Lidl held down inflation on Long Island

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Lidl held down inflation on Long Island

Post by SamSpade »

This was apparently done by an independent third party, not clear what they price checked.

I must say, it must be interesting to be in a "price competitive" grocery market. Things in this area are pretty much a snooze fest.

https://www.winsightgrocerybusiness.com ... ong-island
Prices at Lidl were substantially lower compared to competing retailers on Long Island. Based on data collected before there were supply shortages due to the pandemic, Lidl’s food prices were about 45% lower than specialty retailer Trader Joe’s; 39.6% lower than King Kullen; and 33.8% lower than Stop & Shop.
I'm surprised that they could be 45% lower than Trader Joe's, which for the product sizes and offerings they carry in this market, is probably a leader or close to on the 'low' end of pricing.
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Re: Lidl held down inflation on Long Island

Post by klkla »

I read this yesterday on another site and practically fell out of my chair laughing.

Some key points from the aritcle:

"A new study commissioned by the hard-discounter Lidl US demonstrates its market entry was offsetting larger impacts of food-price inflation on Long Island, N.Y."

"Her latest study captures prices on 47 items both before and after Lidl entered the Long Island market"

They only compared private label products. So how did they know which 47 to compare? Lidl told them in advance!

All they had to do was compare those 47 items themselves before the stores opened and the study was commissioned in order to achieve this result.

This article and the study is a joke. I don't mean any offense to @SamSpade. My criticism is just about the supposed 'study'.
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Re: Lidl held down inflation on Long Island

Post by storewanderer »

Lidl had great pricing on some items, but there is no way it was this much below Aldi. Really, it was pretty close to Aldi. They do have some private label items at what I'd call shockingly low prices ( I guess those 47 items). The study can say whatever Lidl wanted it to say when Lidl picked the items. These studies need to pick high use items but instead always cherry pick things.

I wonder if Lidl is making any money in the US. Lidl is a store I'd look forward to seeing in my area. I liked their large bakery with not overly sweet baked goods and also liked that they had self checkout. Definite two big legs up on Aldi with those features. Aldi I could take or leave but if were here I'm sure I'd go there sometimes. Though I have made many trips to Aldi territory and not stopped into one.

Given Lidl has focused so far on densely populated areas in the East I wonder if they may try to skip the middle of the US (Aldi is so dominant there anyway) and set up a base on the west coast. Would be nice- west coast could use the price competition.

These conventional grocers are going to continue to have trouble competing with these types of stores as these expand more. Many of these middle market commodity quality conventionals have backed themselves into a corner- prices way too high on packaged goods, service and store conditions not consistent, too many gimmicks (loyalty cards, paper coupons, buy x save y), bag bans where now in many places CA included, bagging is a only with service fee since the stores can't touch your reusable bag which essentially makes the conventionals a "bag it yourself" store or "pay for bags" store just like a Lidl or Aldi. It will be interesting to see what happens but I think it will keep getting worse for the conventional format stores if this Lidl can keep expanding (because we know Aldi will keep expanding). Aldi+Lidl is like a one two punch.
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Re: Lidl held down inflation on Long Island

Post by klkla »

storewanderer wrote: July 9th, 2020, 6:41 pmThese conventional grocers are going to continue to have trouble competing with these types of stores as these expand more. Many of these middle market commodity quality conventionals have backed themselves into a corner- prices way too high on packaged goods, service and store conditions not consistent, too many gimmicks (loyalty cards, paper coupons, buy x save y)
The conventional grocers make a lot of money in the areas where there are strong barriers to entry: IE expensive real estate in good locations. That's hard to overcome. All the new entrants tend to fizzle in urban California locations for this reason.

Ralphs is the perfect example. They have focused all their efforts on the 200 or so stores they have that are in amazing locations with highly dense populations, above average income and more importantly above average disposable income.
It's very hard for newcomers to find good locations in these areas. They're letting all the newcomers and discounters fight over areas like the Inland Empire, San Gabriel Valley and Central Valley where quite frankly there isn't a lot of wealth.
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Re: Lidl held down inflation on Long Island

Post by storewanderer »

klkla wrote: July 9th, 2020, 8:54 pm
The conventional grocers make a lot of money in the areas where there are strong barriers to entry: IE expensive real estate in good locations. That's hard to overcome. All the new entrants tend to fizzle in urban California locations for this reason.

