business news in context, analysis with attitude

I've been writing a lot lately about Aldi and Lidl's plans for the US, and how US retailers need to take the threat very seriously. But one MNB reader isn;t necessarily buying:

For 2 years prior to Tesco opening in the US every day you talked about how scared the US retailers should be of them and how they were going to change the landscape and have an impact on this  and an impact on that and that if you were a US food retailer how worried you would be etc etc etc you went on and on.

Just one question: How did that work out for you and Tesco?

Now you are starting all over again like all the US retailers should be scared out of their boots of these guys and how they might not be around when they come in. I realize they are big so was/is Tesco, I realize they are successful with their concepts in Germany and no doubt they won't help the US retailer but don't underestimate the US retailer They will survive. I read your news letter everyday and i do hope I don't have to read everyday as to what Lidi is going to do to the US food industry. The way you talk all supermarket operators including Walmart should start closing up now and ease the pain.

This is a very fair point.

I've said this before, and I'll say it again. I was totally wrong about Tesco's Fresh & Easy stores ... but I think this is because Tesco totally misread the market, which was completely out of character for the company. They were guilty of hubris, and underperformed dramatically. (Once they opened, by the way, I registered my disappointment.)

It always is possible that, while trying to emulate Paul Revere, one ends up looking a lot more like Chicken Little. I'll try not to beat a dead horse, but I'm willing to take the risk.

I don't think, by any means, that US retailers ought to close up and go home in the face of Aldi and Lidl. But I do think they need to take the threat seriously and begin competing with them now, and not wait until they open up down the street. (I'd be willing to bet that Walmart already has a war plan developed for how to compete with Lidl. No question about it.)

By the way, I also got this email yesterday, from MNB reader Bob Thomas:

I am familiar with Lidl in Germany.  They have the ability to offer an amazing value proposition to US consumers – quality and price.

Regarding Target's small urban store initiative, MNB reader David Fischer wrote:

I've been to several of the Target Express locations in the Bay Area. I can't figure out how they are different from a CVS or Walgreens? They have pharmacy, food and a small selection of general merchandise. Is Target basically getting into the drugstore business?

Responding to our story yesterday about Kroger pursuing a market share strategy in the current food deflation environment, MNB reader Tom DeMott wrote:

Kevin, I worked at Kroger in the late seventies and early eighties and I can tell you the one refrain I heard from many executives during this time was to always defend market share. Division management were evaluated on their market share and if there was ever any slippage, they would defend it relentlessly often with corporate assistance. Defending Market Share is in Kroger’s DNA.

Unfortunately most food retailers defend their historical profit rates at the expense of market share which often begins a downward cycle into irrelevancy.

And MNB reader Larry Ishii wrote:

I agree with you that Kroger is smart to strategize this way; they did not get to where they are without a lot of very smart decisions having been made along the way.

As I had told you once before, I was so impressed with Kroger for the year that I worked for them on the West Coast. They have been so much smarter than Wal Mart in managing their company and their growth.

Let’s hope that they continue with their excellent decision making and excellent management development.


And two more baseball-related emails....the first from MNB reader Noah Fleisher:

I’m a lifelong Texas Rangers fan, and therefore accustomed to (and expecting) heartbreak from my team, but this is going to be a delicious series. The drama is inherent already. I predict Rangers in 4, and I predict Joey Bats better wear a suit of armor when he takes his first at-bat at the Ballpark.
Rangers fans have also not forgotten the incredibly boorish behavior of the Jays’ fans last year – the same behavior that was on display again against the O’s.

And, from another reader:

Just a quick note about innovation in baseball.  I find it amusing that we still see managers and pitching coaches using land-line phones to call the bullpen from their dugout.  This technology is about as close as one can get from two cans connected by a string.

Absolutely right. And I'd look for that to change. Soon.
KC's View: