Lidl: The Hard Discounter
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Case Code: BSTR290 Case Length: 15 Pages Period: 2006-2008 Pub Date: 2008 Teaching Note: Not Available |
Price: Rs.300 Organization: Lidl Industry: Retail Countries: Europe Themes: Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
"For now, Lidl is all about being dynamic. Compared to supermarkets and hypermarkets, the discount model obviously bears less risk and offers a much better return profile."
- Jürgen Elfers, Head of European Retail Research, Commerzbank, in February 2004.
"Lidl is notorious for its aggressive handling of its domestic suppliers, contractors and employees."
- Pascal Kuipers, chief editor, Elsevier Food International, in February 2004.
Introduction
In June 2008, Focus magazine reported that Lidl Stiftung & Co. KG (Lidl), a Germany-based discount retailer and part of the Schwarz Group, intended to open 1,000 new stores in Germany, taking its store count to 4,000 in that country. However, the company did not specify any time frame for the roll-out. The magazine also reported that Lidl would enter the US by 2012. Lidl was founded in 1973 by Josef Schwarz in Germany and later expanded by his son, Dieter Schwarz. Although initially modeled on Aldi, the pioneer of discount retailing in Germany, Lidl soon made a mark for itself. Within five years of the first store opening, Lidl had 30 stores in Germany. As of June 2008, it had around 3,000 stores in the country.
Lidl began its international expansion in 1988 when it opened a store in Colmar, France. As of 2008, it had a presence in 23 European countries and offered stiff competition to discounters like Aldi, Penny, etc., and to other big retailers like Tesco. Newspaper reports in early 2008 suggested that with the rising cost of living, customers in Europe were opting to shop at discounters such as Lidl. For example in the UK, Lidl recorded a sales growth of 9.6% (between March and May 2008). Which?, a UK-based magazine that ranked retailers including high-street stores in the UK on the basis of customer satisfaction, ranked Lidl sixth, while Aldi was placed ninth, and UK's leading retailer Tesco, thirty seventh. However, Lidl faced some challenges as well. For example, like discounters, several other retailers were offering attractive deals on product lines, and at the same time stocking a wider assortment of merchandise. Lidl also faced criticism for its human resource practices.....
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