Lidl driving down U.S. competitors’ prices to ‘unprecedented’ levels
Grocery chains with stores near Lidl’s U.S. stores lower their prices for private brand staple products by as much as 55 percent in those markets compared to their stores in markets that do not have a Lidl store, according to a new independent study led by Katrijn Gielens, an associate professor of marketing at the University of North Carolina Kenan-Flagner Business School, that was commissioned by Lidl US.
The study evaluates the competitive price effect of Lidl’s entry into the U.S. grocery market and the reaction of key competitors: Aldi, Food Lion, Kroger, Publix and Walmart. Gielens analyzed prices in six markets where Lidl operates and six control markets without a Lidl store — in Virginia, North Carolina and South Carolina. The study looked at 48 grocery products, including dairy items, meat, produce, canned items and frozen foods, the prices of which were collected on store visits.
“We know that supermarket chains systematically compete with each other on price,” said Gielens, an expert in international retailing. “The level of competitive pressure Lidl is exerting on leading retailers to drop their prices in these markets is unprecedented. In fact, the competitive price-cutting effect of Lidl’s entry in a market is more than three times stronger than the effect of Walmart’s entry in a new market reported by previous academic work.”
For more information on the study’s findings, read this article in Store Brands’ sister publication Progressive Grocer.