Business

Lidl heats up Charlotte’s low-cost grocery competition

A Lidl store in Italy
A Lidl store in Italy

European grocery chain Lidl plans to open its first store in the Charlotte market in 2018 and the company is looking to expand, bringing more competition to the grocery market at a time when supermarkets are already fighting hard for customers’ dollars.

The low-cost grocer sees opportunity for growth in the area, despite increased an increasing number of stores from other low-cost supermarkets like the giant Walmart and the growing Aldi.

This week, Lidl (That’s “Lee-dull,” like “needle”) confirmed that it’s targeting properties on South End, Monroe Road, Lake Norman and the Indian Land area, among other locations.

“We are committed to hitting the market by 2018. We just don’t know which stores will be in that first rollout,” said Ryan Berger, a construction manager for GRDI LLC, a corporate name under which Lidl is operating in the U.S.

In Mooresville, Lidl’s real estate affiliate MGP Retail Consulting LLC is seeking to rezone 4 acres on Williamson Road for a 36,170-square-foot grocery store, the Observer reported this week. The Mooresville Planning Board voted 7 to 1 Thursday night to recommend a rezoning for the project. In South End, the group wants to demolish the existing building at 3229 South Blvd. to make way for a new 33,000 square-foot specialty grocery store, according to property records.

Berger said the chain is still developing its U.S. concept, but that it will be “smaller than your typical grocery store.”

For reference, a standard Harris Teeter store in Charlotte is a bit more than 40,000 square feet.

Lidl is “very similar” to competitor Aldi, said supermarket industry analyst Phil Lempert. The stores tend to be a bit smaller in size and carry a smaller assortment. Lidl shoppers can expect to save about 30 percent on products compared with traditional grocery stores, he said.

Lidl stores, Lempert added, also are perfect for millennials who are focused on high quality, unique foods that are low-priced.

Lidl, which operates nearly 10,000 stores in 26 countries, said earlier this summer that it will open a regional headquarters in Alamance County, about 55 miles northwest of Raleigh, the Raleigh News & Observer reported.

North Carolina provides a “talented workforce, a strategic location and market opportunities” for Lidl as it readies to expand into the U.S., said Brendan Proctor, president and chief executive officer of Lidl US, in a statement.

Growing competition in the Charlotte grocery scene

Grocery store competition, however, has been heating up in Charlotte as more players enter the market.

Walmart, the biggest grocer in the Charlotte area by market share, has been expanding rapidly into the region with its Neighborhood Market concept, which is Walmart’s answer to the traditional grocery store.

Locally, grocery stores have consolidated as competition heats up. Mega-grocer Kroger acquired Matthews-based Harris Teeter in January 2014. And earlier this summer, Salisbury-based Food Lion’s parent company Delhaize, based in Brussels, agreed to merge with Dutch retailer Ahold, which operates the U.S. supermarket chain Giant.

Another discount German grocer, Aldi, said earlier this summer it would invest more than $3 billion over five years to open 650 new stores across the U.S., the Wall Street Journal reported. By the end of 2018, Aldi expects to operate nearly 2,000 stores in the U.S. The grocer has been hosting numerous hiring events across Charlotte the last several months.

And Food Lion recently started lowering prices on thousands of items as part of a new store concept focused on fresh products and low prices called “Easy, Fresh and Affordable,” which also includes a new customer-centric way of training employees. Food Lion’s market share was one of the few to grow in the Charlotte market last year.

“Our brand provides premium products at competitive prices, and we think the concept that we’re working on will be successful even with all the competition,” Lidl’s Berger said. “We see growth and potential.”

John Froman, public relations and marketing manager for Lidl US, said North Carolinians will find Lidl stores “very compelling.” Its markets will offer fresh meat, produce and bakery items, as well as a wide selection of household goods, Froman said.

Grocery shopping is changing quickly because more retailers such as Target have entered the grocery market and because people are dining out more and cooking less. The two trends are pressuring traditional grocery stores, though some do better than others, said Philip Zahn, a senior director of Fitch Ratings.

“The hard discounters (such as Lidl), dollar stores (such as Dollar Tree) and organic/natural formats (such as Whole Foods) are in a position to thrive. Meanwhile traditional supermarkets will continue to lose market share,” Zahn wrote in a research note last month.

Aldi and Lidl will continue to grow, Lempert predicted – at the expense of traditional supermarkets.

“Frankly, the more traditional supermarket will become extinct,” he said.

Observer reporter Joe Marusak contributed.

Katherine Peralta: 704-358-5079, @katieperalta

Charlotte’s top grocery stores by market share

▪ Walmart: 19.8%

▪ Harris Teeter: 19.7%

▪ Food Lion: 19.2%

▪ Sam’s Club: 6%

▪ Bi-Lo: 5.8%

Source: Chain Store Guide

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