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Monday 22.01.2018 | Name days: Austris
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German grocer giant Lidl to set foot on Lithuania after dropping Latvia and Estonia

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Linas Jegelevičius for the BNN

The German grocer retailer Lidl known for its aggressive low-price strategy is about to set foot on Lithuania having before dropped expansion bids in Latvia and Estonia. Although other Lithuanian food chains seem unfazed by the new player, the German giant has already triggered a buzz in the otherwise dormant groceries market. Lidl Lietuva shies from any comments on the arrival, though.

«This is our strategy- not to talk of anything until the launch takes place,» Daina Balčiūnienė, a representative of Lidl Lietuva, told BNN.

Lithuania a small dot in Lidl’s expansion

For now, it is known from media reports that Lidl has finished building a logistics center in Kaunas region, one of the grocery hypermarkets is being built in Alytus, a town in the south, the other is rapidly shaping up in the Baltic seaport of Klaipėda and at least six Lidl supermarkets are expected in the Lithuanian capital, Vilnius.

«With a new competitor the battle for the buyers is gearing up. It’s natural that a new player in the market will slice off a certain part of it, especially if it offers buyers something new and what is in line with the buyer’s expectations,» says Gerardas Rogas, director general of Iki, a major food chain in Lithuania. He adds: «The retail market is very competitive and dynamic in Lithuania.»

Google search turns up some interesting facts about Lidl’s expansionism – Lithuania seems to be just a tiny dot on its map.

To believe public reports, Lidl’s parent company, Schwarz Gruppe, eyes to reach a 100 billion euro turnover bench by 2020, surging from the current turnover of 79 billion euro. It explains the company’s voracious appetite for new markets.

Lidl is said to open its very first American store in 2018, which will be huge for the grocer’s growth.

Lidl had cherished some plans in Latvia and Estonia, too, but they haven’t worked out yet.

Any grocer can be liked if gives whatever buyer wants

Although Lithuania is known for one the densest supermarkets ratio in the European Union, Rogas, of Iki, believes Lidl will muscle its way under the sun.

«In any case, grocery buyers are in a win-win situation. But we will have to be (upon the arrival) even more attractive to our buyers, meaning we will have to be better in accommodating and exceeding the expectations. As always, we will be focusing on the quality, freshness and customer service,» the retailer’s executive told Delfi.lt, a trendy Lithuanian news website.

His counterpart from Maxima Lt, the largest Lithuanian grocer, Žydūnas Valkeris says that «whenever Lidl starts off» the biggest Lithuanian retailer is «ready» for the competition.

«The information we possess of their arrival is as everybody’s – from what is publicly accessible. To believe the public prognostication, Lidl was supposed to start last year and now there are guesses that it will kick-start this year or, perhaps, next year,» the Maxima CEO said.

He believes that any grocery story can be attractive to the client it gives what the buyer wants.

«Therefore, with the Lidl entrance, we will exert to retain the competitiveness,» he says, refusing to speculate how much of the retail food market the new player will slice off.

Biggest grocer slashed price of 3000 items

Approached by BNN, Renata Saulytė, the spokeswoman for Maxima Lithuania, told that Maxima is not preparing «in any way» for Lidl.

«We have adopted our long-term strategy and, basically, we are just following it,» the retailer’s representative said.

Asked if prices in Maxima stores are likely to edge down with Lidl in Lithuania, she hastened to say that price is just one of« many components of competition.»

«According to respectable surveys, price is an important, but non-essential factor in getting the client to one or another store,» she says.

In her words, Maxima has slashed prices of three thousands commodities this year.

«It has come at the expense of our profit. It cost us 10 million euro,» Saulytė pointed out.

She underscores the importance of individualized catering.

«If you were to swing by our supermarkets in rural and urban Lithuania, you’d be perhaps surprised to find so different assortment adapted to the needs of local population,» she told BNN.

Among the other Maxima’s strivings is to always put a fresh product on the shelves.

«Fresh, locally produced products,» the spokeswoman underlined.

Strategies are subject to change

Some of the interviewees that BNN spoke to for the story wondered whether Lidl will be able to keep it up with Maxima on that.

«The bulk of the Lidl assortment is the so-called «private brands», i.e. specially for a certain food chain produced goods, labeled with Lidl or any other grocer’s label,» some experts note.

