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Lidl Looking to Shake Up U.S. Grocery Market

German discounter’s entry into the United States is stirring up the U.S. grocery channel.
July 14, 2017

​NEW YORK – CNBC reports that things are shaking up in the U.S. grocery industry with a new entry to the market: German discounter Lidl. 

Karen Short, a food and grocery analyst at Barclays, told CNBC's "Power Lunch" that Lidl wants to be Wegmans, as Trader Joe's is to Whole Foods, adding that the grocery industry is ripe for more disruption in making this analogy.

Lidl, one of the world's largest retailers, opened its first 10 U.S. grocery stores in Virginia, North Carolina and South Carolina in mid-June. The retailer is planning to open an additional 20 stores on the East Coast this summer and have up to 100 stores open within a year, in states like New Jersey, Pennsylvania and Georgia, per the news source.

Lidl’s biggest differentiator is its product mix, where about 90% are referred to as “premium private label,” notes CNBC, which could help change any negative perceptions U.S. shoppers may have toward store-brand products. Short commented that U.S. consumers are “trained to not like private labels," however more retailers are creating their own brands to compete for shelf space. Retailers changing the private-label game include Whole Foods with its “365 Everyday Value” brand; Kroger with its “Private Selection” brand; and Target’s “Market Pantry” private-label foods.

CNBC notes that Lidl's private-label brands tend to be higher margin and provide the retailer with more opportunities for deep discount pricing.

Short commented to CNBC that grocers also need to strengthen their brands as competition from overseas invades the United States. "[Lidl] is positioning themselves along the Eastern seaboard … going after a niche, middle-income consumer," she said. "[The] store looks very nice. … Trust me, Walmart is not taking this lightly,” she said.