Survey: Lidl poses big competitive threat
Consumers are very excited about shopping at German discount grocer Lidl — even though they have never set foot inside one of the company's stores before.
Lidl's upcoming entry into North Carolina, South Carolina, and Virginia could remove $1 billion in local sales in the medium term, according to a report by global consulting firm Oliver Wyman which surveyed consumers in the three states cited above. It reveals that consumers are overwhelmingly excited about trying Lidl.
Sixty-seven percent (67%) of respondents say it is very likely that they will try shopping at Lidl, and 52% are very excited about shopping there. What's more, 39% say they would shop at Lidl once a week or more in the future. The high levels of trial and intent to return as a regular shopper were driven by their expectations of high quality and innovative new products, according to the report.
"Incumbent grocers need to take notice," said George Faigen, partner in the retail and consumer foods practice of Oliver Wyman. "The threat from Lidl is real and will only get clearer as their stores generate trial and repeat sales."
Grocers who believe my customers would not shop at Lidl or Aldi will likely be surprised, Faigen added. "The U.S. and European trends we have measured over the past five years tell a clear story of consumers moving portions of their weekly shopping from incumbent grocers to these private brand retailers," he said.
Key findings from the survey include:
*Even though none of the survey respondents had ever been to a Lidl store in the U.S.
*Contrary to commonly held industry wisdom, households at all ends of the income spectrum are excited about Lidl’s store openings. In fact, 49% of households with an annual income over $75,000 are excited about Lidl compared with an almost identical 48% of households earning less than $25,000 last year.
*There was particularly high excitement from consumers around Lidl’s new product offering and their highly awarded private brands. However, being unfamiliar with Lidl’s private brands was also one of the top concerns among respondents too.
*Whether consumers shopped at traditional, specialty, or regional grocers in the past, there is a very high interest in shopping at Lidl in the future.
*Consumers who already shop at Aldi are overall more excited and likely to try Lidl than non-Aldi shoppers.
Amazon in new rewards program for Prime
Amazon is giving shoppers another reason to sign up for Prime—and a reason not to use credit cards.
The online giant is launching a new program, called Amazon Prime Reload, that allows Prime members to earn 2% bonus every time they reload their Amazon gift card balance with cash from their checking account and debit card. The bonus is given in the form of rewards that can be used to make purchases on Amazon.
The new program lets Amazon avoid credit card fees. It also adds an additional incentive to sign up for Prime membership. In order to qualify for the new program, shoppers have to give Amazon their U.S. bank account and routing number, debit card number and driver's license number.
Amazon already has a branded credit card for Prime members that gives card holders 5% cash back on Amazon.com, and cash back when spending at restaurants, gas stations, and drugstores.
The first back-to-school spending forecast is out
There is good news for retailers in a just-released 2017 back-to-school spending forecast.
Retail sales during the back-to-school shopping season of July and August 2017 will grow 4.0% over 2016, according to eMarketer’s forecast. Retail sales in the U.S. during those core months will reach an estimated $857.18 billion, accounting for 17.0% of total retail sales for the year.
E-commerce for the back-to-school season will grow 14.8% to $74.03 billion in 2017. That represents 8.6% of total back-to-school retail sales—online and offline—for the period, up from the 7.8% share last year.
“Ecommerce growth this year comes on top of a strong year in 2016, making it that much more impressive,” said eMarketer senior analyst Yory Wurmser. “Younger consumers that shop in preparation for going back to high school and college actually prefer shopping online, so ecommerce growth should continue for the foreseeable future.”
Five product areas play an outsized role during the back-to-school season:
Apparel and accessories
Books, music and video
Computers and consumer electronics
Office equipment and supplies
Toys and hobbies, including sporting goods
Back-to-school ecommerce sales in these core categories during July and August will exceed the quarterly growth rate for ecommerce overall at 15.8%, reaching $37.56 billion.
“Several core product areas are among the sectors with the highest ecommerce penetration,” Wurmser said. “Even apparel, which traditionally has been bought in stores, is increasingly moving online.”
eMarketer excludes home goods from its definition of core back-to-school product categories despite the big role that dorm shopping plays in back-to-school sales. Although important, home goods do not see a significant bump in sales during the season relative to other parts of the year, according to eMarketer.