Discount Retail Chain Lidl USA is making key merchandising changes and its chief customer officer sees “untapped potential.” But analysts say the discounter still faces a challenging road ahead.
When Lidl prepared to enter the grocery industry in the United States back in 2015, the German retail powerhouse seemed to have everything going for it.
Renowned across Europe for the potent mix of low prices and high-quality goods that defines its thousands of colourful stores, Lidl arrived stateside with deep pockets, a highly developed private label strategy and a disciplined focus on efficiently running a complex business in a highly competitive environment.
But instead of steadily growing its U.S. footprint as it had originally intended, Lidl US has moved ahead in fits and starts, prompting questions about why its value-focused business model has trouble gaining traction on American soil.
Lidl’s U.S. store network so far comprises only about 170 stores in nine states and Washington, D.C. Meanwhile, German archival Aldi, which entered the U.S. in 1976, has accelerated its growth and now has almost 2,400 stores stateside.
While Aldi has continued to ramp up its growth, Lidl US has laid off hundreds of corporate workers during the past two years and closed a number of stores.
“They’ve given up so much opportunity over the past few years between the pandemic, people being out of work, looking for value” and dealing with inflation, Michael Infranco, assistant vice president of retail intelligence provider RetailStat, said about Lidl’s journey in the U.S. “These guys seem to have missed that boat, so they’re going to have to hitch their ride on another one.”
That time could be now, with throngs of shoppers across income levels flocking to discounters and mass retailers in search of more affordable grocery options.
Lidl US has new changes underway, including a broad update of its assortment, as it looks to adapt its model to better suit the U.S. consumer, Chief Customer Officer Frank Kerr said.
Focusing on ‘untapped potential’
After moving through several CEOs during its first years, Lidl US last summer appointed its first American CEO, Joel Rampoldt, a former consultant who is serving as the company’s fifth chief executive.
In March, the company brought on a team of four new senior executives, including a new chief commercial officer and Kerr, its first chief customer officer.
Kerr acknowledged in an interview that Lidl is facing a considerable learning curve as it adapts to the U.S. market and said the company is closely examining its next moves in the U.S., a region that “is really untapped potential for us.”
Lidl sees itself as able to simultaneously meet the needs of shoppers looking for a limited assortment discounter or a traditional supermarket, Kerr said.
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“We really see the opportunity to disrupt any market that we go in because quite frankly, we can appeal to a various amount of demographics and customers and quite frankly … really deliver on the value proposition, despite where their normal shop may be prior to us entering those markets,” Kerr said.
Kerr was a member of the team of executives that founded Lidl’s U.S. unit. He spent time working for the grocer in Germany and the U.K. ahead of the debut of its first U.S. stores in 2017. Kerr then left Lidl for Save A Lot in 2018, where he served as a regional director and later vice president of retail operations and wholesale sales before moving to Lidl International in 2022.
Lidl is developing a broad update to its assortment as it works to connect more deeply with shoppers in the U.S. Changes the company is working on include the introduction of freshly baked bagels to its signature in-store bakeries as well as a meat department overhaul linked to Independence Day.
Kerr said Lidl takes particular pride in its low-cost baked goods, pointing to its 79-cent baked-in-store croissants as an example of how it hopes to strengthen its relationships with U.S. shoppers.
Lidl’s dual focus on low prices and fresh food is a clear differentiator as it tries to build a stronger presence in the U.S., particularly among discounters, which tend not to put as much emphasis on fresh merchandise, said John Clear, senior director in the consumer and retail group at consulting firm Alvarez & Marsal and a former Lidl executive.
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