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
Excerpts
Lidl: Managing the 4 Ps
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...
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...
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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