CEO highlights private brand selection, adaptability as discount invasion begins
Pledging to “rethink grocery” behind a combination of quality, convenience and value, Lidl US on Wednesday revealed that its first U.S. stores would open June 15.
Lidl, a division of German retailer Schwarz Group with U.S. headquarters in Arlington, Va., also provided locations of the 20 stores it said it would open this summer but did not reveal how many of those would open their doors in June.
Lidl’s entry promises additional points of pressure to a U.S. grocery market already struggling with overcapacity, slowing sales affected by deflation and price competitiveness threatening profits. Anticipation of its arrival has been a driving factor in any number of events in recent years, from the Ahold-Delhaize merger, to Walmart’s price and service investments, to stepped-up renovations and expansion of its German counterpart Aldi.
The release came on the heels of an event in New York Tuesday that also included remarks from executives and a sampling of its fresh and private brand products. These included a line of specialty international products to be marketed under the Preferred Selection brand and a large array of exclusive wines officials said would be offered at “market-beating” prices up to 50% less than conventional grocery stores.
U.S. CEO Brendan Proctor said Lidl would address compromises of existing U.S. grocers and be adaptive as it grows.
The locations for Lidl’s first 20 stores are as follows:
Kinston, N.C. 4050 W Vernon Ave
Greenville, N.C. 1800 East Fire Tower Rd
Wilson, N.C. 3520 Raleigh Rd Parkway West
Sanford, N.C. 3209 NC 87 South
Rocky Mount, N.C. 940 N Wesleyan Blvd
Winston-Salem, N.C. 3315 Sides Branch Rd
Havelock, N.C. 547 US Hwy 70 West
Rockingham, N.C. 705 US 74 Business East
Wake Forest, N.C. 1120 South Main St
Spartanburg, S.C. 8180 Warren H Abernathy Hwy
Greenville, S.C. 2037 Wade Hampton Boulevard
Virginia Beach, Va. 6196 Providence Rd
Hampton, Va. 2000 W Mercury Blvd
Culpeper, Va. 15169 Brandy Road
Chesapeake, Va. 4033 Portsmouth Blvd
Norfolk, Va. 6440 N Military Hwy
Newport News, Va. 11076 Warwick Blvd
Richmond, Va. 12151 W. Broad St
North Chesterfield, Va. 1311 Mall Drive
Richmond, Va. 5110 S Laburnum Ave
These locations, which will be open seven days from 8 a.m. to 9 p.m., would be serviced from newly opened distribution centers in Virginia and North Carolina, Lidl US CEO Brendan Proctor said. A third Lidl DC, in Perryville, Md., is still under construction.
Lidl will open an additional 80 stores in markets between New Jersey and Atlanta by next summer, Proctor added. Advertising for the opening stores would begin shortly in those markets, Proctor said. The company late last week launched social media channels for the first time on Facebook, Instagram and Twitter (@LidlUS) and is introducing itself there behind a “#RethinkGrocery” tag.
In remarks Tuesday in New York, Proctor reiterated claims that Lidl would provide a convenient solution for U.S. shoppers who feel “compromised” by existing grocery shopping options, and predicted the company would succeed as a result of superior efficiency and sourcing that would provide quality products at a good value, as well as an ability to adapt as demonstrated in expansions to 27 countries in Europe.
Lidl’s private brands will emphasize a line of international specialty items and organics.
“The feedback we got from customers in the U.S. was very clear. People feel they’ve been compromised,” he said. “They feel you can get good quality, but it’s extremely expensive, or you can get cheaper product, but the value reflects that. The other compromise they make is time: The amount of time it takes to do a grocery shop.
“People want a good quality product, they want it at a good price and they don’t want to spend all day in a store—they want to get back to living. That that’s our model is about. That’s our strength.”
Proctor has spent 17 years at Lidl, most recently in its Ireland division, but has also worked for the company in Austria. He grew up in the grocery business, helping his parents run a corner store where he grew up in Donegal, Ireland. For the past two years he’s overseen the buildup of Lidl’s U.S. launch. Reports of Lidl’s U.S. expansion first surfaced in June of 2013; and the company acknowledged the expansion was on exactly two years later. Although Lidl has characterized its store openings as ahead of schedule, it only previously acknowledged its first stores would open “before 2018.”
“I’m really excited about getting back to real live retail where there’s customers coming in the door, and we can get feedback, and we get to adapt and change every week,” Proctor said.
Proctor described the ability to adapt as a particular strength of Lidl, explaining that the company intended to learn from the initial 100-store rollout and make changes as needed. Some real estate sources have raised concerns the company’s selected locations could draw from existing competitors with widely varying volumes and demographics, which they said could result in wide differences between the sales volumes at Lidl’s stores.
Nathan Victor, Lidl’s director of purchasing with chef Amanda Freitag, at Lidl’s preview event in New York Tuesday.
When asked about those concerns, Proctor said: “What we believe we can do is be agile as retailer and adapt and learn from the markets we’ve gone into. I’ve worked in Austria and in Ireland and I believe adapting is one of our strengths: Listening to what the customer wants and creating an offer around that. So I believe we have a very good offering for all of our customers, but I’m looking forward to opening the stores and getting feedback because I’m a retailer.”
He did not say whether Lidl was aiming for a particular demographic. “Anybody in the U.S. who buys groceries is a future customer for us,” he said. “I believe we have products for everybody. Great quality at the best prices, that’s something that everybody wants.”
The private brand selection presented at Tuesday’s event highlighted specialty products like exclusive wines (including a Chilean malbec that will retail for $6.99), award-winning cheeses and the international specialty items under the Preferred Selection brand with labels indicating the country of origin of those items. A menu using Lidl ingredients was prepared by celebrity chef Amanda Freitag. Lidl will also highlight a line of organic and gluten-free products, and announced that all of its fresh and frozen seafood would be certified sustainable by the Marine Stewardship Council, Best Aquaculture Practices or the Aquaculture Stewardship Council.
Lidl will source approximately 85% of its products from the U.S., Proctor said, and those also would emphasize quality and freshness, saying, for example, that its floral selections would meet standards for stem thickness and that displays for fresh produce would be shallow so as to preserve quality on the shelf.
All of Lidl’s private label products will not have synthetic colors, trans fats or added MSG, said Boudewijn Tiktak, EVP and chief commercial officer at Lidl US. Its products come with a guarantee to be known as “Lidl Love it,” which offers replacement and refunds for items customers are not satisfied with. Around 90% of the selection of Lidl stores will be private brand. Proctor declined to give an item count for the stores, each of which will have six aisles and 20,000 square feet of selling space. Packaging for many of the private label items previewed Tuesday had UPC codes on three sides, allowing for more efficient checkout.
All of Lidl’s location will have bakeries positioned near the entrance where workers will finish par-baked items several times a day. Stores will not have service delis or service meat departments. Proctor said the initial stores would each employ 50 to 60 workers.
by Jon Springer
