Subject category:
Strategy and General Management
Published by:
IBS Center for Management Research
Length: 12 pages
Data source: Published sources
Abstract
This case discusses the intensifying price wars on the US grocery retail aisle. US retail, which was already under pricing pressure because of players like Amazon, Kroger, etc, experienced a further onslaught from German discount retailer Lidl. While another German hard discounter ALDI had been operating in the US since 1976, the debut of Lidl in June 2017 sent tremors through the industry. Lidl entered the US with the slogan 'Rethink Grocery' and opened 10 stores across the country. It also unveiled plans to open 100 more stores by 2018. The chain promised US consumers a new shopping experience and prices up to 50 percent lower than those at existing grocers. Lidl's hyped entry triggered a price war among all the other players, who in turn geared up to combat the discounter. ALDI too announced an investment of about USD3.4 billion on remodeling and expansion in the US. The competition between the two German discount chains resulted in putting massive pressure on their rivals who were forced to drop prices. However, Lidl saw a sluggish performance during the first year and it had to modify its strategy. But analysts felt the battle looming between ALDI and Lidl would cause a major disruption to the traditional supermarkets. Their aggressive cost-slashing tactics were certain to win them a healthy market share. With ALDI and Lidl competing for retail supremacy in the US market, it remained to be seen what impact it would have on the market and the other players. It would also be interesting to see who would lead the disruption of the US grocery retail.
Teaching and learning
This item is suitable for postgraduate courses.Time period
The events covered by this case took place in 2017-2018.Geographical setting
Region:
Americas
Country:
United States
Featured companies
Aldi
Industry:
Retail
Lidl
Industry:
Retail
About
Abstract
This case discusses the intensifying price wars on the US grocery retail aisle. US retail, which was already under pricing pressure because of players like Amazon, Kroger, etc, experienced a further onslaught from German discount retailer Lidl. While another German hard discounter ALDI had been operating in the US since 1976, the debut of Lidl in June 2017 sent tremors through the industry. Lidl entered the US with the slogan 'Rethink Grocery' and opened 10 stores across the country. It also unveiled plans to open 100 more stores by 2018. The chain promised US consumers a new shopping experience and prices up to 50 percent lower than those at existing grocers. Lidl's hyped entry triggered a price war among all the other players, who in turn geared up to combat the discounter. ALDI too announced an investment of about USD3.4 billion on remodeling and expansion in the US. The competition between the two German discount chains resulted in putting massive pressure on their rivals who were forced to drop prices. However, Lidl saw a sluggish performance during the first year and it had to modify its strategy. But analysts felt the battle looming between ALDI and Lidl would cause a major disruption to the traditional supermarkets. Their aggressive cost-slashing tactics were certain to win them a healthy market share. With ALDI and Lidl competing for retail supremacy in the US market, it remained to be seen what impact it would have on the market and the other players. It would also be interesting to see who would lead the disruption of the US grocery retail.
Teaching and learning
This item is suitable for postgraduate courses.Settings
Time period
The events covered by this case took place in 2017-2018.Geographical setting
Region:
Americas
Country:
United States
Featured companies
Aldi
Industry:
Retail
Lidl
Industry:
Retail