Shoppers — particularly younger ones — are warming up to German discount grocer Lidl, which entered the United States market one year ago.
Forty-eight percent of 600 consumers who tried Lidl are now shopping there on a regular basis (more than twice per month), according to an independent survey by global consulting firm Oliver Wyman. Consumers also are spending more money per shopping trip at Lidl today than a year ago, indicating they have found a wider range of Lidl products they prefer.
Younger shoppers — aged 18 to 34 — had a particularly high awareness of Lidl and shopped there frequently, according to the survey.
The survey results come as Lidl has pulled back on its original U.S. expansion plans amid mixed performance results.
“Lidl is new in the U.S. market, and we expect that they will gradually adapt their model based on consumer feedback, a pattern they successfully honed entering more than 20 countries in Europe,” said Tanja Ebner, principal in Oliver Wyman’s retail and consumer goods practice. “What Lidl has done so far has struck a chord with younger consumers who are valuing Lidl’s good private brand product quality almost as much as their low prices.”
In key survey findings:
• Lidl is stealing customers from a wide range of incumbent grocers. Forty percent of consumers we surveyed are loyal to supermarkets are now shopping at Lidl more than twice per month.
• Forty-six percent of Lidl customers say their primary reason to shop at Lidl is either good quality, good promotions, or really fresh products. Thirty-nine percent cite low prices as their primary reason.
• Lidl beats all other grocery retailers in our survey in value perception (expected) and in freshness of products (unexpected).
• Customer satisfaction is surprisingly high with offerings not normally associated with hard discounters, including choice of organic products and wine selection.
• Satisfaction is higher in states Lidl entered recently versus those it entered earlier, which could be due to Lidl using lessons learned from earlier store openings to adjust its offer.
• Difficulty in reaching stores is cited as the number-one reason for not shopping more often at Lidl.
Consumers in the U.S. are showing an appetite for formats that offer good value for money, according to Oliver Wyman. Lidl only operates about 50 stores in six U.S. states as of June 2018, fellow European hard discounter Aldi already has a network of over 1,600 U.S. stores.
“Hard discounters are in the U.S. to stay and win. Incumbent grocers must evolve, redefining their business to align with the consumers’ demands for high quality and value,” said Georges Faigen, partner in the retail and consumer goods practice. “Grocers need to double down on what they believe makes them uniquely attractive to their consumers, otherwise they risk a certain defection of sales, profit, and customers.”
The online questionnaire was conducted in April 2018, with 3,600 individuals surveyed in the states where Lidl operates stores: North Carolina, South Carolina, Virginia, Delaware, New Jersey, and Georgia. Of these, 600 had shopped at Lidl already, Oliver Wyman asked them about their experiences in detail.