Lidl makes its long-awaited U.S. debut on June 15, opening the first three of 20 stores it plans to open this summer across Virginia, North Carolina and South Carolina. Mike Paglia, retail director of Kantan Retail, offers the following insights on the grocer's prospects in the United States:
"Lidl will look to price its assortment at up to 50% less than other supermarkets in the United States. While this figure is based on a comparison of comparable products sold at leading national retail grocery stores, this should be taken with a grain of salt. However, in a Kantar Retail price survey we conducted in the UK, we found that Lidl was on average 15% cheaper than its main competitor, Asda. This price difference should provide a sense of the expected price gap in the US.
The grocer is making a point of separating itself from its competition (Aldi) by building 20,000-sq.-ft. mini-supermarkets. By offering a bigger shopping experience than other discount grocers, Lidl is setting itself up to be the main destination for shoppers seeking a fill-in trip, but also a destination for those looking to save money on their shopping trip.
Health and sustainability will be key features of the assortment, as private label items will be free of trans fats, added MSG and certified synthetic colors. 90% of the assortment will be private label and 85% of the assortment will be sourced from within the U.S., suggesting the retailer is seeking to appeal to shoppers seeking “better for you” items.
Contrary to popular misconceptions, Lidl’s core shoppers will be positioned more towards a midmarket shopper, which is consistent with the grocer’s approach in the U.K. and other markets.
Lidl plans to have 100 stores open across the East Coast by 2018, aligning tightly with our estimates of having 120 stores in the U.S. by the end of 2018.
By 2023, Kantar Retail expects the grocer to have 630 stores open across the United States, with a focus on suburban metro markets at the onset.
We expect the retailer to generate nearly $700 million in sales by the end of 2018, growing to $8.8 billion in 2023 as customers begin to gravitate away from other grocers."