Lidl Going A Long Way

Discount supermarket Lidl is the one to watch in Europe, according to the latest report from food and grocery specialist IGD. Between 1996 and 2003 IGD estimates that the retailer trebled its European sales, with an average increase of 17% per annum.

The report, European Discount Retailing, says that last year Lidl increased its sales by 15% to Euro 18.9 billion, around twice the rate of Aldi. Even in the difficult trading environment of its domestic market (Germany), Lidl's sales grew by an average 15% per annum over the same period. Its international success has been achieved in a relatively short time, its first international move being into France in 1989. It now operates in 18 markets and is just starting out in Hungary, its third new market this year.

Lidl also has good potential for new store growth at home - it has opened three new 30,000 sq.m distribution centres across Germany this year and will add two more in 2005, bringing the total to 30 and enabling it to open a further 1,000 new stores by the end of the decade.

IGD believes that Lidl is clearly well-positioned for growth across Europe and that in the next three years it will be targeting entry into Denmark, Switzerland, Luxembourg, Estonia, Latvia, Lithuania, Slovenia, Croatia and Turkey. Lidl follows a set of unique trading principles, including highly centralised procurement structures, 'when it's gone it's gone' (WIGIG) sourcing agreements on national brands and has a growing role for branded lines.

Louise Spillard, IGD Business Manager, says Lidl is expected to increase discount format sales to around Euro 30 billion by 2010. 'This offers clear opportunities for suppliers and Lidl is increasingly willing to take brands, often as short-term volume deals. However clear defensible price structures are essential, particularly when supplying a brand. Suppliers will also need to convince Lidl to take an added value approach, rather than simply focusing on price reductions'.

IGD is online at www.igd.com

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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