Lidl is Winning Over Next Generation of Consumers According to New Oliver Wyman Survey

New survey from Oliver Wyman asks consumers about their views of and shopping habits at Lidl stores opening in their area; results translate to implications for incumbent grocers.

BOSTON--()--Europe’s leading hard discounter Lidl’s entry into US over the last year is resonating with grocery consumers in a meaningful way, according to global consulting firm Oliver Wyman.

“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.”

The independent survey by the firm found that 48 percent of 600 consumers who tried Lidl are now shopping there on a regular basis (more than twice per month). Consumers also are spending more money per shopping trip at Lidl today than a year ago, indicating they have found a wider range of Lidl products they prefer. Younger shoppers – aged 18 to 34 – had a particularly high awareness of Lidl and shopped there frequently, appreciating both Lidl’s private label product quality and their attractive prices.

“Lidl is new in the US 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. “What Lidl has done so far has struck a chord with younger consumers who are valuing Lidl’s good private brand product quality almost as much as their low prices.”

Key survey findings:

  • Lidl is stealing customers from a wide range of incumbent grocers. Forty percent of consumers we surveyed are loyal to supermarkets are now shopping at Lidl more than twice per month.
  • Forty-six percent of Lidl customers say their primary reason to shop at Lidl is either good quality, good promotions, or really fresh products. Thirty-nine percent cite low prices as their primary reason.
  • Lidl beats all other grocery retailers in our survey in value perception (expected) and in freshness of products (unexpected).
  • Customer satisfaction is surprisingly high with offerings not normally associated with hard discounters, including choice of organic products and wine selection.
  • Satisfaction is higher in states Lidl entered recently versus those it entered earlier, which could be due to Lidl using lessons learned from earlier store openings to adjust its offer.
  • Difficulty in reaching stores is cited as the number-one reason for not shopping more often at Lidl.
  • Consumers who have never shopped at Lidl are becoming increasingly aware of the grocer, according to a comparison of responses this year and last year from the same metropolitan areas.

US consumers are showing an appetite for formats that offer good value for money. And while Lidl only operates about 50 stores in six US states as of June 2018, fellow European hard discounter Aldi already has a network of over 1,600 US stores.

“Hard discounters are in the US to stay and win. Incumbent grocers must evolve, redefining their business to align with the consumers’ demands for high quality and value,” said George Faigen, partner in the Retail and Consumer Goods practice of Oliver Wyman. “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.”

About the survey

The online questionnaire was fielded in the US in April 2018. We surveyed 3,600 individuals in the states where Lidl operates stores: North Carolina, South Carolina, Virginia, Delaware, New Jersey, and Georgia. Of these, 600 had shopped at Lidl already, and we asked them about their experiences in detail.

The sample of 600 Lidl shoppers we asked consists of 52 percent female consumers, 81 percent with a household income between $25,000 and $150,000 and 35 percent millennials (ages 18-34).

About Oliver Wyman

Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across nearly 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 4,700 professionals around the world who help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.

Contacts

Oliver Wyman
Francine Minadeo, 212-345-6417
francine.minadeo@oliverwyman.com

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