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Lidl’s U.S. foray sparks price cuts

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CHAPEL HILL, N.C. — Lidl’s entrance into the United States last June prompted rival grocers to lower prices on key staples by as much as 55% at stores in the vicinity of the Lidl outlets, according to a study released January 10 by the University of North Carolina Kenan-Flagler Business School.

The study was led by Katrijn Gielens, associate professor of marketing at UNC Kenan-Flagler, and was commissioned by Lidl US.

Gielens analyzed prices in six markets where Lidl operates and six control markets in which Lidl is not present in Virginia, North Carolina and South Carolina.

She looked at prices for a broad basket of 48 grocery products, including dairy, meat, produce, and canned and frozen goods, which were collected through store visits.

In markets surveyed where Lidl was present, retailers on average set prices 25% above Lidl prices.

“The level of competitive pressure Lidl is exerting on leading retailers to drop their prices in these markets is unprecedented,” Gielens said in a statement. “In fact, the competitive price-cutting effect of Lidl’s entry in a market is more than three times stronger than the effect of Walmart’s entry in a new market reported by previous academic work.”

Meanwhile, Thomson Reuters said on January 17 that Lidl was slowing its U.S. expansion plans and switching its focus to smaller formats, citing a report in the German business newspaper Handelsblatt.

Projects under way in Virginia, New Jersey, Ohio and Pennsylvania have been halted or abandoned, Handelsblatt reported.

Lidl would neither confirm nor deny any change of plans for the U.S. market. But a spokesperson said that the company is constantly examining and adjusting its property portfolio.

Lidl now has 49 stores in the United States, about half of the number that the company had initially said it intended to open within its first year in the market.


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