Lidl is the second-largest food retailer in Europe, with headquarters in Neckarsulm, Germany. The company was founded in 1933 and is operated by the Lidl Stiftung & Co. KG. Let us know more about that the Lidl Swot Analysis & Competitors-Know More
The supermarket chain operates 10,800 stores across 28 European countries with an annual turnover of €40bn (£35bn). It has around 25 million customers each week.
Product Summary:
Lidl offers fresh produce, bakery goods, meat and poultry products, frozen goods including ice cream and frozen pizza, alcoholic drinks including wine and beer as well as household goods including toiletries and laundry detergents. The company sells most of its non-food products under the ‘Lidl own’ brand, with most of its food products sold under the ‘Lidl exclusive’ brand.
Operations:
Lidl operates its retail business through three segments: Central Eastern Europe, Lidl International, and Deutschland.
The Central Eastern Europe segment operates in Austria, Croatia, the Czech Republic, Germany, Hungary, Italy, and Slovakia.
The Lidl International segment includes all international activities outside of Central Eastern Europe including operations in Poland, Portugal, and Spain.
The Deutschland segment comprises Lidl stores operating in Germany.
Lidl Swot Analysis
Company Strengths:
1. Pricing:
Lidl brands offer a wide range of high-quality products at cheaper prices than its competitors. The supermarket’s pricing strategy is based on a long-term view, based on a philosophy of “brand, brand, brand,” which means that the marketing and innovation will be responsible for raising the profit margin through product innovation. In addition to price compression, Lidl continues to focus on profit growth by expanding low-value food categories such as bread and pasta which are typically purchased by households more frequently. A further strategy is offered by the creation of warehouses in low-value categories such as bread and pastries, where inventories are stored until they can be sold at a later stage.
2. Customer Base Expansion:
Lidl focuses on customers in the middle of the market who are price conscious but with a stronger focus on quality than at Aldi. The company believes that it has more room to attract customers in lower socio-economic groups without affecting its core customer base. The company aims to have a target share of its primary competitors by opening stores in regions with a low competition where it is difficult for competitors to enter easily.
3. Effective Operation:
Lidl participates in the “second-price” price war with Aldi and Lidl stores often open on the same day, and they encourage customers to buy more by offering additional sales on top of their usual prices. Lidl sells products at prices lower than its competitors, but still offers customers a wide range of high-quality products at cheaper prices.
4. Store Design:
Various store designs were developed by Lidl such as the ‘Vista’ look which was launched in 2010 and ‘Smart Life’ which was launched in 2015. These will be updated over time, but will always provide customers with a comfortable shopping experience and a modern environment for purchase.
Weaknesses:
1. Logistic Cost :
Lidl’s logistical costs are very high due to the company’s vast number of stores. The company will need to find ways to reduce its high costs to compete with Aldi, which already has low-cost logistics.
2. Reviews:
Lidl is renowned for its success in creating stores within proximity of Aldi stores, but the difference in service and perception between the two brands varies widely between customers. Based on scores from 31,010 consumer reviews on consumer reports, Lidl ranked 6th out of 6 supermarkets while Aldi came 2nd behind Amazon (US).
3. IT:
Lidl has not had the best track record when it comes to IT.
First, several data security breaches affected more than one million customers in Germany, Poland, France, and the UK in 2014. Lidl wanted to reassure customers by providing free SIM cards to customers who used AT&T’s service in the United States after hackers stole their phone numbers. Lidl also made extensive use of online banking since 2012, but it made mistakes in storing customer data which was revealed after a security breach occurred in 2015.
4. Marketing:
Lidl does not have much experience when it comes to online marketing.
The company launched e-commerce in several European countries such as Germany, France, and the UK in 2016. This was done to compete with Aldi, which was already working on online marketing and online shopping in the United States and Australia. Lidl has also partnered with the delivery service providers such as Waitr in the US and Deliveroo in Germany to provide its products to customers at a cheaper price than its competitors.
