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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"For now, Lidl is all about being dynamic. Compared to supermarkets and hypermarkets, the discount model obviously bears less risk and offers a much better return profile."¹

- Jürgen Elfers, Head of European Retail Research, Commerzbank², in February 2004.

"Lidl is notorious for its aggressive handling of its domestic suppliers, contractors and employees."³

- Pascal Kuipers, chief editor, Elsevier Food International⁴, in February 2004.

Introduction

In June 2008, Focus⁵ magazine reported that Lidl Stiftung & Co. KG (Lidl), a Germany-based discount retailer and part of the Schwarz Group, intended to open 1,000 new stores in Germany, taking its store count to 4,000 in that country. However, the company did not specify any time frame for the roll-out. The magazine also reported that Lidl would enter the US by 2012.

Lidl was founded in 1973 by Josef Schwarz in Germany and later expanded by his son, Dieter Schwarz. Although initially modeled on Aldi⁶, the pioneer of discount retailing in Germany, Lidl soon made a mark for itself. Within five years of the first store opening, Lidl had 30 stores in Germany. As of June 2008, it had around 3,000 stores in the country.

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1] Pascal Kuipers, "Lidl: Darwanian Discount,"www.foodinternational.net, February 2004.
2] Commerzbank, founded in 1890 and headquartered in Frankfurt, Germany, is one of the leading financial institutions in Germany.
3] Pascal Kuipers, "Lidl: Darwanian Discount,"www.foodinternational.net, February 2004.
4] Elsevier Food International is a quarterly magazine, specializing in international food grocery. (Source: www.foodinternational.net).
5] Focus (AFX UK Focus) is a UK-based financial news agency that also publishes issues of political and economic interest.
6] Founded by Karl and Theo Albrecht in the late 1940s, Aldi was the first discount format grocery chain in Germany. The chain comprised two divisions ALDI Nord (North) and ALDI Sud (South), which operate independently of each other in specific markets. (Source: http://en.wikipedia.org/wiki/Aldi)

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