Private Label Remains The Focus For Lidl
The past few years have been challenging for the U.S. division at Lidl. Following several years of growth in the easter portion of the country, the grocer experienced noteworthy management changes and a pause in new store openings.
Today, the grocer appears to be back on track, focusing its store expansion efforts on key markets in the east while also launching a new consumer-direct marketing campaign designed to highlight what Lidl feels sets it apart from other grocery chains.
In an interview with Store Brands, Miguel Paradela, executive vice president of Purchasing and Chief Commercial Officer for Lidl US, offers insight into the current state of the company, its efforts to upgrade its assortment, and which areas will see new store growth in the year ahead.
STORE BRANDS: When you look at Lidl’s position in the marketplace today, how do you view the company’s presence in the U.S. grocery market?
MIGUEL PARADELA: Throughout the last year there have been a lot of organizational and strategic changes, and these changes are important for Lidl. But, we continue to be strongly focused on private label products. This has been and continues to be our business model and is why we have been successful as we operate in more than 30 countries worldwide. One of our focuses currently is on our fresh categories, which includes our selection of produce, bakery, meat, poultry, and fish. We’re also focused on carrying more private label products and fewer branded items. Our customers are asking for more affordable items, but still want those products to be high quality and innovative. Having products that meet those needs is what makes us different from other retailers.
SB: Regarding Lidl’s enhanced focus on its fresh assortment, does this include expanding products and better pricing? What is the ultimate goal of this renewed effort?
MP: The main focus for us has been to get the assortment right. We’ve made some assortment adjustments such as replacing some items in produce while maintaining a strong and representative assortment. We’re not carrying 7,000 items like other retailers, but our selection of more than 4,000 items makes our assortment very attractive to shoppers. We’ve also taken steps to guarantee maximum freshness of our products and we have increased the frequency of fresh product deliveries to our stores. We’ve also done a big revamp in meat and poultry as we have changed suppliers and changed the items we carry and at the same time focusing on the categories our customers want. This includes the patties, ground beef, and beef items that showcase our new private label brand Butcher’s Specialty. Also, our fresh bakery products are a can’t-miss as you walk into our stores. We have added more American products to the assortment that shoppers expect to find in bakery such as New York bagels and donuts, along with innovative items such as our French butter croissants that we import from Europe. The croissants are one of our hero items.
SB: Private label products have been the cornerstone of Lidl’s assortment. As U.S. consumers increase their purchase rates of private label products, how is this impacting the assortment Lidl offers?
MP: As you mentioned, U.S. consumers are deciding to put more private label products in their baskets. We continue to watch market data, which shows this growth. Over the past 12 months, Lidl US share in private label items grew 8% faster than total market in the past year, which shows our business model and our strategy is the right one. More than 70% of our assortment is private label and we continue to see big opportunities in the category.
SB: We’ve talked earlier about the changes to Lidl’s fresh categories. Are there other categories at Lidl we should be watching where we will see innovation in the coming year?
MP: There will always be updates to products to meet the needs of our customers. The frozen area is one we feel offers a lot of opportunity. Also, the chilled area with products such as cheese and yogurt is one we’re also focused on. There is a lot to come in both categories.
SB: Lidl recently launched a new consumer marketing campaign. What will the campaign tell current customers and those who have not yet shopped in your stores?
MP: Our goal is to get new customers into our stores and also work to make our current shoppers more loyal. With the campaign, we are highlighting the innovations that we are offering and to make sure that everybody understands what Lidl offers. We guarantee the best price/value proposition and want to be the first choice for grocery shoppers.
SB: What plans does Lidl have to expand its store count and grow beyond its base of operations on the East Coast?
MP: We are focusing on our core markets and will keep growing in those areas. As we look to open new stores, our focus will be on metropolitan areas such as Washington, D.C., Atlanta, and New York.
SB: As you look ahead, what role do you see Lidl having in the U.S. grocery marketplace?
MP: Lidl will make a big difference in the U.S. grocery marketplace because of our attractive assortment. Part of our business model is to offer a selection of products that is focused on making the shopping experience for our customers faster and better. We offer a more limited assortment but are focused on having the right products in the store. We want our customers’ tour through the store to be easy and fast to allow them to spend more of their time with family.
