Lidl: The Hard Discounter

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Case Details:

Case Code : BSTR290
Case Length : 15 Pages
Period : 2006-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : Lidl
Themes: Business Strategy
Industry : Retail
Countries : Europe

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Lidl began its international expansion in 1988 when it opened a store in Colmar, France. As of 2008, it had a presence in 23 European countries and offered stiff competition to discounters like Aldi, Penny⁷, etc., and to other big retailers like Tesco⁸.

Newspaper reports in early 2008 suggested that with the rising cost of living, customers in Europe were opting to shop at discounters such as Lidl. For example in the UK, Lidl recorded a sales growth of 9.6% (between March and May 2008). Which?⁹, a UK-based magazine that ranked retailers including high-street stores in the UK on the basis of customer satisfaction, ranked Lidl sixth, while Aldi was placed ninth, and UK's leading retailer Tesco, thirty seventh.

However, Lidl faced some challenges as well. For example, like discounters, several other retailers were offering attractive deals on product lines, and at the same time stocking a wider assortment of merchandise. Lidl also faced criticism for its human resource practices.

Background Note

Lidl's history goes back to the 1930s when Josef Schwarz (Josef) bought a stake in a wholesale fruit business, called Südfrüchte Grosshandel Lidl & Co. Josef expanded the business to include grocery.

It was renamed Schwarz-Lebensmittel-Sortimentsgrosshandlung (SLS). The business expanded in the 1930s and the early 1940s till it was destroyed during World War II in 1944. It took the company ten years to rebuild the business. It then merged with the A&O retail chain, based in Heilbronn¹⁰...

Excerpts >>

7] Penny is a discount chain operated by the Germany-based REWE Group. In 2007-08, Penny recorded a turnover of €5.9 billion. As of mid-2008, there were around 2,000 Penny stores in Germany. (Source: www.rewe-group.com)
8] Tesco plc. is a UK-based international grocer and general merchandise retail chain. It was established in 1919 and as of 2008, it was the market leader in Britain, both in terms of sales and market share and the third largest retailer in the world.
9] Which? is a British consumer magazine that conducts consumer campaigns, and product tests and publishes consumer-related reports.
10] Heilbronn is a city in northern Baden-Württemberg, Germany.

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