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Aldi and Lidl in America 2017

Aldi and Lidl in America 2017

The grocery industry is focusing on the online revolution and AmazonFresh. But, actually, a different format is outperforming the growth in the online channel and the total sector by quite a margin – the hard discounters.

Following that logic, Schwarz’ CEO has mothballed the Lidl click & collect prototype in Berlin. He pointed to the UK, the most advanced online grocery market. The fastest growth, again more than 20% this month, is achieved by Aldi and Lidl.

So, while focussing on the long term, the digital revolution and transformation is of course the right thing to do, grocers shouldn’t take their eyes off the ball. In the immediate here and now – the discounters are the real threat to top line sales and margins.

And now Schwarz Group’s Lidl, the EU’s biggest retailer by sales, is coming to America…


Executive summary
The Concept
The concept: product centricity, relentless process optimisation
The concept: modernising one single format, internationalisation, buying power
A winning format: The Discounter – success factors
The concept: adaptability, agility, online opportunity, optimisation and efficiency
The concept: Aldi Sued expansion
Global retailer ranking: Top ten by sales 2015, USA retail & grocery data
Global Top 10 Retailers, $bn sales 2015: ranking and analysis
USA data: population, retail sales, grocery sales in $m, p.c. spend in $, 2011-16
Aldi Sued USA
Aldi: A completely underestimated business model
Aldi: Simplicity, simplicity, simplicity – fine tuning a single format over decades
Aldi: Efficient layout and product presentation and the all important SKU count
Aldi: Lean SKU count means bigger buying power than Wal-Mart
Aldi: Supplier relationships and the quality focus
Financials and KPIs: Aldi 2017
Aldi: The original – split into two, an organising principle to manage complexity
Aldi: Sales 2011 - 16, Sued & Nord in €m, international vs domestic
Aldi: The diverging performance in Germany, leading the sector in sales per store
Aldi: Profitability and margin decline in Germany, record investment, brand listings
Aldi: new store concept and fresh ranges drive up staff costs
Aldi: Benchmarks, sales densities, Sued ahead of Nord, profits and margins
Aldi USA 2017
Aldi: US Figures 2015 - 16, sales, stores, space, sales per store, sales density
Aldi: Aldi Sued – a rising force in US grocery, operates from coast to coast
Aldi: USA, investing $3.0bn, simply living
Aldi: Aldi retailing strategy in the USA
Recent key developments
Recent key developments: Aldi announces accelerated growth strategy
Recent key developments: Aldi $1.6bn nationwide store remodel plan
Pricing profile versus Walmart
Strategy: Aldi pricing versus Walmart, research shows considerable gap
Strategy: … then Walmart lowers prices …
Strategy: Walmart lowers prices, the Reuters data
Strategy: Aldi battles Walmart for price leadership
Updated stores
Updated stores: Aldi store strategy USA
Updated stores: Aldi begins remodeling stores near first Lidl sites
Store visits - pictures
Trader Joe’s
Trader Joe’s: Figures 2015 - 16, sales, stores, space, sales per store, sales density
Aldi Nord: Trader Joe – highest sales density in the USA
Aldi Nord: Trader Joe’s innovative take on grocery
Store visits - visits
Outlook: What are Aldi’s likely future plans? Trader Joe expansion?
Outlook: Should the Trader Joe’s concept be brought to the EU?
Lidl 2017
Lidl: the copy cat overtaking Aldi, the original
Lidl: the brands equilibrium, Kaufland the growth driver in CEE
Lidl: OSA, Warendruck, operational independence for Lidl and Kaufland – until now?
Lidl: category management, always the second mover
Schwarz: Data and KPIs
Schwarz: sales 2010-17, total & domestic growth, domestic share of total
Lidl: strong growth essentially lfl, pan EU presence, big bang expansion
Lidl: store upgrades, premiumisation, bake off stations, vertical integration
Lidl: efficiencies in the supply chain and stores
The expansion into the USA
International expansion: USA delays and nervousness International expansion: high expectations, scheduled to start trading in 2018
International expansion: USA HQ in Arlington, Virginia, take lessons from Aldi’s US journey
International expansion: USA laying the groundwork, around 40% national brands
