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Lidl prompts lower prices on Long Island

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CHAPEL HILL, N.C. — Lidl’s recent entrance into the eastern suburbs of New York City prompted rival grocers to cut prices on key staples, according to an analysis by the University of North Carolina Kenan-Flagler Business School.

Lidl

A Lidl store in Huntington, N.Y.

Prior to Lidl’s arrival, supermarket operators on Long Island were raising prices, said Katrijn Gielens, a marketing professor at UNC Kenan-Flagler, who compared prices for the study, which was commissioned by Lidl US.

Lidl operates four Long Island stores and has another four in the works. The Arlington, Va.-based company has been building new stores on Long Island and re-bannering some of the two dozen Best Market stores it acquired there in early 2019.

Gielens compared list and shelf prices on 47 items, including meats, produce, dairy items, frozen food and canned goods, before and after Lidl’s arrival.  Prices were logged at 27 stores operated by Aldi’s, BJ’s Wholesale Club, Costco, King Kullen, Stop & Shop, Target, Trader Joe’s and Walmart.

Her data show a 14.9% decline in list prices at Aldi stores following Lidl’s arrival late last year. Walmart responded by cutting prices by 8.5%, and Costco pushed down prices by 8.3%. List prices on surveyed items at Stop & Shop, BJ’s, Trader Joe’s, Target, and King Kullen declined between 5.3% and 3.8% following Lidl’s arrival, she said.

“Lidl’s competitive price-cutting effect is continuing to pressure other retailers to drop their prices. The data shows the effect is greater than Walmart’s entry in a new market reported by previous academic studies,” Gielens said in a press release.

Gielens said the data comes as U.S. food prices are rising at the fastest pace in a generation and Americans are facing an economic downturn stemming from the coronavirus pandemic. “Understanding how supermarket competition can keep grocery prices at bay is more important than ever,” she asserted.

“Overall, these findings corroborate the results from the study we conducted in 2018, which showed that Lidl exerted a significant level of pressure on leading retailers in that they set lower prices in markets in which Lidl was present,” Gielens said.

Gielens also led the 2018 study – also commissioned by Lidl – which found that Lidl’s entrance into the United States in mid-2017 prompted rival grocers to lower prices on key staples by as much as 55% at stores in the vicinity of the Lidl outlets.


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