That was part of the significance to that group of stores Lidl purchased (Best Foods) was they entered an area like that with high barriers to entry. I would venture there are some smaller operators in SoCal who may sell out but the stores I'm thinking of generally aren't in the best neighborhoods and have spaces that would be much too big for an Aldi or Lidl. Without naming names two groups specifically I am thinking of bought a few divests off of Albertsons/Lucky in the 90's; one runs a few formats (discount, hispanic, conventional) and has been closing stores and has exited the two out of state territories they expanded into with single locations, the other runs one format (International) and just stayed around Los Angeles and has been doing some decent remodels.

A big variable will be how much other retail closes over the next 12 months. The retail stores in those urban densely populated areas will, ideally, be the last office supply stores, bed and bath stores, etc. to close so those locations may not come available as quickly as my first sentence here would allude. However we should also watch the drug stores because I am expecting to see a significant amount of closure activity or store downsizings out of those chains (all 3 of them) and think those without lease restrictions would be great pick ups for a discount format grocer. In the case of CVS, bringing a discount grocer into half of the space would get the buildings back to the level of productivity Longs had back in the 90's when Longs had so much obscure canned food for sale.

What is about to happen to retail, may be just what Lidl and Aldi (and perhaps Amazon) are waiting for to go in for the kill (or so they think) with the grocery business.
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Re: Lidl held down inflation on Long Island

Post by klkla »

storewanderer wrote: July 9th, 2020, 9:23 pmThat was part of the significance to that group of stores Lidl purchased (Best Foods) was they entered an area like that with high barriers to entry. I would venture there are some smaller operators in SoCal who may sell out but the stores I'm thinking of generally aren't in the best neighborhoods and have spaces that would be much too big for an Aldi or Lidl. Without naming names two groups specifically I am thinking of bought a few divests off of Albertsons/Lucky in the 90's; one runs a few formats (discount, hispanic, conventional) and has been closing stores and has exited the two out of state territories they expanded into with single locations, the other runs one format (International) and just stayed around Los Angeles and has been doing some decent remodels.

A big variable will be how much other retail closes over the next 12 months. The retail stores in those urban densely populated areas will, ideally, be the last office supply stores, bed and bath stores, etc. to close so those locations may not come available as quickly as my first sentence here would allude. However we should also watch the drug stores because I am expecting to see a significant amount of closure activity or store downsizings out of those chains (all 3 of them) and think those without lease restrictions would be great pick ups for a discount format grocer. In the case of CVS, bringing a discount grocer into half of the space would get the buildings back to the level of productivity Longs had back in the 90's when Longs had so much obscure canned food for sale.

What is about to happen to retail, may be just what Lidl and Aldi (and perhaps Amazon) are waiting for to go in for the kill (or so they think) with the grocery business.
There are definitely some barriers to entry in Long Island but not compared to Manhattan, West LA, or San Francisco for instance. I'm also curious why it is taking them so long to get these locations on Long Island open. There has to be more to the story there.

I can't think of any small operators left in SoCal that have great locations to sell. If they don't have great locations then there wouldn't be any barriers to entry.

The drug chains downsizing is an interesting possibility although most of their stores are a lot smaller than Lidl's current format of 36,000 sq. ft.

BTW you forgot to mention anything about the plastic bag bans in this response :mrgreen: lol
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Re: Lidl held down inflation on Long Island

Post by storewanderer »

klkla wrote: July 9th, 2020, 9:36 pm
storewanderer wrote: July 9th, 2020, 9:23 pmThat was part of the significance to that group of stores Lidl purchased (Best Foods) was they entered an area like that with high barriers to entry. I would venture there are some smaller operators in SoCal who may sell out but the stores I'm thinking of generally aren't in the best neighborhoods and have spaces that would be much too big for an Aldi or Lidl. Without naming names two groups specifically I am thinking of bought a few divests off of Albertsons/Lucky in the 90's; one runs a few formats (discount, hispanic, conventional) and has been closing stores and has exited the two out of state territories they expanded into with single locations, the other runs one format (International) and just stayed around Los Angeles and has been doing some decent remodels.

