,000 sq ft, it plans to offer a wider range of products than usual, including an extensive chilled beer offer, to better meet the needs of US shoppers. The retailer has already developed a concept store in Fredericksburg, Virginia which enables it to test new ideas and take feedback from shopper focus groups.
Infrastructure established to support east coast focus
Since announcing its plans to enter the US market in 2015, the retailer has focused on developing the infrastructure to support its business, including its corporate headquarters, regional offices and distribution centres. In addition to developing stores in Virginia, North Carolina and South Carolina, construction is also underway in Pennsylvania, New Jersey, Maryland, Georgia and Delaware.
Not Aldi vs. Lidl: supermarkets in their sights
Activity in the US discount sector continues to ramp up. Earlier this month Aldi announced plans to invest $1.6bn in remodelling 1,300 stores in the US by 2020, including expanding and enhancing fresh foods departments. This comes as it also continues to aggressively expand its network, with the retailer on track to have 2,000 stores open by the end of next year. With Aldi and Lidl both looking to grow at pace, it may be expected that they will be targeting each other. However, their market share gains will likely come at the expense of incumbent supermarket operators, as the discounters focus on their convenience and product credentials, in addition to delivering a low-price proposition.
Defensive plans being put in place
Many retailers are already advancing their defensive strategies, including investing in private label development, shifting their pricing strategies towards an EDLP model and reviewing existing discount formats. Over the next 12 months we expect to see a heightened focus on value and price messaging from across the US grocery sector, especially as Lidl’s first store openings draw ever closer.
| Stewart Samuel, Program Director, IGD Canada|
Based in Canada, Stewart heads up all of IGD's research and coverage on the North American market. He is also responsible for shaping IGD's research program across the region. Contact Stewart at email@example.com for further insight on the discount channel and other key trends set to shape the market this year.