Can Lidl Compete with Aldi in the U.S.?

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Well-known across Europe, Lidl (pronounced lee-duhl) is a discount supermarket giant based in Germany. It operates over 10,000 stores in 27 countries, and has made a huge footprint in the grocery industry since its founding in 1930. Luckily for American consumers, Lidl is finally coming to the U.S.

Lidl plans to open its first 20 stores throughout Virginia, North Carolina, and South Carolina by this summer, and up to 100 stores within the first year up and down the East Coast. It did not say which cities where the grocery stores will open. This is an earlier debut than the 2018 time frame it initially targeted.

What Will Lidl Look Like?

According to The Washington Post , Lidl's U.S. store prototype is much larger than a typical European location. 35% bigger, in fact, says U.S. chief executive Brendan Proctor, than some of the company's biggest stores in Europe. "The company decided to go with a larger format because it thinks that it will need to offer a wider array of items to thrive in the U.S. market," notes the Post.

Like Aldi, Lidl offers its customers a no-frills grocery shopping experience. Product is placed on the shelves in original delivery boxes, allowing customers to take what they need directly from the carton and saving Lidl money by not having to pay someone to stock shelves. So, when the box is empty, it is simply replaced with a full one.

But unlike Aldi, Lidl offers more branded products and imports more low-priced gourmet foods, as well as sources many local products from the countries where its stores are located. Aldi, however, is known for its exclusive house brands, which lets the grocer provide its products at a discount without the hidden costs of advertising and marketing usually associated with national name brands.

The Post also points out that Lidl will offer a large selection of non-grocery items in its U.S. stores, much like it does in its European locations. Shoppers can expect home improvement items like drills, outdoor items like lawn mowers, and even yoga pants, and this miscellaneous section will rotate out with new offerings about every week.

Can Lidl Compete?

But can Lidl take on Aldi? The other German discount supermarket company opened its first U.S. store in 1976, and now operates 1,600 stores stateside, under both the Aldi banner and Trader Joe's.The company has invested $3 billion into a 5-year expansion plan that will add more than 650 new locations by 2018, increasing the number of U.S. stores to 2,000.

Aldi has smartly expanded its product selection to include more specialty items that cater to the health-conscious shopper, and it offers many gluten-free, better-for-you, and natural and organic products, much like Walmart WMT and Kroger KR have recently done. The amount of fresh food being offered at Aldi stores has been widely expanded as well, and even its dairy products are now without artificial growth hormones.

It's a known problem that American consumers feel torn at the grocery store, either getting high quality product at extremely high prices-looking at you Whole Foods WFM -or settling for okay quality at cheap prices. Aldi has tried to bridge this divide, and has found success in doing so. Lidl would be wise to follow suit.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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