What CPG Brands Could Learn From Lidl, A European Supermarket That's Heading Stateside

Lidl, a German-based supermarket chain that’s been around since the early 1970s, has announced that it will open its doors this summer on U.S. soil for the first time, launching an expected 20 stores in the Carolinas and Virginia, all of which are purposefully located close to the brand’s U.S. headquarters in Arlington, Va.

Though Lidl is an unfamiliar name in the States, there are nearly 10,000 locations throughout Europe. The supermarket is particularly successful in generating revenue, totaling about $96 billion in 2016. 

Lidl’s business model is akin to that of our very own Trader Joe’s: The German grocer stocks mostly its own private-label brands, which will account for roughly 90% of the brands it will carry Stateside. The products from these brands range from cheese, cereal, condiments, meat, and dairy items to shampoos, soaps, and diapers. Also similar to Trader Joe’s is Lidl’s pricing; apparently, Lidl’s own private-label goods will often end up costing less than half the price of similar products made by popular brands other U.S. supermarkets are selling. 



However, unlike Trader Joe’s, Lidl has a strong commitment to, and a reputation for, its fresh high-quality produce. 

Should CPG Brands and the Retailers Selling Them Declutter?

One notable thing Lidl has done is pare down the number of items it offers in each category, which, in turn, gives consumers fewer choices. At a recent media event, Lidl’s chief commercial officer, Boudewijn Tiktak, not so subtly highlighted just that, asking, “Do you need 50 labels of ketchup?” 

This brings us to an interesting point: The paradox of choice and its overwhelming nature should make retailers notice and adapt. As product lines grow, the metaphorical wall of 50 labels of ketchup becomes more and more daunting for consumers. Lidl and others who follow the paring-down method may be onto something. 

We only need to look at what’s been happening with retail department stores—what with their myriad labels and lines, they’ve been losing business and, as a result, are shutting their doors. For example, Macy’s is closing 15% of its stores, and even the flagship Ralph Lauren store on Fifth Avenue in New York City is slated to close.

Lidl’s timing for entering the U.S. market couldn’t be better, even with the relatively saturated market of grocers. Although Marie Kondo’s seminal book, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing, came out in 2014, the principles of decluttering and its subsequent popularity are still as relevant as ever.

Take, for example, Mark Zuckerberg, who wears the same thing most days. Despite being an influential billionaire and tech mogul, the point still stands: One less choice to make may be psychologically beneficial by reducing unnecessary complication. And at the end of the day, a consumer who isn’t overwhelmed by choice — one who hasn’t been scared off by a wall of 50 ketchup labels and, as a result, is quite likely happier — will naturally come back.

Next story loading loading..