Bumpy start aside, Lidl a hit with younger consumers: Survey

Despite a rocky start in the U.S., Lidl is having a significant effect on grocery consumers, according to consulting firm Oliver Wyman.

The independent survey by the New York-based firm discovered that 48% of 600 consumers who have shopped at Lidl are now shopping there regularly (defined as more than twice per month).

Consumers also are spending more per shopping trip at Lidl now than a year ago, indicating that they’ve found a broader of Lidl products they prefer. Younger shoppers – those 18 to 34 – had a particularly high awareness of Lidl and shopped there frequently, spurred by their positive perceptions of its private-brand product quality and its value prices.

READ: A first look at Lidl

“Lidl is new in the U.S. market, and we expect that they will gradually adapt their model based on consumer feedback, a pattern they successfully honed entering more than 20 countries in Europe,” said Tanja Ebner, principal in Oliver Wyman’s retail and consumer goods practice.

READ: Lidl drives prices at U.S. rivals down to ‘unprecedented’ levels

Lidl has struck a chord with younger consumers who are valuing the quality of Lidl's private-brand products almost as much as the discounters low prices, he said. Lidl's offering is about 90% private label products, Ebner noted during a call discussing the survey's results.

Key findings of the survey include:

• Lidl is luring customers from many existing grocers: 40% of those surveyed who are loyal to supermarkets are now shopping at Lidl more than twice per month.

• 46% of Lidl customers said their main reason to shop there is good quality, good promotions or really fresh products, while 39% offered low prices as their primary reason.

• Lidl beat all other grocery retailers in the survey in terms of value perception, which was expected, and in product freshness, which wasn’t.

• Customers expressed a high level of satisfaction with products not normally associated with hard discounters, among them organics, meat and wine.

• Satisfaction is higher in states that Lidl has entered recently versus those it entered earlier, which Oliver Wyman attributes to the grocer having applied lessons it learned from earlier store openings to adjust its offering.

• Difficulty in accessing stores was given as the top reason for not shopping more often at Lidl.

• Consumers who’ve never shopped at Lidl are increasingly aware of the company, according to a comparison of responses this year and last year from the same metropolitan areas.

Additionally, U.S. consumers are interested in value formats: While Lidl currently has only 55 stores in six states, rival European hard-discounter Aldi already has a network of 1,600-plus stores here, with plans to grow to 2,500 locations.

“Hard discounters are in the U.S. to stay and win,” said George Faigen, partner in the Retail and Consumer Goods practice of Oliver Wyman. “Incumbent grocers must evolve, redefining their business to align with the consumers’ demands for high quality and value. Grocers need to double down on what they believe makes them uniquely attractive to their consumers, otherwise they risk a certain defection of sales, profit and customers.”

When asked why, if the chain was proving popular with those who shopped there, the grocer had decided to pull back on its original growth plans, Faigen responded the Lidl was most likely taking the time to “tune” its offering to the U.S. shopper’s tastes and preferences, with the expectation of long-term success, and that as an “agile” company, it would eventually be able to “match itself to the needs of consumers.”

Fielded in the U.S. last April, the online questionnaire surveyed 3,600 individuals in the states where Lidl operates stores: North Carolina, South Carolina, Virginia, Delaware, New Jersey, and Georgia.

Of the respondents, 600 had shopped at Lidl already, and were asked about their experiences in detail. The sample Lidl shoppers consisted of 52% female consumers, 81% with a household income between $25,000 and $150,000, and 35% millennials.

A version of this article appeared at ProgressiveGrocer.com.