April 24, 2014

Lidl delays US entry

Better late than never (photo: creative soul -- fotolia)
En attendant Lidl: US fans will have to stay patient (photo: creative soul -- fotolia)
Columbus and the Pilgrim Fathers were only too anxious to go there, but Lidl clearly intends to take its time getting to the New World. The German discount retailer has postponed entry to the USA again until 2018. However one may admire the thoroughness with which the Swabians make their travel arrangements, they are now going to have a hard time breaking the news to all their disappointed supporters on the other side of the Pond.

Observant eaders will have noticed that the post 'Lidl goes USA' is by far the most commented blog on this site. We have been bombarded with fan mail from our transatlantic cousins demanding that Lidl comes post-haste to Fort Hood, Concord, Buffalo, Colorado Springs, Seattle, San Antonio etc. Doubtless this has got senior execs running for their maps, and we trust that they have now found the "Black Hills" and "Copperas Cove".

Arch-rival Aldi will surely be delighted to have even more time to organise a greeting party. So why is Lidl delaying arrival? Have they been frightened by the flat-earthers?

Klaus Gehrig, top dog at strategic holding company Schwarz Unternehmens Treuhand (SUT), gives the official reason: "We don't intend to enter any new countries in Europe which is why we want to concentrate completely on the USA, but we won't be starting there before 2018. We can't kick off with just ten stores, you need critical mass to penetrate such a market."

This is a far cry from last year when Lidl talked of opening around 100 outlets in 2015. After flirting with the US for more than a decade, the privately-owned company last postponed entry in 2008, but that was for the obvious reason of the world financial crisis.

Land of opportunity

The logic behind going remains as compelling as ever though. Lidl now makes around two-thirds of its huge annual net revenues (€54bn) abroad, but the potential for growth in Europe continues to decline. The USA represents a huge market of 300m people and trade concentration levels are much lower than in Old Europe. The Top 5 players account for only around 30 per cent of the US food market against over 73 per cent in Germany and similarly high levels in other major European countries.

The fact that Aldi USA plans to boost its store base by nearly a half to just under 2,000 outlets by 2018 doesn't seem to worry management at Lidl headquarters in Neckarsulm. After all, the US is a big place with plenty of room for manoeuvre, especially for small-box discount concepts.

Given this undoubted opportunity might there be another reason for the current postponement? After all, Primark intends to enter the States in late 2015, and even Tesco, which burnt its supermarket fingers so badly with Fresh & Easy, intends to return there this year with its F&F clothing business.

Lidl is so tight-lipped that one can only speculate. It is summised by some in the trade that Lidl has jibbed because of dramatic personnel changes at the top recently. Only four weeks ago, Sven Seidel took over as CEO after the surprising departure of Karl-Heinz Holland. Perhaps it is not a good idea to take the jump when you need to adjust your stirrups.

But whatever the reason for the new delay, the Swabians clearly want to be ready. And, if they don't make it in the land of unlimited opportunity when they do come, it certainly won't be for lack of preparation. Meanwhile, however, what are the guys at Lidl going to tell their American fans?

Podcast microphone (photo: Gerhard Seybert-Fotolia)
(photo: Gerhard Seybert-Fotolia)

Podcast. Click arrow to listen to an audio version of the text:

Lebensmittel Zeitung print and digital (photo: LZ)
Our German B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: by retail news editor Hans-Jürgen Schulz 
Lebensmittel Zeitung, no. 8, 25.04.2014 

German Retail Blog

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Comments for this article are closed.

  1. Ruth Raphel
    Created 24 April, 2014 21:44 | Permanent link

    Interesting story, Mike, and well written...

  2. Jose Berrios
    Created 3 November, 2014 01:19 | Permanent link

    I just hope that Lidl, unlike Aldi USA, will stay true to its brands and grocery line here in the US. Though it's nice to have an Aldi with the OCCASIONAL German products, it would be nice to have a store here that stays true to its roots and always offers the products we have come to love in Germany!

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