Lidl case study: responding to consumer needs in the discount retail sector

This report on Lidl forms part of Datamonitor's case studies series, which explores business practices across a variety of disciplines and business sectors. It focuses on Lidl's UK operations, and how the German discount retailer is capitalizing on rising demand for discounters at a time of increased economic worries.

Report Highlights

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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
The UK discount grocery sector is growing 2
Rising food and fuel prices have benefited the UK discount retail sector 2
Leading supermarkets are addressing the credit crunch and the discount retail threat by slashing their own prices 2
Lidl's UK market share is growing, benefiting from consumer price concerns 2
Lidl is the third leading grocery retailer in Germany, and is growing fast in the UK 2
Lidl was the leading discounter in the UK in 2007, with a growing market share 3
Lidl has reported strong UK sales so far in 2008 and is placed high up in a retail satisfaction survey 3
The company plans to open numerous UK stores to capitalize on consumer price concerns 4
Store growth has been aided by its acquisition of many Kwik Save stores 4
Lidl's website contains a section specifically requesting information on new sites on which it could locate new stores 5
However, the stores are still perceived to be too basic for some consumers, while concerns over staff welfare is also an issue 5
No frills approach has put some consumers off Lidl 5
The company has a reputation of being a bad employer 5
Lidl has modernized its image to focus more on quality and health 7
Lidl introduced a line of fairtrade products in 2006, capitalizing on the trend for ethical living 7
However critics have said this was mere 'green-washing', due to inconsistencies with some of its working practices 8
There was controversy when Lidl tried to buy Germany's leading organics stores Basic in 2007 8
In early 2008, the company promoted its expanded fresh produce range with a five-a-day campaign 8
Lidl employs a celebrity chef to develop online recipes, emphasizing its products' quality 9
Lidl's online offering is growing in popularity, but could be developed further 9
Lidl's website has grown in monthly visitors, as people look for the latest deals 9
The company does not have an online UK retail service, which could be a future opportunity 9
APPENDIX 10
APPENDIX 10
Case study series 10
Methodology 10
Secondary sources 10
Further reading 10
Ask the analyst 10
Datamonitor consulting 10
Disclaimer 11
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Table 1: Lidl is the tenth leading grocery retailer in the UK, with a growing market share 3
Table 2: This table shows what loyal main users like about Lidl in food and grocery. Loyal customers say there is nowhere else they would prefer to do most of their shopping for food and grocery 6
Table 3: This table shows what disloyal main users dislike about Lidl in food and grocery. Disloyal main users do most of their food and grocery shopping at Lidl but would prefer to shop elsewhere 6
Figure 1: Lidl's website has a page devoted to new property requests 4
Figure 2: Lidl's fairtrade range, Fairglobe, encompasses five products 7
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