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Lidl’s highly anticipated entry into the cutthroat U.S. grocery market hasn’t gone all that smoothly, so now it’s trying a humorous new ad campaign to reignite interest. Whether or not the series of 30-second spots featuring the dubious business practices of the fictional, family-owned “Vanhill’s” supermarket chain will do the trick remains to be seen.
“When you get a chance to work with a brand as fearless and competitive as Lidl, you have to deliver work the category won’t see coming,” David Muhlenfeld, vice preisdent and creative director for The Martin Agency, told Winsight Grocery Business. “So we went semi-ballistic and took a cheerful hammer to fruit pyramids and all the other tricks traditional groceries use to make you pay more than you should.”
It’s clear that Lidl needs to make investments to keep momentum going as it retools operations and reconsiders its expansion plans. Still, the grocer has already had an impact on competitors, with some retailers cutting private-label brand prices by as much as 9.3% when a Lidl store moves in nearby. That’s three times the typical reduction that occurs when Walmart encroaches, according to a recent study.
Besides low prices, Lidl has less-tangible advantages to bring to the table as well, such as deep pockets, management experience and the ability and willingness to adjust strategy when needed. These assets, plus being a private company that doesn’t need to worry about shareholders, may prove to be its strong suit in the long run.
Lidl’s marketing blitz underscores how its low prices set it apart from competitors, suggesting that the retailer has the U.S. consumer’s best financial interests at heart. Whether or not the campaign actually poaches shoppers from major retail chains is the big question, but a humorous take on a pocketbook issue seems like a savvy route to take and could bolster the retailer’s bottom line.
It also will be interesting to see how major grocery chains respond to these tongue-in-cheek commercials. Typically supermarkets focus outreach on fresh produce, in-store specials and delivery options, and some stress mission and values, such as Kroger’s holiday messages about ending food waste. But grocers rarely mention the opposition in their marketing efforts.
Signs of Lidl’s poor U.S. performance have been building for months, from store traffic declines to canceled developments, and strategy shifts ranging from increased fresh promotions to a focus on smaller stores. In December, Lidl fired its German head of U.S. operations. Lidl had grand plans to change the status quo with its U.S. arrival last year, and the grocery chain can only hope that this new campaign could still help it realize these grand ambitions.