Catalina isa out with a new report about the impact Lidl is having in markets where it is opening stores, concluding that it “was less disruptive to competing supermarkets than some grocers had originally feared.”
Some excerpts:
• “During the 16-week study period, incumbent stores lost a total of 4.3 percent of sales. Trips declined 3.6 percent, and shoppers declined 5.0 percent.”
• “Sales declined by 6.8 percent in the first month, but were down only 1.9 percent by month four.”
• “Three departments—produce, beer and wine—accounted for 60 percent of the total sales decline, even though those departments account for just 16 percent of overall store sales.”
• “The Center Store, comprising shelf stables and general merchandise, accounted for just 7 percent of total losses, although they are approximately 40 percent of overall store sales.”
• “Private label products represented 58 percent of lost sales, although they account for only 28 percent of store sales. Name brands represented just 42 percent of the sales loss, although they account for 71 percent of store sales.”
• “Hispanic shoppers were far more impacted than the average shopper, reducing their purchases by 9.2 percent versus the 4.3 percent average. African-American shoppers reduced sales by 5.4 percent, while sales to Caucasians were down just 3.7 percent and Asian Americans just 3.3 percent.”
• “Larger households with five or more people declined at 127 percent of the average. Younger shoppers were slightly more likely to reduce purchasing, while shoppers 65 years and older were impacted 25 percent less than the average.”
Meanwhile, the News & Observer reports that real estate developer Leon Capital Group is suing Lidl for breach of contract, calling Lidl's conduct "fraudulent" and “deceptive” while saying that “the grocer left real estate developers ‘holding the proverbial bag’ in millions in development costs through ‘lies, misrepresentations and bad faith’.”
The lawsuit charges that Lidl tied up hundreds of sites as it planned its US incursion, many of which have not been developed as lower-than-expected sales caused it to cut back on its plans. The suit suggests that either Lidl did this deliberately to prevent other retailers from getting good locations while it tested thew waters, or was incompetent and bit off more than it could chew.
Lidl says that it will vigorously defend itself and that it “will become apparent that the allegations in the complaint are without merit.”
Some excerpts:
• “During the 16-week study period, incumbent stores lost a total of 4.3 percent of sales. Trips declined 3.6 percent, and shoppers declined 5.0 percent.”
• “Sales declined by 6.8 percent in the first month, but were down only 1.9 percent by month four.”
• “Three departments—produce, beer and wine—accounted for 60 percent of the total sales decline, even though those departments account for just 16 percent of overall store sales.”
• “The Center Store, comprising shelf stables and general merchandise, accounted for just 7 percent of total losses, although they are approximately 40 percent of overall store sales.”
• “Private label products represented 58 percent of lost sales, although they account for only 28 percent of store sales. Name brands represented just 42 percent of the sales loss, although they account for 71 percent of store sales.”
• “Hispanic shoppers were far more impacted than the average shopper, reducing their purchases by 9.2 percent versus the 4.3 percent average. African-American shoppers reduced sales by 5.4 percent, while sales to Caucasians were down just 3.7 percent and Asian Americans just 3.3 percent.”
• “Larger households with five or more people declined at 127 percent of the average. Younger shoppers were slightly more likely to reduce purchasing, while shoppers 65 years and older were impacted 25 percent less than the average.”
Meanwhile, the News & Observer reports that real estate developer Leon Capital Group is suing Lidl for breach of contract, calling Lidl's conduct "fraudulent" and “deceptive” while saying that “the grocer left real estate developers ‘holding the proverbial bag’ in millions in development costs through ‘lies, misrepresentations and bad faith’.”
The lawsuit charges that Lidl tied up hundreds of sites as it planned its US incursion, many of which have not been developed as lower-than-expected sales caused it to cut back on its plans. The suit suggests that either Lidl did this deliberately to prevent other retailers from getting good locations while it tested thew waters, or was incompetent and bit off more than it could chew.
Lidl says that it will vigorously defend itself and that it “will become apparent that the allegations in the complaint are without merit.”
- KC's View:
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A lot of this makes clear that while there were a lot of concerns about Lidl’s ability to disrupt the marketplace - and I’ll admit that I did my share of alarm-sounding - at least to this point, the impact has been underwhelming.
But…I would be careful about underestimating Lidl’s ability to pivot and adapt. Lidl didn’t get to be Lidl by being incompetent. It has money and desire, and so it may well have a US future, even if it will take longer and be harder than expected.
