ARLINGTON, VA–German grocery Lidl, a division of Germany's Schwarz Group that has its US headquarters here is preparing for its entrance into the US market this summer with a simple plan: undercut its competitors' prices at reductions of 50%. So said Brendan Proctor, chief executive officer for Lidl US at a media event in New York this week speaking with Reuters.
Lidl was unable to return a request for comment to GlobeSt.com in time for publication.
Clearly, Lidl will have an impact on the grocery-store market, which is already struggling with margins and like its traditional retail counterpart, is also feeling its way in a new environment that is rapidly changing thanks to e-commerce and changing consumer tastes.
In many ways, though, the grocery-story sector has been under siege for decades — the market share of traditional grocers has declined roughly 40% since 1980, wrote Matthew Cypher, a professor of real estate finance and director of the Real Estate Finance Initiative at Georgetown University, last year in an issue of UrbanLand, the Urban Land Institute's magazine.
The issues facing this segment of the grocery market have been well documented as the “squeezing of the middle”: traditional grocery store formats are losing market share to value-category competitors such as Walmart and other supercenter concepts, while also struggling to compete against the premium grocery formats such as Whole Foods that focus on high-quality produce, meats, and prepared foods.
And as e-commerce gains traction in the grocery space, margins will erode even further.
Exactly how Lidl will affect the local grocery-stores will be seen shortly. The first wave of stores will be opening in June, in Virginia and in the Carolinas.
ARLINGTON, VA–German grocery Lidl, a division of Germany's Schwarz Group that has its US headquarters here is preparing for its entrance into the US market this summer with a simple plan: undercut its competitors' prices at reductions of 50%. So said Brendan Proctor, chief executive officer for Lidl US at a media event in
Lidl was unable to return a request for comment to GlobeSt.com in time for publication.
Clearly, Lidl will have an impact on the grocery-store market, which is already struggling with margins and like its traditional retail counterpart, is also feeling its way in a new environment that is rapidly changing thanks to e-commerce and changing consumer tastes.
In many ways, though, the grocery-story sector has been under siege for decades — the market share of traditional grocers has declined roughly 40% since 1980, wrote Matthew Cypher, a professor of real estate finance and director of the Real Estate Finance Initiative at Georgetown University, last year in an issue of UrbanLand, the Urban Land Institute's magazine.
The issues facing this segment of the grocery market have been well documented as the “squeezing of the middle”: traditional grocery store formats are losing market share to value-category competitors such as Walmart and other supercenter concepts, while also struggling to compete against the premium grocery formats such as Whole Foods that focus on high-quality produce, meats, and prepared foods.
And as e-commerce gains traction in the grocery space, margins will erode even further.
Exactly how Lidl will affect the local grocery-stores will be seen shortly. The first wave of stores will be opening in June, in
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
