After a sluggish debut, Lidl has begun to pick up steam by offering a revamped merchandising plan (featuring more American products), a smaller footprint (20,000-25,000 square feet vs. its original 36,000 square foot model) and an evolving real estate philosophy in which it is now willing to lease locations rather than adhering to its initial decision to acquire all real estate and build on those sites. It had also originally chosen to build many of its stores in the same trading areas as two more established and successful discount retailers – Walmart and Aldi – making Lidl’s entry that much more difficult.
The German discounter, which debuted in the U.S. in June 2017 and planned to have more than 100 stores open in the Mid-Atlantic and Southeast during its first year, has faced setbacks primarily in its ability to generate the level of sales that many predicted.
After being criticized for not being in touch with the American consumer by its own leader, Klaus Gehrig, CEO of the Lidl’s parent company, Schwarz Gruppe, Lidl moved company veteran Johanne Fieber into the U.S. chief executive post and added Roman Heini to the newly created post of chairman of its U.S. business. The collective moves have seemed to help.
Despite the early challenges, Lidl is still prepared to spend earnest capital to grow. Trade analysts believe that the privately-held merchant has spent as much as $2 billion to acquire land, build stores, construct three distribution centers and hire a management team that is based in an impressive headquarters building in Arlington, VA.
It also made a significant investment when it acquired 27 Best Market stores (24 on Long Island) earlier this year and announced plans to convert those stores to the Lidl banner over the next three years. The first of those stores – Babylon and Huntingdon – will open early next year. Also opening early next year as Lidl units will be two stores – Plainview and Center Moriches – that Best Market acquired from A&P in 2016 (but had not yet opened).
The discount retailer is also reportedly interested in acquiring several Shoppers stores in the Baltimore-Washington market that current owner UNFI has put on the sales block.
In addition to the Best Market purchase, Lidl earlier this year announced that it will open 21 new stores (not including the planned conversions of those Long Island units) with a heavy focus on Pennsylvania, New Jersey and Maryland, three states where Lidl had only operated a handful of stores.
During the past three months, some of those planned new stores have opened, including units in Trooper, PA; Royersford, PA; York, PA; Lacey, NJ; College Park, MD; and Hagerstown, MD. It will also open an additional New Jersey store in Bergenfield; an additional Pennsylvania unit in Philadelphia (East Butler Street); and five more stores in Maryland – Catonsville, Lanham, Nottingham, Waldorf and District Heights, which opens on October 9.
With the inclusion of the Best Market stores, Lidl U.S. now operates 107 stores.
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