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The retailer LIDL has announced they are setting up stores in the Australian market. Please help me understand the retailer LIDL and their likely success in Australia by providing a company analysis of their model, performance and competitors.
Hello! Thank you for using Wonder to ask about LIDL and their performance, model, and competitors for their upcoming market in Australia. The short answer is that by the year 2020, Kaufland and LIDL are expected to join the Australian market. ALDI, LIDL and Kaufland are not competitors, but they have found a happy medium in working alongside each other by having their own customer base. Currently, LIDL has opened stores in the United States and plans on having 5,000 job openings by 2018. Heidi Klum has collaborated on an exclusive clothing line for LIDL's locations in the United States. You will find a detailed report and my methodology below!
METHODOLOGY
After searching through trusted media sites, corporate websites, and industry reports, we have found a significant amount of information regarding your question. First, we looked into LIDL and their market strategies for the past two years including the Australian market. Next, we researched corporate websites to further our understanding on LIDL and their competitors. Finally, we looked into why LIDL is establishing stores in Australia. This report will be split into three sections. The first section will detail LIDL's market strategies and performance. The second section will highlight what new markets LIDL is entering and the third section will show LIDL's general landscape in Australia. You will find a deep dive of my findings below!
OVERVIEW OF LIDL'S STRATEGY AND PERFORMANCE
Evening Standard had an article that discussed LIDL's business model. LIDL offers a quality product for a very low cost. This was very effective marketing when the economy took a turn for the worst and the middle class was interested in cheaper options. LIDL is able to do this because they do not pay a premium to have brand name goods on their shelves, since they are an international business, LIDL can negotiate on prices with their suppliers, they carry a limited variety of products, LIDL operates on low-cost which means less staff is needed, and efficiency aids in the speed and cost savings.
Brick Meets Click states that LIDL sticks with a successful synergy strategy by mimicking ALDI. Besides offering lower prices than ALDI, LIDL attracts two other consumer groups such as customers who like steep discounts but are unsure if it meets their needs, and ALDI shoppers who like the low prices but want a supermarket experience.
Unconventional Wisdom Journal states that LIDL's strategy is simple. It is described as "Wherever AL DI goes, LIDL follows". The Australian states that LIDL also copies ALDI's strategies by keeping prices low for the maximum amount of food.
Retail Week states that discount grocery stores gain about 43% of all food sales in Germany. In Poland, LIDL is a major discount store and it is expected by 2020 that discount stores will gain about 30% of the food market. Please note that these articles were hidden by paywalls and I could only take the header information into this report. I added them because I found both statements relevant to the request.
In 2015 to 2016, The Schwartz Group had a 7% revenue growth in the United Kingdom. LIDL has a 9% revenue growth while Kaufland increased to a 4% revenue growth. Their highest growth was found in Spain, the Czech Republic, and Austria. LIDL plans on using their funds to remodel and open other stores. In 2016, LIDL opened stores in Lithuania and by 2018, LIDL is expected in Serbia and to further expand their market in the United States.
In the United Kingdom, Business Insider states that LIDL is their fastest growing supermarket with at 17.7% sales increase in 2016. LIDL's private label food sales are increasing at 6.6%. Currently, LIDL has about 630 stores in the United Kingdom and are planning to open about 50 more. In 2017, LIDL's sales increased to 18.3% and holds about 5% of the United Kingdom's grocery market. Combined with ALDI, their market share is about 12% and growing.
LIDI ENTERING NEW MARKETS
Brick Meets Click states that LIDL is currently building three distribution centers in United States' Mid-Atlantic region. LIDL is also opening about 20 stores in Virginia, North Carolina, and South Carolina. By 2018, LIDL expects to have about 100 stores open on the East Coast generating about 5,000 jobs. LIDL has also collaborated on an exclusive fashion deal with Heidi Klum for their stores in the United States. This shows that LIDL is mimicking Walmart and Target by offering the American consumer a little of everything in each store. This move into America comes after LIDL's success in the United Kingdom because of their cost-friendly approach.
LIDI'S GENERAL LANDSCAPE IN AUSTRALIA
According to Coriolis Consulting, LIDL has more stores worldwide over ALDI. In Australia, this article states that LIDL has applied for Australian trademarks which will cover thousands of supermarket items. LIDL also has the same advantages as ALDI in experience, expertise, and global power but they offer lower prices to their consumers.
Unconventional Wisdo m Journal states that ALDI and LIDL are the two largest chains in Europe. LIDI has about 10,000 stores in Europe and is owned by Schwarz Gruppe which also owns LIDL's sister company, Kaufland. LIDL has been around since 1930 and in 1973 it started copying ALDI's business concepts. This move gained LIDL the Britain’s Grocer of the Year award. This article states that if both LIDL and Kaufland combine, it would be in comparison to the size of Kmart. This group is lead by German billionaire Dieter Schwartz. In the 2015 to 2016 year, LIDL had about $121 billion in turnover. This article states that ALDI, Kaufland, and LIDL are not rivals; they have found a happy medium operating close to each other and it is expected that when LIDL and Kaufland enter the Australian market, they will copy ALDI's business strategy.
IGD states that LIDL and Kaufland are expected to become part of the Australian market in 2020. In 2016, Kaufland has been doing feasibility market studies in Australia. This Australian News website states that after a long market analysis, Kaufland is more suitable to open their stores in Australia over LIDL because they are bigger (20,000 square meters which is 15 times bigger than ALDI), Kaufland stocks about 40,000 items while ALDI stocks about 1,300 items, and it is only speculated that the Schwartz Group decided that the discount grocery store market is too saturated in Australia.
CONCLUSION
To wrap it up we have found a significant amount of data regarding your question. LIDL and Kaufland are expected to join the Australian market by 2020. LIDL is currently expanding their grocery stores in the United States. By 2018, LIDL expect there to be another 100 stores opening and about 5,000 jobs available on the East Coast. As far as their business strategy goes, LIDL likes to follow ALDI around and offer cheaper food to the same consumer market.
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