business news in context, analysis with attitude

The Wall Street Journal reports that while Lidl’s first US stores were successful at luring shoppers from other retailers, it “hasn’t been able to sustain that level of traffic, and grocers including Kroger Co. and Wal-Mart have recovered much of their lost market share.”

Some context:

“In June, Lidl was drawing 11% of consumer visits to traditional grocers in nine markets in Virginia, North Carolina and South Carolina, according to data that inMarket shared with The Wall Street Journal. By August, Lidl’s share of that traffic fell below 8% … Lidl’s share of grocery visits declined in that period even as it was opening more stores in those states. Lidl has opened 37 stores in five states and plans to operate as many as 100 in total, from New Jersey to Georgia, by next summer.

“When more-diversified food sellers such as Wal-Mart and Target Corp. are included, inMarket says Lidl’s share of shopping trips in those states peaked at nearly 3% in June before falling in July and August. Lidl recovered some traffic in September, reaching 2% of the market.”

However, Will Harwood, a Lidl spokesman, says, “This is designed for us to learn and adapt and be nimble. It’s not about whether our model works in a market, but what we do to adapt to that market.”
KC's View:
First of all, let’s be clear about something. This is early days, and Lidl has plenty of running room in which it can adjust its offer to make it more compelling to shoppers. They have to act nimbly, not just talk about being nimble, but it seems to me that this is not out of the realm of possibility. And, even if its market shares are not what some thought they would/should be, Lidl also can have an impact on the expectations game, affecting the competitive environment in a way that can impact margins and profits.