2023 Lidl closings

[mjhale]

Fresh & Easy did the same thing with their arrogant prototype fixation.

The funny "karma" about that is, the few stores that they opened in former supermarkets (like Palm Springs) were the highest volume and most profitable.

This got me thinking about Lidl's statistics when it comes to how they built out their stores. Lidl has 16 stores in the immediate Northern Virginia area. This includes the soon to open Lorton, VA store and the mini-Lidl at their HQ in Arlington. Of those 16 stores...

• Eight stores are new builds to what seems to be their standard US prototype half arch, glass sided building.

• Three stores are in former Shoppers Food Warehouse locations that Lidl purchased.

• Four are taking over other vacant retail space that I assume Lidl is leasing.

• One is on the first floor of their HQ building.

Eight new build and three purchased stores could not have been cheap for them in Northern Virginia. Plus ongoing property taxes and assessments that they would be their responsibly. Its not as if there hasn't been retail space available in this area for the past five or so years and especially since 2020. I can understand if you are Walmart and you're looking for 125,000 sq feet. But Lidl is looking for 25,000ish sq feet. Perhaps as you said their arrogance got to them and they had to have their store model in their place. Also, recently I've noticed that landlords seem to be more lenient about grocery tenants in the same center. In Merrifield, VA Lidl shares a center with a long running H Mart and in Fair Lakes assuming Amazon Fresh actually opens there will be five (!) grocery selling tenants there. I have to wonder if landlords will put the pressure on existing grocery tenants who have exclusive deals so said landlord can fill space. There is a center up the street from me that has a Safeway and now a former Bed Bath and Beyond. The Bed Bath and Beyond would be a perfect space for Aldi or Lidl if Safeway was willing to budge on what I assume is an exclusive deal.

Oh and the Lidl stores where they are presumably leasing are Merrifield, McLean (although they may own this one - it is a former Safeway that was closed in favor of Balducci's), Fairfax and Annandale. I'd be curious how these four stores perform as opposed to the others on the same thought of the non-new build Fresh and Easy locations performing much better.

[storewanderer]

I guess 11 stores closed Sunday.
https://www.winsightgrocerybusiness.com ... res-sunday

This is unfortunate.

Also a new store is supposedly opening in Lorton, VA on the 25th. Store appears to have poor access. I wonder what the status of that is. Will that be the last Lidl grand opening in the US?

[buckguy]

The locations on the list are redundant with the locations that already have been mentioned here and elsewhere. They also opened a store in DC last month. That store had been announced last fall.

It looks like they still have plans to go into the old Safeway in downtown Bethesda and they closed on property for a store in Rockville, which also was around the time they announced layoffs, but also announced plans to build a DC in Bucks County PA, which would be close to Philly and much of NJ.

Lots of mixed signals. What seems significant is that some of the closings were relatively new (2 years or less) and the locations included a little bit of everything---places with little competition, established retail corridiors and different income levels.

[storewanderer]

The locations on the list are redundant with the locations that already have been mentioned here and elsewhere. They also opened a store in DC last month. That store had been announced last fall.

It looks like they still have plans to go into the old Safeway in downtown Bethesda and they closed on property for a store in Rockville, which also was around the time they announced layoffs, but also announced plans to build a DC in Bucks County PA, which would be close to Philly and much of NJ.

Lots of mixed signals. What seems significant is that some of the closings were relatively new (2 years or less) and the locations included a little bit of everything---places with little competition, established retail corridiors and different income levels.

Way too many mixed signals unless they can walk away from all of these leases immediately...

I wonder how many closed store leases they are sitting on at this point.

Maybe Lidl needs to try to expand to some other regions away from the East/Southeast. I'm not sure if they'd have better luck but clearly they are not working out well in various environments in the East/Southeast so it may be time to try some other regions.

Opening a new DC in the East region seems sort of pointless when they keep closing stores. Any idea how many stores the initial DC they currently use had capacity for?

Lidl probably should have tried to move out closer to the West. Less competition, less price sensitivity, until pretty recently in SoCal/AZ only no Aldi...

[ClownLoach]

The locations on the list are redundant with the locations that already have been mentioned here and elsewhere. They also opened a store in DC last month. That store had been announced last fall.

