Lidl gears up for U.S. expansion, eyes Maryland market
June 10, 2017
Maryland consumers likely will see the Lidl banner start to pop up on new supermarkets in the next year as the German grocer moves into the U.S. market in a big way.
Lidl, which touts low prices, easy-to-shop stores with just six aisles and a curated selection of mostly private label products, will open its first U.S. stores this summer in Virginia, North Carolina and South Carolina. The first 10 of 20 stores in those states will open Thursday, part of a rapid expansion to bring as many as 100 stores to the East Coast by next summer.
In Maryland, the chain is building a regional headquarters and distribution facility in Cecil County, first announced in August, and is eyeing potential store sites across the state.
"It is one of our areas of focus," said William Harwood, a Lidl spokesman, though he declined to confirm specific locations. "We are actively preparing sites across the state... Certainly in Baltimore, we're keen to look at what's available. It's an area of interest."
Such aggressive expansion by a major player in Europe with deep pockets will be felt by food retailers of all stripes — traditional supermarkets, organic grocers, mass discounters and convenience stores, especially in the "overstored" Baltimore region and mid-Atlantic, experts said.
Some of Lidl's competitors will be familiar from Europe where it has 10,000 stores in 27 countries. In Germany it competes with Aldi Sud, which is expanding as Aldi in the United States with discount, private-laber groceries in no-frills stores, and Aldi Nord, which owns Trader Joe's, also known for its private label, small store format. Even Giant and Food Lion are owned by Netherlands-based Ahold Delhaize.
"Lidl, from what we understand, is coming in like a storm," said Jeremy Diamond, a director of Diamond Marketing Group, a Baltimore-based food retail consulting firm. "They basically want to come in to the region and not open one or two stores. They want to come in and flood the grocery retail market."
Usually retailers are able to blanket a region quickly only when one chain buys out another.
"It's rare that it's somebody moving in with so many stores at one shot," Diamond said. "Everyone is looking at them, from the Wegmans to the Trader Joes and how they're going to do it."
Ultimately, he said, consumers will benefit from price competition.
Stores that Lidl plans to build in the United States will be smaller and sell far fewer items in a given category than traditional supermarkets. Footprints tend to be about 36,000 square feet, with about 20,000 square feet of selling space. About 90 percent of the products are private label.
Features include fresh baked goods from in-house bakeries at each store's entrance, sustainably grown fresh or frozen seafood, organic fruit and vegetables, meat, dairy and packaged prepared foods plus a half dozen "middle of store" aisles.
"We think Lidl is the right model for the right time," Harwood said. "We're really building very convenient, efficient stores. We do that hard work of curating options onto the shelves."
For instance, Lidl's director of purchasing for wine has tasted more than 10,000 bottles and selected just 120 for store shelves. In addition to its fixed assortment of staples, the grocer sells a rotating selection of non-food items at discounts, such as fitness gear, small kitchen appliances, toys and outdoor furniture.
The company also plans to roll out an exclusive clothing line designed by supermodel and designer Heidi Klum later this year, its first ever fashion collaboration, announced last week.
Phil Lempert, a food industry analyst and editor of SupermarketGuru.com., said he believes Lidl has a winning formula for the United States.
"They're differentiating themselves from Aldi," Lempert said. "If you look at the store design, it's much brighter, hipper than your typical Aldi store. That's interesting, because if you look at Lidl in Europe, they look like Aldi... They're going for the same basics that Aldi has but upping the game and making it a little more showy."
Lidl is tapping into trends such as smaller format grocery stores, fading loyalty to brand names and growing demand, especially among millennials, for sustainable and organic food.
"They want to eat something different and unique and want the retailer to stand up and be more curating of what's on the shelves," Lempert said. "Gone are the days of 100 brands of olive oils."
The company, which employs about 50 workers per store, said it prefers to buy its store sites and build from the ground up but that it also will lease space. It is planting roots in Maryland by investing $100 million in an 800,000-square foot distribution center under construction in the Principio Business Park in Perryville. It expects to hire 100 full-time workers there.
The company would not confirm specific store sites in Maryland, but could bring stores to Aberdeen, Annapolis, Eldersburg and possibly Berlin on the Eastern Shore, according to news reports.
Last summer the Aberdeen City Council approved a site plan for what is expected to be a 36,000-square-foot Lidl store on South Philadelphia Boulevard. The grocer is going through the development process in Anne Arundel County to build a store just outside city limits on Bay Ridge Road. In Eldersburg, a developer of property off Liberty Road has proposed a shopping center that could be anchored by Lidl.
And last month, Lidl was among a number of grocers whose representatives met with Baltimore Mayor Catherine Pugh and city economic development officials during the International Council of Shopping Centers convention in Las Vegas. Officials traveled to the convention to try to attract retailers to the city, especially supermarkets that could help fill city "food deserts."
After a recent Baltimore Development Corp. meeting, BDC President William Cole IV said officials met with Lidl, Giant Food, Safeway and Save-A-Lot.
"We met with every grocer we could get in front of or who would come to us," to try to attract grocers to the city, Cole said.
Pugh said last week that she was encouraged that a number of grocers are exploring smaller format stores for urban areas. While in Las Vegas, the mayor talked up the benefits of investing in Baltimore as a member of a panel in a standing-room only session attended by supermarket chain owners and real estate investors.
"I'm very confident that we'll have some bites at the apple for sure," Pugh said. "Anybody looking for 25,000 to 40,000 square feet would be very appropriate for communities. All of them are quality venues that would bode well."
She said officials talked to grocery representatives about potential sites that are available.
"There are so many available sites in the city where people are looking for quality food," she said. "There's so many folks who are interested in investing in Baltimore. We just want to make sure we get the right investment for our city."
Sun reporter Sarah Gantz contributed to this story.