Saturday, January 20, 2018

Why Lidl needs to apply careful strategic planning to its U.S. expansion

Have you ever seen just one Lidl supermarket in a specific country?

The answer will surely be “no”, because Lidl’s philosophy is based on the establishment of as many supermarkets as possible, with all of them being located in the main cities and towns that lie within the territory of a country.

Lidl’s key strength is its highly-organized supply chain, which relies on the achievement of a high volume of sales, in order for it to be economical and cost-efficient for the company. As a result of the cost savings achieved through its logistics expertise and also through the size of its distribution network, Lidl can offer discount prices to its customers.

Therefore, before implementing any expansion to new areas, change of strategy or policies, and/or extension of its range of products, Lidl has to plan carefully those actions, since they involve a heavy investment in logistics equipment, facilities (warehouses), and means of transport (big trucks, in particular).

Although expanding to the U.S. market is a long-standing ambition for many companies, only a few of them have proved to be lucky or capable enough to make their dream come true.

Lidl has been one of those companies that have realized their dream by expanding to the other side of the Atlantic.

However, things may be a bit more complicated than originally expected, and the company should make use of wise strategic planning, if it doesn’t want to encounter any nasty surprises.

It is a fact that Lidl does not possess the same level of market insight and expertise for the U.S. retail market, specifically regarding the supermarket sector, as it does for the European market.

Thus, in order not to suffer any unexpected heavy losses, this discount store chain should probably consider to implement different marketing approaches, or even an entirely differentiated business model, so that it can attract and retain consumers.

Regardless of its vast previous experience as a highly successful discount store operator, with literally thousands of stores in various countries under its bonnet, Lidl will be literally regarded a startup company when it comes to the expansion of its operations to the U.S. market.

As a result, it should try not to be carried away with the success that it has enjoyed in Europe so far, because the U.S. market has got its own unique and distinctive characteristics that differentiate it from the European market to a large extent.

Lidl’s change of strategy -- Slower and focused
Further reading:
German market chain Lidl maps its first USA stores