Aldi Vs Lidl in US: Who will lead the Grocery Retail Disruption?
Case Code: BSTR558
Case Length: 11 Pages
Pub Date: 2019
Teaching Note: Available
Organization: Aldi, Lidl
Themes: Corporate Strategy, Growth Strategy
Abstract Case Intro 1 Case Intro 2 Excerpts
This case discusses the intensifying price wars on the US grocery retail aisle. US retail, which was already under pricing pressure because of players like Amazon, Kroger, etc., experienced a further onslaught from German discount retailer Lidl. While another German hard discounter Aldi had been operating in the US since 1976, the debut of Lidl in June 2017 sent tremors through the industry. Lidl entered the US with the slogan 'Rethink Grocery' and opened10 stores across the country. It also unveiled plans to open 100 more stores by 2018. The chain promised US consumers a new shopping experience and prices up to 50 percent lower than the those at existing grocers.
Lidl's hyped entry triggered a price war among all the other players, who in turn geared up to combat the discounter. Aldi too announced an investment of about $3.4 billion on remodeling and expansion in the US. The competition between the two German discount chains resulted in putting massive pressure on their rivals who were forced to drop prices. However, Lidl saw a sluggish performance during the first year and it had to modify its strategy. But analysts felt the battle looming between Aldi and Lidl would cause a major disruption to the traditional supermarkets. Their aggressive cost-slashing tactics were certain to win them a healthy market share.
With Aldi and Lidl competing for retail supremacy in the US market, it remained to be seen what impact it would have on the market and the other players. It would also be interesting to see who would lead the disruption of the US grocery retail.
The case is structured to achieve the following teaching objectives:
- Understand entry and expansion strategies of hard discounters in a developed retail market like the US
- Understand the challenges retailers can face while operating in a highly developed retail markets
- Analyze the strategies of a competitor / well established player to combat threat from new entrants
Background of the Grocers
The Discounters' Stint in the US
Counter Moves to Combat Lidl
Lidl's Hyped Entry
Entry Gone Awry
Lidl's Change in Strategy
International Expansion, New Market Entry, Disruption, Entry Strategy, Expansion Strategy, Retail Management, Globalization, Store Format, Product Assortment, US Grocery Market, Hard Discounters
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