A big variable will be how much other retail closes over the next 12 months. The retail stores in those urban densely populated areas will, ideally, be the last office supply stores, bed and bath stores, etc. to close so those locations may not come available as quickly as my first sentence here would allude. However we should also watch the drug stores because I am expecting to see a significant amount of closure activity or store downsizings out of those chains (all 3 of them) and think those without lease restrictions would be great pick ups for a discount format grocer. In the case of CVS, bringing a discount grocer into half of the space would get the buildings back to the level of productivity Longs had back in the 90's when Longs had so much obscure canned food for sale.

What is about to happen to retail, may be just what Lidl and Aldi (and perhaps Amazon) are waiting for to go in for the kill (or so they think) with the grocery business.
There are definitely some barriers to entry in Long Island but not compared to Manhattan, West LA, or San Francisco for instance. I'm also curious why it is taking them so long to get these locations on Long Island open. There has to be more to the story there.

I can't think of any small operators left in SoCal that have great locations to sell. If they don't have great locations then there wouldn't be any barriers to entry.

The drug chains downsizing is an interesting possibility although most of their stores are a lot smaller than Lidl's current format of 36,000 sq. ft.

BTW you forgot to mention anything about the plastic bag bans in this response :mrgreen: lol
The Lidl I went into definitely wasn't 36,000 square feet and it was built by Lidl. It may have been 25,000 square feet.

I do wonder what is taking them so long. That is part of why I wonder how exactly they are doing and if they are actually profitable in the US or not. They seem to be expanding... slowly... which makes me wonder.

How hard is it to get a new liquor license for a store in CA (does Lidl even sell liquor), along with a parcel/space with enough parking for a grocery store? I think even some of the operators in not the best locations in SoCal, have some potentially desirable properties and other things like the liquor licenses. It is easier to buy that existing grocery parcel than try to piece together multiple parcels nearby to get what you need to put up a new grocery store. Doubt we will see it happen though. I suspect this Best Foods was a one off sort of deal for Lidl.

Lidl and Aldi (and WinCo, Food 4 Less, etc.) seem to have the checkout format of the future for as long as cashiers are not allowed to touch reusable bags. I think the checkout I've seen in some Aldi locations is the best. The customer unloads their cart and then an empty cart is down there at the end next to the cashier. After items are scanned the items are dropped back into the empty cart. There is no counter after the scanner. No additional handling of items after scanning by store employees. This is the most efficient set up under current circumstances. It also saves space.
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Re: Lidl held down inflation on Long Island

Post by klkla »

storewanderer wrote: July 9th, 2020, 10:19 pm How hard is it to get a new liquor license for a store in CA
This can get complicated. If you're buying the whole company it's fairly easy. In this case the license was issued to the legal entity and as long as you maintain the legal entity the license remains active.

If you buy a location but not the legal entity you have to reapply.

It's generally not that hard unless there is community opposition for some reason.
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Re: Lidl held down inflation on Long Island

Post by buckguy »

The DC area is very expensive for entry and some jurisdictions can be challenging in terms of zoning and community input. All that doesn't seem to be a barrier for them. Their initial stores are in middle income suburban areas, so not well-off, but not food deserts. All 3 appear to be close to existing Aldis. The one I've seen is a new build, although oddly more or less where there had been a long running 1950s Safeway in College Park.

Lidl has gone into middle income areas in the Baltimore area and one is not far from an Aldi. Interestingly Aldi has stores in areas of all incomes in the Baltimore area although they've avoided well-off parts of the DC area, thus far. Lidl seems unafraid of overlap with Aldi and willing to go into areas with other competitors including low price operators like Price-Rite
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Re: Lidl held down inflation on Long Island

Post by SamSpade »

KLKLA, I don't know how I missed that yesterday. Thanks for pointing it out. Yes, easy to "game" a survey when you tell the company what items to price check!
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