LIDL´s newest store - trading up, but what´s next?

woensdag 28 september 2016

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LIDL´s newest store - trading up, but what´s next?

And here it is - the newest LIDL store approaching high-end customers in the city centre of Hamburg. It´s a pop-up store for their fashion brand Esmara. Again the discount retailer is trading up, just like it fellow friend ALDI is doing already for a long time. Both retailers are competing on launching new flagship stores creating a premium character. On the same side their product range is not only growing in terms of number of SKUs - both in private label and brands - but also at quality level. 

Certainly the "value for money" image will be strengthened if they manage to keep their price level low as they used to do. However the risk to loose their customers base is growing for ALDI and LIDL.

Even more interesting to the newest moves of the leaders in food discount is the reaction of the traditional retailers. Like we see now in Britain the main reaction is a price war. This price war has been also the first reaction of retailers in other countries years before and it proofed not to be successful.

What can be seen is that those retailers that managed to develop a real customer orientated format have no need to compete on price. They beat discounters with well-targeted choices in assortment – specific to the location meeting the demands of their customer.

There are several good examples around the world, but looking at the home country of ALDI and LIDL it can be seen that the two mayor traditional retailers EDEKA and REWE did a great job to diversify their formats. From small convenience to large hypermarkets the range of formats is large, but each one of them is successful on it´s own. (as an example have a look at the new E-CENTER Braunschweig.

As a result discounters are stagnating in Germany, which is partially driven by their very limited potential to create customer orientated store formats. However, this might the next step. So can we expect a “LIDL to GO” or a “ALDI Hyper”?  

Martin Gaber

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