How difficult is it for Lidl to maintain its international success

Although Lidl has managed to enjoy success in Germany, as well as in many other countries, it seems that it is difficult for this supermarket chain to unlock the full potential of the U.S. market.

Actually, Lidl’s has been forced to review its ambitious U.S. expansion plans, and as a result, adopt a more conservative approach, by lowering the number of new stores that it expects to establish in the U.S.

In my opinion, the company has made a big fundamental mistake this time: it tried to accelerate the expansion process, based on the confidence it had built from past success that it has enjoyed in other countries.

However, these cases of success in other countries outside Germany, like its operations in the UK or Greece, for example, were not based on any previous “accumulated market wisdom” that could be easily and immediately transferred from one country to another.

When Lidl first entered the UK market, it was an underdog, rather than a market leading and pioneering company.

Today, after fifteen years or so, Lidl can be proud of its results in the UK, as it has managed to enjoy constant growth by profitably meeting customer needs.

This took time, however. 

It didn’t happen in one day; it didn’t even happen in one year. 

It took more than fifteen years to be exact.

Throughout all these years, Lidl came to realize that consumer tastes change in the blink of an eye. Markets are as volatile as ever, and winning companies are those who can figure out ever-changing consumer needs correctly, and respond to those needs properly and in a timely fashion.

A supermarket company, regardless of its size and resources, can easily fail or be successful even in its domestic market, if it fails or is successful, respectively, in “reading” consumer needs.

This fact is strengthened when a company decides to expand internationally and attempt to transfer any market knowledge of its domestic market to international markets as well.

I believe that Lidl has been a bit “too fast” in trying to accelerate its expansion in the U.S. It should give itself plenty of time to become familiar with the tastes of American consumers first, and take it really slowly, letting its expansion horizon even exceed a decade (as it has done in cases of other countries), if it wishes to enjoy long-term success.

Experience has proved that successful companies enjoy healthy profits in the long term, rather in the short term, in the supermarkets sector.

Source:

German lessons: What Walmart could have learnt from Lidl, and vice versa