Lidl: The Hard Discounter
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Case Details:
Case Code : BSTR290
Case Length : 15 Pages
Period : 2006-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : Lidl
Themes: Business Strategy
Industry : Retail
Countries : Europe
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Lidl: Managing the 4 Ps
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Although Lidl began by emulating Aldi, the company slowly developed its own approach to retailing. Lidl's later strategies not only differentiated its stores from those of Aldi, but also helped it to establish itself as a successful discount chain.
Simplicity was the basis of all of Lidl's operations. According to the company,
"Our business is simplicity itself: we buy and sell with the sole aim of offering our customers the highest quality, everyday products at the lowest prices."Lidl's philosophy of simplicity helped keep operational costs at a minimum...
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Store Management
Lidl avoided expensive flooring, furnishing, or embellishments as these added to costs. Apart from a few basic fixtures like pallets, wire bins for promotional goods, and simple shelves, the stores avoided most features associated with regular retail outlets (Refer Exhibit V for a photo of a Lidl Store). Lidl also kept shop overheads to a minimum...
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Challenges Ahead
Although Lidl was doing quite well in its home country and was also rapidly expanding to foreign countries, it faced challenges on various fronts. The company was hugely successful in selling some product categories and not so successful in others.
For example, while Lidl had a high share of trade in products such as chocolate confectionery and toilet paper, its share of hair color sales was miniscule (Refer Exhibit VI for Share of Trade of Lidl in Europe for some categories)... |
Outlook
According to some reports in late 2007, Lidl's management recognized that there
was a need to change its culture, from a "paramilitary"organization to one that
adopted modern management techniques. Considering its not-so-good reputation in
the media regarding its employee relations, Lidl realized that it might find it
difficult to attract the right talent in the future and would have to create a
more employee-friendly environment...
Exhibits
Exhibit I: The Lidl Logo
Exhibit II: Lidl's International Ventures
Exhibit III: Companies under the Schwarz Group
Exhibit IV: Top Retailers in Germany in Terms of Sales (As on January 01, 2006)
Exhibit V: A Lidl Store in Germany
Exhibit VI: Category wise Share of Trade at Lidl (As of mid-2007)
Exhibit VII: Some Discounters in Europe
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