Opportunities:
1. Social Media:
Lidl is renowned for its social media platforms such as Facebook and Twitter. The company delivers news and updates regarding products, discounts, and marketing campaigns to its customers to connect with them. Lidl’s Facebook page has more than 1 million likes, but it also has a Twitter account which makes the company even stronger when it comes to social media marketing. Lidl’s Twitter account has more than 49.3k followers. This allows the company to widen its customer base by selling products alongside online marketing strategies.
2. Stores Expansion:
Lidl is currently the second-largest supermarket chain in Europe, with operations in 32 countries. The number of Lidl stores has increased at a rate of 5 percent every year since the company’s foundation until 2013. With more than 10,000 stores across Europe, the company continues to open new stores to expand its market share. Lidl plans to have 90 percent of its growth coming from new store openings or existing store expansions. The company also plans on opening new stores outside of Central Eastern Europe including operations in Poland, Portugal, and Spain.
3. Acquisition:
Lidl has shown a willingness to make acquisitions or strategic investments to expand its business. In 2014, the company bought a 20 percent stake in the Swiss retail chain Spar Group. This investment led to the acquisition of 49 stores owned by Globus and Merkur Markt as well as several Spar stores. Lidl also acquired Efeu Healthcare—a Greek producer of plant-based pharmaceutical products for €29 million, as well as a majority stake in Flowers Food Czech Republic for €75 million, which is a food retailer with 35 hypermarkets and supermarkets around the country.
Threats:
1. Competitors:
Lidl is a well-established player in its market, but it aims to gain a larger share of the European market by opening stores in regions where competition is low. This explains why Lidl has opened stores in places such as Portugal and Spain which have lower populations than Germany.
In addition to this, competitors such as Aldi and Lidl may be able to influence Aldi’s reputation among young customers due to the price war the two companies have been engaged in. Aldi recently opened 800 Aldi stores across seven countries over the next few years.
2. Global Expansion Strategy:
Lidl is expanding its stores worldwide, but the company continues to have a low awareness outside of Central Eastern Europe, especially in the United States. Lidl’s expansion strategy will put a lot of pressure on the company’s financial resources and human resources.
Major Competitors:
1. Aldi:
Aldi is based in Germany. It was founded in 1946. Aldi has more than 6,000 stores in Europe and several stores in the United States and Canada. The company’s headquarters are located in Essen, Germany. Aldi is Lidl’s largest competitor in the discount supermarket industry with over 25 billion Euros in annual revenue. The company has a diversified product portfolio and low costs which make it a strong competitor to Lidl.
2. Netto:
Netto is based in Denmark. The company was founded in 1993. It has several locations in the United Kingdom, Germany, and other European countries. Between 1992 and 2010, Netto had stores in Poland which were later sold to Lidl.
3. Penny:
Penny is a German discount supermarket chain founded in 1971 by Theo Albrecht. The company has over 1,000 stores throughout Europe; however, Penny’s presence is larger than Lidl’s due to the high number of stores located in Eastern Europe compared to Lidl’s market share west of Germany.
4. Intermarche:
Intermarche is based in France. The company’s operations are focused on the French market. The company was founded in 1924. It has retail stores throughout Europe and it offers products at competitive prices. Due to its low profile, Intermarche is one of the smaller competitors of Lidl.
Conclusion:
Lidl is a massive competitor in Central Eastern Europe focusing heavily on online marketing. Taking into account the decrease in revenues that Lidl had between 2012 and 2013, the company’s growth potential has been limited to continue to expand its customer base. Its acquisition of Flowers Food Czech Republic shows that Lidl focuses on expanding its operations by diversifying its product portfolio while also acquiring businesses with similar business models to increase revenue.
Lidl also faces several competitors in Central Eastern Europe, but its market share has remained relatively high throughout the past years due to its high number of stores throughout Europe.
Some frequently asked questions and answers:
1. Is there a Lidl store in India?
A. No, Lidl does not have a physical store in India.
2. Is Lidl available in Canada?
A. Yes, Lidl does have a physical store in Canada.
3. Is there a Lidl website?
A. There is a website for Lidl which operates under the name lidl-in-canada.ca
