The $89 billion Lidl grocery chain is looking at expanding from Europe to the U.S., according to a U.K.-based retail analyst who says the retailer could open as many as 100 East Coast stores in 2015, Supermarket News reported.
The analyst, Matthias Queck of Planet Retail, said that in June the 10,000-store no-frills grocer officially began to study moving into the U.S., but that the real decision has already been made. "We consider the so-called feasibility analysis to be a factual 'yes' to a market entry, rather than an open question, simply because the company is in need of new long-term expansion while it is nearing saturation in 26 European markets, some of which will remain economically challenged for years to come," Queck said.
Lidl says it is specifically looking at the East Coast. The U.S. stores are expected to be similar to those of its European rival Aldi, with discount prices but limited selection. Lidl is the largest grocer in Europe by revenue.
Aldi, which has been in the U.S. since 1976, says it plans to keep expanding in the U.S., opening as many as 80 stores a year including stores in California in the near future. Lidl reportedly believes Aldi will be its chief competitor in the U.S.
Well, maybe. The problem for Lidl in Europe is that it has run out of room to expand. In the U.S. it will face a different set of challenges, including the ever-present Walmart (NYSE:WMT) and Costco (NASDAQ:COST), along with already-under-pressure regional chains that would see another prepackaged competitor as a reason to double down on their own price cutting.
Then there's Kroger's (NYSE:KR) very effective high-low strategy: low prices on staples, along with an assortment of higher-priced specialty foods. That essentially puts a limited-assortment competitor to Lidl inside Kroger's stores—and it suggests that Lidl's executives will need to look well beyond Aldi to get a clear idea of how feasible a 500-store U.S. invasion really is.
- See this Supermarket News story
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