Amazing article in French magazine LSA. Lidl is one of the largest retailer in the world. Most of time, it is under estimated for several reasons:
- First of all, it is a hard discounter. Therefore it keeps it simple, does not innovate much on products or shopping experience, but maintain consistently excellent execution in store.
- It does not communicate much, as it has a low marketing budget, but also because the company culture is based on not discussing about the company. No public statements, no communication on the sales figures. It is a familly company.
- It does not try to have "avant gardist" store concept. When it takes a decision, for example to have in store baked bread, to spread it fast.
But Lidl has changed its strategy not so long ago, trying to leave hard discount to become "the real supermarket of tomorrow" as its French manager Friedrich Fuchs explains. Here are the great highlights of the article.
- Lidl is giving up the hard discount concept in all its countries, to become a new form of supermarkets.
- The share of sales under "national brands" is 10%, private label 90%
- The strategy is to extend the average store from 880m2 to 1300m2
- It will also implies larger employee staff, from 8-9 people in 1990 to 20-25 people (the double of people of the average Ed at the time I worked there).
- Lidl has a digital strategy based on click & collect deals, especially on premium wines.
- They have 1 621 products in range.
- They don't have any plans on extending their national brand range, focusing their effort on their private labels. They even said they don't need national brands! Watch out suppliers.
- They have purchasing agencies in all their European countries, but try as much as possible to buy at a European level. For example major brands like Coke (Coca Cola) are negotiated at Lidl International in Germany. But France have special products bought for the whole Europe, like cheese and wine in France. This is a great idea as France is the main market for those products, and as they are local suppliers, they could benefit from a better sourcing.
- Stores are delivered each day, by 25 warehouses (60 stores per warehourses, which is in my opinion not as much as I believed).
Real Estate Strategy
- They have a clear real estate strategy: On the 1500 stores in France, they plan on rebuilding 900 of them.
- They spend 4,5 to 5 million € to reshape each of their store renovation. Let's put it in prospective: Lidl France = 8,5 billion € in 2014. They have 1 500 stores. That means they spend 100% of a year's sales in each store!!!! Crazy investments!
Their strategic goals by 2020:
- Having renovated 100% of their current stores
- Reach 1800 to 1900 stores
- 8% of market shares (from 4.9% today)
This is amazingly detailed, and I hope you like the precision of the explanations and figures given in this article.