Valkeris, the Maxima Lietuva CEO, admits, however, there is no a single strategy working for all.

«Lidl has, obviously, accrued a certain valuable international experience. Still, there is no single, success- guaranteeing strategy. Some get rooted in one country, but not necessarily pan out in another (country),» he said.

He predicts that, after Lidl’s arrival, each participant of the market will be more focusing on what gives them an advantage in the competition – exclusiveness.

A lot remains to be seen

Dainius Dundulis, owner of Norfa, another Lithuanian food market retailer, says there are still quite many unanswered questions ahead of Lidl’s arrival.

«Obviously, it will have its share of the market, however, it is hard to predict yet if it will be growing, falling or remain stagnant. Now most believe that the market will stagnate, which means Lidl will be taking away part of the other players’ market,» he told Delfi.

Norfa spokesman, Darius Ryliškis, told BNN Norfa takes no preparation anticipating the new rival.

«When it appears here and when we will see what it offers, we might go over our prices as anyone else in the market and see what to do next. But for now we are sticking with our strategy, that’s it,» he told.

His counterpart from Rimi grocery store chain, Giedrė Bielskytė, also downplayed the buzz about Lidl.

«Competition, and very high one, let me note it, is a daily thing we are dealing with. We have our prices subject to change every day, so a new competitor, Lidl or any other out there, does not clout our activities in any way,» she told BNN.

Food chain CEOs sugarcoat things?

But retail food market experts suspect the grocery chains’ executives are secretive and perhaps hypocritical – saying niceties or neutral things for the public, but likely already having redrawn the strategies they brag about.

«I know that those Lithuanian retailer that are to some extent acquainted with Lidl strategy in other markets, do plan certain actions. And those who are not that much familiar with it, do homework to get a better understanding of the chain,» says Laurynas Vilimas, head of Lithuania’s Trade Enterprise Association.

The hard time for a retailer will come when Lidl kicks of a number of new stores in the country, he believes.

«Then a real competition will start and then, perhaps, the existing players’ plans and strategies may be subject to amendments,» Vilimas says. «In case of Lidl, I believe all understand that it is branding itself worldwide as a low-price chain. Therefore, with its arrival and, especially, if it starts generating rather large flows of buyers, the others’ pricing policy may change, too.»

Lidl is learning too

Meanwhile, Artūras Urbonavičius, head of a department at Nielsen Lietuva, a business research company, notes that the German grocer will likely be relying on a limited set of commodity brands.

«Certainly, there should be some new brands in the new supermarkets apart those to be found elsewhere in Lidl hypermarkets, but I predict their assortment will not be as wide as in other food chains,» he says.

Still, the buzz about Lidl stores will be big for the first weeks, but, in the longer run, the relation between price and quality may be a key factor determining at which door the crowds will turn up.

He says Lidl just recently understood the importance of fresh food and started baking pastry rolls and bread in the stores abroad.

«In France, for example, no one imagines a food vendor without fresh bread. So Lidl is adapting and changing its strategy, heeding the buyer’s needs and copying to some extent the conventional grocers, which are known for assortment of fresh provisions,» Urbonavičius emphasized.

Lidl eyed entire Baltic market of Lithuania, Latvia and Estonia in the past, but had dropped the plans, citing «unfavourable» market conditions. Then a plan encompassing just Latvia and Lithuania emerged a few years ago, but only in Lithuania it is fleshing up.

Ref: 020/111.111.111.2821


Leave a reply

  1. Terry ronan says:

    I would be very grateful if I could get in contact with the Lithuania guy that I met in your Tondu store.I been informed that he has transfered to a store in Cardiff.

    Thumb up 0 Thumb down 0

  2. Kak says:

    Please come in Latvia.

    Thumb up 0 Thumb down 0

  3. Trevor Hudson says:

    We always used Maxima until Lidl opened here in Klaipeda. Everything is cheaper and they have really good checkouts, if there is a queue they open more checkouts, in Klaipeda Maxima in Big2 have around 25 checkouts with only a few working. Also Maxima say they have reduced prices, not true, recently milk up from 85 to1.05 euro pack of bacon rashers up from 1.79 to 2.45, euro, bottle of Spanish red wine was 2.19 up to 3.39 only last week. Also Lidl fresh produce and fresh bread is really good.
    Try them !

    Thumb up 0 Thumb down 0

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