A year ago, the grocery world was abuzz as German deep-discounter Lidl began opening its first U.S. stores on the way to what was expected to be 100 in a year and more after that. Its growth plans left many wondering how established supermarket operators such as Kroger Co. would respond.
Now, a year later, the talk about Lidl has quieted to a whisper and the operator has just 53 U.S. stores. That’s a far cry from the hype last summer as Lidl opened its first 10 stores in June 2017 while targeting 100 within the next year.
Lidl competes largely on price. It’s similar to Aldi, another deep discounter – although Lidl boasts in-store bakeries, more fresh produce and higher levels of service.
“They came in with a pretty big splash,” Jim Hertel, senior vice president at Long Grove, Ill., food retail consultant Inmar Analytics, told me. “But I don’t know that they offer anything superior except price.”
Kroger (NYSE: KR), the nation’s largest operator of traditional supermarkets, Walmart (NYSE: WMT) and others quickly cut prices in response, making it tougher for Lidl to woo customers.
“My guess is they’re rethinking their strategy,” Hertel said. “Fifty-three stores is not what they came here to do. They have to feel they have a workable model with a scalable proposition. They might try to see their way to four digits of stores (at least 1,000) or take their ball and go home before they lose hundreds of millions of dollars.”
Lidl will continue to open more stores after opening 53 U.S. stores in six states along the East Coast since June 2017, U.S. spokesman Will Harwood said.
The grocery has abandoned plans to build stores in Cary. Leon Capital Group claims Lidl backed out on agreements to buy property and operate stores after signing an agreement, and after the firm devoted money to designing the project and developing infrastructure on the site, according a lawsuit by Leon Capital.