lidl_of_the_future_store_front_2Lidl will soon arrive in the US, raising many questions for retailers and manufacturers: How big will be they be? What are their strengths? How will others react to them?

Checking out a “Lidl of the Future” store in the UK can fill in some of those blanks – and also begin to show why the growing ranks of hard discounters like Aldi and Lidl represent something more than just another source of competition for grocery retailers.

Based on the video below and my recent visit to the UK, Bill Bishop and I see their next-generation stores, branded “Lidl of the Future,” moving away from an essentially functional experience, and toward one that is quite welcoming and showcases fresh food. This transformation broadens Lidl’s appeal and likely accelerates their growth.

We wanted to call out two areas in the “Lidl of the Future” store format:

Greater emphasis on fresh items

lidl_bakery

  • A fresh bakery counter greets shoppers at the front of the first aisle, selling breads, rolls, and croissants from open baskets at prices typically 50% less than surrounding supermarkets.
  • The rest of the first aisle features fresh produce, meat, and chilled items that merchandise locally sourced items and a large selection of Lidl’s own premium brand items.

Treasure hunt appeal from in & out general merchandise

lidl_general_merchandis

  • The back section of the store features a wide range of general merchandise items that turn very quickly and enhance the store’s gross margin. When Bill visited the UK in early February 2017, the items ranged from watches, to pajamas, to hardware supplies, and they were displayed in adjustable height wire baskets and shelves, or directly on pallets.
  • All of the general merchandise items move through the store on a two-week cycle in which the markdown signs begin clearance in the second week.

POV – Bishop/Bolton

Lidl and Aldi are different from today’s US supermarkets in ways that go beyond just pricing. These hard discounters are increasingly focused on delivering their own unique in-store shopping experience, one that can be described as contemporary, comfortable, and enjoyable.

This focus on an improved shopping experience makes them an attractive shopping alternative, broadens their appeal, and likely accelerates their growth.

Looking ahead

The growth of Aldi and Lidl will require existing US grocery retailers to start asking themselves how they can do things differently to control costs – from marketing and merchandising to operations and logistics.

This post was originally published March 9, 2017 on brickmeetsclick.com.