Lidl, a 40-year-old German grocery chain controlled by the privately owned Schwarz Group, Europe’s largest retailer, is recruiting U.S. staff for its regional headquarters and distribution center in Virginia as well as for its stores. The company recently said it was set to begin the hiring of 800 associates for a dozen store locations in Virginia, and that the associates would start at a salary of $12 per hour, plus benefits. The company expects to fill 4,000 U.S. jobs in the coming months.
Brendan Proctor, president and chief executive officer of Lidl’s U.S. operations, had pledged to create a unique experience for American shoppers.
“Grocery shopping involves too much compromise,” Proctor said in a statement.
Customers are being forced to choose between quality, price and convenience, and this is a compromise they shouldn’t have to make.”
Proctor said the company’s U.S. stores would encompass up to 36,000 square feet of shopping space, about 35% larger than the chain’s biggest stores in Europe. He told The Washington Post that the company opted for a larger format because it thinks it needs to offer a wider array of merchandise to thrive in the U.S. market.
Planet Retail, a London-based research firm, has projected that Lidl will reach sales of $5 billion in the United States in the next five years, and that it will operate about 550 supermarkets in the eastern U.S. by 2022.
Lidl’s U.S. stores will be about twice the size of a typical Aldi store, but significantly smaller than a traditional supermarket operated by such chains as Kroger Co. or Albertsons Cos.
Germany-based Aldi made its U.S. debut in 1976 and expects to have nearly 2,000 stores in about three-dozen states by the end of 2018.
Aldi last month announced it had allocated $1.6 billion for remodeling and expanding more than 1,300 of its U.S. stores by 2020. Aldi said the investment would accommodate its ramped-up offerings of fresh produce and organic products, and finance initiatives to improve lighting, use recycled materials and install energy-saving refrigeration displays. Aldi’s revamped stores are expected to compete directly with 365 by Whole Foods Market outlets, a lower-cost brand aimed at the younger demographic.
Planet Retail estimates that Aldi’s profits in the United States have risen by about 50% over the past five years.
Both Lidl and Aldi should benefit from the trend among supermarket retailers to get smaller, more efficient and closer to the customer. Lidl and Aldi share a similar store operational model, with emphasis on self-service, easy-to-navigate layouts, low overhead costs, fresh food, convenience and the lowest possible prices.
While Aldi is a control label retail operator, selling primarily its own privately branded knockoffs of established brands, Lidl typically carries a more curated selection of up to 40% of national brands, allowing shoppers in a given category to choose between one private label and one national brand.
Lidl’s U.S. stores will also feature a large section dedicated to nongrocery items. Proctor told The Post that shoppers can expect to see items as diverse as drills, yoga pants and garden lawn mowers, with the merchandise rotating on a weekly basis.
Neither retailer has a commanding online sales channel. Lidl, which acquired German grocery delivery start-up Kochzauber in 2015, has introduced online ordering in Germany, Belgium and the Netherlands, and has considered taking the service to the United Kingdom and Spain. Aldi last year launched online sales of wine by the case and nonfood items in the United Kingdom.
Both discounters benefited from the tepid economic recovery by catering to customers looking to pare their food bills without compromising too much on quality. But the single-minded focus on price appears to be starting to change, as the retailers’ stores in Europe have begun investing in more upscale merchandise that can lure middle-class shoppers.
Analysts noted that the moves complicate the retailers’ business models and possibly make it harder for them to defend the price leadership they’ve managed to maintain in virtually every market they’ve entered.