It looks like they still have plans to go into the old Safeway in downtown Bethesda and they closed on property for a store in Rockville, which also was around the time they announced layoffs, but also announced plans to build a DC in Bucks County PA, which would be close to Philly and much of NJ.

Lots of mixed signals. What seems significant is that some of the closings were relatively new (2 years or less) and the locations included a little bit of everything---places with little competition, established retail corridiors and different income levels.

Way too many mixed signals unless they can walk away from all of these leases immediately...

I wonder how many closed store leases they are sitting on at this point.

Maybe Lidl needs to try to expand to some other regions away from the East/Southeast. I'm not sure if they'd have better luck but clearly they are not working out well in various environments in the East/Southeast so it may be time to try some other regions.

Opening a new DC in the East region seems sort of pointless when they keep closing stores. Any idea how many stores the initial DC they currently use had capacity for?

Lidl probably should have tried to move out closer to the West. Less competition, less price sensitivity, until pretty recently in SoCal/AZ only no Aldi...

This sounds an awful lot like Fresh and Easy. Shrinking to grow doesn't work for a startup. The dead rent on the closed stores eventually strangles the entire entity.

I haven't seen a Lidl yet, but the description of being similar to Aldi but lacking the "Aldi Finds" limited time special foods would mean I would probably buy much less from a Lidl than an Aldi. Whenever I stumble into Aldi I always find at least half a dozen "Aldi Finds" that I just have to try. That aspect makes the store interesting and fun to shop. Remove that and not only would I not go there impulsively, but I wouldn't buy much when I was there. It doesn't sound like they have anything to make up for the absence of such specialty items aside from an in store bakery.

If I am right about my analysis then I would imagine Lidl would have decent foot traffic but the basket size and average transaction would be so low that the store can't generate enough revenue to be profitable. They need some kind of "edge" to get the customers in the door regularly, and get them to buy more than they planned to when they get there. It doesn't sound like Lidl has any "edge" besides low price.

Based on that I don't think they would experience any success out West either. It doesn't sound like they've got a price issue. Sounds like the store fleet is inconsistent and either a new prototype or a reused building but all are failing so that isn't the issue. Locations also sound pretty diverse with failure in all types of areas so again not a location issue. People? It's a low service model so expectations would be low. Thus the problem is product. They don't have the right product line to drive profitable sales and repeat business.

[storewanderer]

This sounds an awful lot like Fresh and Easy. Shrinking to grow doesn't work for a startup. The dead rent on the closed stores eventually strangles the entire entity.

I haven't seen a Lidl yet, but the description of being similar to Aldi but lacking the "Aldi Finds" limited time special foods would mean I would probably buy much less from a Lidl than an Aldi. Whenever I stumble into Aldi I always find at least half a dozen "Aldi Finds" that I just have to try. That aspect makes the store interesting and fun to shop. Remove that and not only would I not go there impulsively, but I wouldn't buy much when I was there. It doesn't sound like they have anything to make up for the absence of such specialty items aside from an in store bakery.

If I am right about my analysis then I would imagine Lidl would have decent foot traffic but the basket size and average transaction would be so low that the store can't generate enough revenue to be profitable. They need some kind of "edge" to get the customers in the door regularly, and get them to buy more than they planned to when they get there. It doesn't sound like Lidl has any "edge" besides low price.

Based on that I don't think they would experience any success out West either. It doesn't sound like they've got a price issue. Sounds like the store fleet is inconsistent and either a new prototype or a reused building but all are failing so that isn't the issue. Locations also sound pretty diverse with failure in all types of areas so again not a location issue. People? It's a low service model so expectations would be low. Thus the problem is product. They don't have the right product line to drive profitable sales and repeat business.

I am not sure where you got the impression Lidl does not have any "finds" type items however that is very incorrect. On food these stores constantly get in one time items. On non food which is the main part of "Aldi Finds" Lidl also has a very similar program. They allocate more space and have better presentation on those items than Aldi has. I think the problem with the items Lidl has is they are too "practical" - like they are not stuff you would buy unless you actually needed it. They also seem to get nicer items. Lidl gets in various season-relevant general merchandise items just like Aldi. I suspect they are having problems moving these items and may be better off cutting it by 50% and just focusing on food. Aldi Finds on the other hand tend to be impulse buy type items, things you did not think you needed but make the decision to buy impulsively.

