Entering any new market is a risk. Just because business is good in 1 country this doesn’t mean success automatically translates into another. This is especially relevant in retail. This makes Lidl’s recent expansion into the US market both a brave and ambitious move while financially dangerous.
Different countries have different tastes, preferences and habitual buying patterns. In the grocery sector, we can also include the stereotypical consumer preference for buying “local”. General leanings exist towards supporting existing national companies (and jobs) against multinationals impeaching on their turf.
Lidl have 20 stores already operational since July and another 100 pinned in for opening by the end of 2018. It’s fair to say Lidl will be either gleefully counting the pennies or nervously missing them when the totting up of the end of year performance numbers begins. Tesco’s expensive failure to break the American market will serve as ample warning.
Seated in an armchair many miles away in the Emerald Isle, it would be quiet presumptuous of me to cast judgements on their business performance so far. However, observing their online activities through social media and website marketing materials does present me with ample evidence of their branding and marketing efforts in this new market. So let’s take a global look at this new American Lidl.
Same Plan, Different Country
One aspect I notice about Lild’s entry into the US market is they’ve generally kept their business model the same. If it ain’t broke don’t fix. Low prices proved an excellent market differentiator in the European grocery sector. They’ll hope American customers will be equally enamoured. At the same time, small stores made store navigation easy and enjoyable for European customers. Exhausted American consumers undertaking long treks through Walmart could view this aspect warmly.
In Ireland, what I enjoy about their stores isn’t just the consumer friendly layout but the modern design. Refrigerated products have clear paneled doors serving not only to conserve energy. They provide the consumer with a homely feeling and encourages them to stay in-store longer as the room temperature is regulated. When I was working at Tesco, many consumers would complain particularly in Summer months that the store was too cold. Keeping customers warm, keeps customers spending as they are not rushed through the store. Sometimes the basics matter.
Being a new entrant to the American market, they’ll be able to bring innovative store designs attracting customers due to the novelty factor and a different customer experience. Larger chains like Walmart find it harder to innovative stores due to their vast size. Their slogan “Rethink Grocery” acts a demo of how the company wants to be seen as a true innovator in the grocery market.
Serving the American public
Their US grocery market offerings also carry parallels with their European operations. Everyday essentials are at the heart of their special offers. This provides consumers with value for the items they really need such as bread, meat, fish, vegetables, and fruit. In America, they’re calling these offers the fresh 5 giving up to 50% discounts on selected items.
The use of the scarcity effect is also evident with their offers with some only available for 4 days and others “3-day specials”. This encourages consumers to shop regularly catering to their fears of missing out on a deal. Weekly surprises is also a cool way of packaging their different hardware goods sold every week. It generates some excitement and keeps consumers guessing as to what to expect each week making impulse purchases more likely.
The wide promotion of Organic and Gluten free products also cultivates an association that Lidl is a healthy food store catering to the increasingly health conscious American consumer. Lidl’s promise that over 80% of private label products will be sourced in America will also win consumer approval.
Crafting An American Friendly Brand
The American public is radically different from their European cousins. Americans are more sensationalist, upbeat, emotional, and social in nature. Once Lidl chose to enter the US market, discussions would have immediately begun with ad agencies and creatives on how to create an American friendly brand personality. A grocery store that Americans can love and caters to their specific needs, desires and wants.
Value is at the heart of Lidl’s differentiation strategy and providing low-cost products. They’ve different ways of promoting this in different countries. Their marketing in Ireland has a focus on demonstrating their provision of cheap products to highly price conscious consumers. As a result, their marketing materials like brochures carry a cheap and simple approach. In the UK, Lidl places an emphasis on demonstrating value and quality to a nation driven by status and an appreciation of the finer things in life. Here, their marketing presentation to the UK public depicts a Lidl which is classy, innovative and modern.
Consequently, Lidl’s marketing to the American public takes a different approach. Cheap and cheerful is the instant impression you get from their marketing efforts. Their website is full of wit, creative messaging and bright colours. This positions Lidl as a fun, easy going and friendly company. Copyright advertising of their products includes such gems as “Don’t sweat these prices”, “Romaine calm we have organics” “Catch these savings before they fizzle out”.
This might sound insignificant but humor earns peoples trust. It creates a perception that the company is “cool” and distinctly non “corporate”. This is important to recognize especially as consumers are shifting towards spending their money on smaller local brands rebelling against global corporations. Something about the word corporate creates a perception of unfriendliness and profiteering. Lidl’s creation of a more fun and friendly brand personality will help them escape the perception that they are a foreign corporation seeking to take local jobs and cash.
Rethink Grocery – Lidl’s US Differentiation Strategy
Entering any new market isn’t just about creating an appealing brand personality and just expecting customers to buy it. You’ve got to engage with your potential customers to earn their trust.
Lidl’s lastest fashion partnership with Heidi Klum is a great PR exercise to strengthen their profile in America and beyond. Linking with a well-known celebrity whos focused on status and wearing the best and most fashionable clothes is an intelligent move. Lidl is creating similar associations for themselves as a trendy and high-quality brand. These ranges will no doubt be available at Lidl prices again highlighting how they bring consumers quality and the latest products at affordable prices.
Lidl is also using social media as a vehicle for engagement with the American public. Their Animated videos with lively music on Instagram and Facebook help create more interactive and attention grabbing advertising of their products. Videos get more engagement and help Lidl stand out as this innovative new grocer taking a whole new approach to business. Promotion of great recipes and meal ideas for their products also helps connect at a deeper level with American consumers.
Lidl’s C.S.R activities
As consumers, we like to support organizations that give and help their communities rather than pillage from them. So Lidl offering cheap prices might encourage us to spend a little(not a lot) there out of necessity rather than loyalty. This is why they need to connect with consumers at an emotional level and fuse greater connections with the American public.
Transformative Corporate Social Responsibility activities in a new market is an excellent way to earn consumers trust. Lidl have already begun such activities providing funding to local puppy homeless shelters. People love their pets and sadly often feel more affinity and empathy for them than other human beings.
Supporting animal welfare will earn them praise in the short term. However, if they seek to make a long term impression on the American public then they’ll need to actively help change lives. Supporting the Amercian public through funding and community projects etc. This will not just earn them transient affection but genuine love.
It’s early days in Lidl’s entrance into the US market and we’ll refrain from judgement just yet. However, they’re doing many things right so far. It remains to be seen can they truly connect and earn the trust of the American public. Only then will they earn a sufficient share of their grocery spend.