International expansion: USA new store concept, Aldi, Dollar stores, stiff competition
International expansion: USA expansion steered from Ireland, SAP HANA, DCs
Recent key developments
Recent key developments: Lidl openings to attack Aldi
Recent key developments: Lidl & Aldi store location map and overlap
Recent key developments: Lidl looks for sites in Ohio
Recent key developments: US grocers reacting preemptively to Lidl opening
Recent key developments: Lidl looking for sites in Texas
Recent key developments: Lidl starting date revealed for 20 sites
Recent key developments: The locations for Lidl’s first 20 stores
Recent key developments: Lidl’s private label structure in the USA
Store impact analysis
The prototype store: Lidl in Fredericksburg, Va
New store concept: the EU model, energy efficiency
Store impact analysis: First 20 Lidl stores will impact Walmart
Store impact analysis: Lidl store location impact analysis on competitors
Store impact analysis: Southeast, Mid-Atlantic ripe for Lidl share growth
Store impact analysis: low staff cost ratios
Store impact analysis: Has Lidl secured the right sites?
Strategy: Lidl USA 2017
Lidl: two top priorities for the USA
Vertical Integration
Vertical integration: achieved in soft drinks, progressing in confectionery, the PET system
Vertical integration: vertical integration in fruit and vegetables, DCs built, owned and run by Lidl
Vertical integration: even bigger suppliers completely out of capacity when dealing with Lidl
Vertical integration: delays with the ice cream project, investment scaled up, cutting edge facilities
Fresh & local
Fresh & local: pivot to offer quality and freshness and low price
Fresh & local: the importance of vertical integration
Fresh & local: bake off stations, meat, poultry, seafood
Fresh & local: Triple supply, replenishment costs, supply chain
Fresh & local: moving away from standardisation to localisation?
Outlook: Questions answered: Aldi & Lidl 2017
Questions: What will be the ultimate size footprints of Aldi and Lidl in the USA?
Questions: Will Aldi and Lidl settle more in urban, suburban, or rural markets?
Questions: What have been the biggest hurdles and learnings for Aldi?
Questions: Is Aldi a complementary trip, or a competing one, vs. Walmart?
Questions: What will be the biggest differences between Aldi and Lidl in the U.S.?
Questions: Who is most at risk to lose market share to Aldi and to Lidl?
Questions: What could be the ultimate market share for Aldi and Lidl?
Questions: Do Aldi and Lidl have the right management teams?p130 Questions: What are the most effective defense tactics from competitors of Aldi?
Questions: How close in price does Walmart needs to get vs. Aldi?
Questions: What customer is Lidl targeting?
Questions: What are grocers doing to prepare for Lidl’s East coast expansion?
Questions: What are Aldi and Lidl doing on the e-commerce side?
Questions: Why did Lidl decide that now was the right time to push into the US?
Questions: How many US stores will Aldi and Lidl operate five years out?
Questions: Will Aldi or Lidl ever become a leading player in any metro market?
Questions: How are Aldi and Lidl funding their growth?
Questions: Will Lidl’s entry have a better chance of success than Tesco?
Recommendations
Recommendations: FMCG Players In The USA Should Get Ready For Lidl Now
The impact on Walmart
The impact on Walmart: the context
The impact on Walmart: the new threat from the discounters
The impact on Walmart: the discounters business model
The impact on Walmart: Aldi outperforms Walmart on SKU buying level
Sources
Chart 1: A winning format: The Discounter – success factors Chart 2: Global Retailers Top 10, $bn sales 2015
Chart 3: Reuters pricing data Aldi vs Walmart
Chart 4: Lidl & Aldi store location map and overlap
Chart 5: Triple supply, replenishment costs, supply chain
Table 1: USA data: population, retail sales, grocery sales in $m, p.c. spend in $, 2011-16
Table 2: Aldi: Figures 2011 - 16, Sued & Nord in €m, international vs domestic
Table 3: Aldi: US Figures 2015 - 16, sales, stores, space, sales per store, sales density
Table 4: Trader Joe’s: Figures 2015 - 16, sales, stores, space, sales per store, sales density
Table 5: Schwarz: sales 2010-17, total & domestic growth, domestic share of total

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