The only Lidl units I've been to are new builds. They are very nice stores. They are far nicer than a typical Aldi building. They are more spacious, better presented, have offered self checkout from day one, have a nicer entry/exit area, nicer restrooms, basically everything about them is nicer than an Aldi.

As far as mix goes Lidl has a larger mix of high use items and has more national brand items than Aldi, but over time Lidl seemed to be expanding private label items. I haven't been in Lidl enough to assess how their in stock condition is over time but whenever I've been there the stores seem well stocked.

I almost think they have gone too big with their stores and the expense structure is too high. These are supposed to be a low labor model/low overhead type of operation. The buildings are modern and look very energy efficient. How can it possibly make sense to pay leases on dark stores vs. keep these low expense structure stores open?

My suspicion is Lidl's problem is they are trying to compete on price but they are actually not able to do it because they have too few stores. So they are basically losing more and more money, the more they sell. So even stores that look to be moving plenty of product are losing enough money that they decide to just shut them down. Unlike Aldi with far greater buying power due to having more stores, Lidl is trying to compete with these companies that have greater buying power but with too few stores.

It also appears Lidl is further screwing around by requiring a "My Lidl" loyalty card for various sale prices. I do not recall and kind of hassle or hoop like this with Aldi. This defeats the whole purpose of a rock bottom price store to be running digital promotions requiring an app or something.

Then to make matters worse this Lidl management keeps closing stores. They probably need more stores to increase volume and get cost per unit down so they can move up into a higher buying bracket. I just think they are done in the US based on this store closure activity.

[mjhale]

I think that veteran+ is on to something with the arrogance that is described in Fresh and Easy also being in the Lidl management and thought processes. Personally I like the Lidl stores because of their pricing being along the lines of Aldi but having a bit more product selection. There is a guessing game at Aldi if you are going to like their version or not since that is your only option. Lidl does have the advantage of having national brands in some areas that give you another option if you are having second thoughts about their own brand. With that said, I can see the we are going to run a German grocery store in the United States and its going to work attitude. Things like the cold, almost robotic management staff, themed items not somewhat Americanized like Aldi does so people won't just go ewww what is that and not buy it. Also, the back 1/3 of the Lidl closest to me is filled with the junk bins. I wouldn't even call it too practical. I'd call it stuff I'm not buying at a grocery store because there are known options elsewhere for same or similar price. I never see anyone actively browsing the so-called special buys product, even the food. I wonder how much of it is in storage somewhere or return to vendor because the next batch came in and they still haven't sold what they had out. Combine all of this with their potential real estate costs due to store acquisitions and all of their new builds I can see where they would be struggling. At their price point you have to be doing some serious volume to make up for costs. Lidl is either going to admit that their approach isn't working and radically rework what they are doing - store closings aren't enough. Or bail and add themselves to the list of retailers who thought they could do "their thing" in the US without attempting to understand the American market.

[storewanderer]

I think that veteran+ is on to something with the arrogance that is described in Fresh and Easy also being in the Lidl management and thought processes. Personally I like the Lidl stores because of their pricing being along the lines of Aldi but having a bit more product selection. There is a guessing game at Aldi if you are going to like their version or not since that is your only option. Lidl does have the advantage of having national brands in some areas that give you another option if you are having second thoughts about their own brand. With that said, I can see the we are going to run a German grocery store in the United States and its going to work attitude. Things like the cold, almost robotic management staff, themed items not somewhat Americanized like Aldi does so people won't just go ewww what is that and not buy it. Also, the back 1/3 of the Lidl closest to me is filled with the junk bins. I wouldn't even call it too practical. I'd call it stuff I'm not buying at a grocery store because there are known options elsewhere for same or similar price. I never see anyone actively browsing the so-called special buys product, even the food. I wonder how much of it is in storage somewhere or return to vendor because the next batch came in and they still haven't sold what they had out. Combine all of this with their potential real estate costs due to store acquisitions and all of their new builds I can see where they would be struggling. At their price point you have to be doing some serious volume to make up for costs. Lidl is either going to admit that their approach isn't working and radically rework what they are doing - store closings aren't enough. Or bail and add themselves to the list of retailers who thought they could do "their thing" in the US without attempting to understand the American market.

What is worse with Lidl is they seem to keep changing management in the US. There does not seem to be a stability to understand what is going on and flow through the ideas implemented/what worked/what didn't work/why. So new management come in and keep having new ideas and maybe some of the old not working ideas just needed tinkering to work vs. being thrown out entirely and starting over.

And then these management changes seem to be giving them "US" type ideas like add more national brands (okay.. but profitability...), start loyalty card based pricing for some ad items (BAD idea for this format), etc.

Store management is in a tough spot at retailers like this who claim to be expanding but then keep changing strategy, randomly closing stores, etc. The store management has basically been hired and told you are here to follow the formula, run the store how we say, etc. We are opening hundreds of new stores in the coming years and you early store managers all get to be District Manager or higher in short order due to the rapid expansion. The problem is this strategy the store managers are being told to execute is clearly not working but there is no flexibility for that store management and they just have to keep following (not working) orders. It is a miserable place to be in as a store manager knowing you are on a sinking ship so I can see how they are robotic and indifferent. Many of these store managers probably thought they'd be a District Manager by now due to the rapid expansion being promised but now given the chain is struggling it is probably tough to even bonus let alone get promoted.

I think your last sentence is where this is going.

[veteran+]

I think that veteran+ is on to something with the arrogance that is described in Fresh and Easy also being in the Lidl management and thought processes. Personally I like the Lidl stores because of their pricing being along the lines of Aldi but having a bit more product selection. There is a guessing game at Aldi if you are going to like their version or not since that is your only option. Lidl does have the advantage of having national brands in some areas that give you another option if you are having second thoughts about their own brand. With that said, I can see the we are going to run a German grocery store in the United States and its going to work attitude. Things like the cold, almost robotic management staff, themed items not somewhat Americanized like Aldi does so people won't just go ewww what is that and not buy it. Also, the back 1/3 of the Lidl closest to me is filled with the junk bins. I wouldn't even call it too practical. I'd call it stuff I'm not buying at a grocery store because there are known options elsewhere for same or similar price. I never see anyone actively browsing the so-called special buys product, even the food. I wonder how much of it is in storage somewhere or return to vendor because the next batch came in and they still haven't sold what they had out. Combine all of this with their potential real estate costs due to store acquisitions and all of their new builds I can see where they would be struggling. At their price point you have to be doing some serious volume to make up for costs. Lidl is either going to admit that their approach isn't working and radically rework what they are doing - store closings aren't enough. Or bail and add themselves to the list of retailers who thought they could do "their thing" in the US without attempting to understand the American market.

What is worse with Lidl is they seem to keep changing management in the US. There does not seem to be a stability to understand what is going on and flow through the ideas implemented/what worked/what didn't work/why. So new management come in and keep having new ideas and maybe some of the old not working ideas just needed tinkering to work vs. being thrown out entirely and starting over.

And then these management changes seem to be giving them "US" type ideas like add more national brands (okay.. but profitability...), start loyalty card based pricing for some ad items (BAD idea for this format), etc.

Store management is in a tough spot at retailers like this who claim to be expanding but then keep changing strategy, randomly closing stores, etc. The store management has basically been hired and told you are here to follow the formula, run the store how we say, etc. We are opening hundreds of new stores in the coming years and you early store managers all get to be District Manager or higher in short order due to the rapid expansion. The problem is this strategy the store managers are being told to execute is clearly not working but there is no flexibility for that store management and they just have to keep following (not working) orders. It is a miserable place to be in as a store manager knowing you are on a sinking ship so I can see how they are robotic and indifferent. Many of these store managers probably thought they'd be a District Manager by now due to the rapid expansion being promised but now given the chain is struggling it is probably tough to even bonus let alone get promoted.

I think your last sentence is where this is going.

Exactly the promises that F&E promised.

That's why I bypassed Whole Foods and Trader Joes offers

[storewanderer]

Exactly the promises that F&E promised.

That's why I bypassed Whole Foods and Trader Joes offers

I mean, sometimes it works. For a while. Wal Mart moved a lot of people up fast in the 80's and 90's and a lot of those people ended up in regional/corporate by the 00's or 10's.

Then Wal Mart got into a nasty little habit of constantly restructuring and many of those lifer store managers who got promoted above store were pushed out, VERPed out, fired, decided they'd had enough, whatever. If the one restructure didn't hit them then the next one did.