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Interview with Melanie Murk - EFMI Business School

Lidl formula is becoming more and more like the local corner shops

Lidl started 2018 with a marketing campaign in which they once again make use of their title of the best vegetable department in the Netherlands, which they won for the sixth time in September 2017. The discounter boosts its fresh produce image with huggable fruit and vegetables, called Vitaminies. Nowadays, the discounter has a considerable marketing budget. “Lidl can be found everywhere now,” says Melanie Murk-Severein from the EFMI Business School. “The formula is becoming more and more like the local corner shops. Consumers can do all of their weekly shopping there.”

Fresh, and the fresh produce section in particular, plays an important part in offering a total range, but Lidl isn’t a full service supermarket. It’s mostly about the basic products in the assortment, but some things are changing in the fresh department, according to Melanie, who’s following developments closely. “Firstly, Lidl has broadened its assortment of fruit and vegetables considerably. They’re also gradually doing more with potatoes. In the past, it was mostly about two kinds: waxy and floury potatoes. Nowadays, more special varieties and types are on the shelves.”

Cleverly and efficiently expanding their range
Lidl is cleverly and efficiently expanding its range. “At first they were just carrying the front runners. Because they had a small range and many shoppers, rotation speed was very high, and that’s naturally crucial for the quality of the products. You want the products that were delivered in the morning to be on the consumer’s plate by evening. That way, there’s not much risk of loss. Moreover, Lidl is known on the market for purchasing high quality. They won’t put a poor quality product on their shelves. They started looking at products similar to the front runners that also have a high chance of having a high rotation speed. You can’t really talk about a discount assortment anymore now. They have various kinds of tomatoes, apples, bell pepper, and most products now also have an organic variant. They’ve also developed fresh meal and soup kits.”

The approach used by Lidl to upgrade their fresh produce, can now also be seen in other fresh departments. “They carefully choose which groups to add value to. That can currently be seen in the bread department, and I think they’re also expanding their standard meat assortment. They’re doing it step by step, but if you follow them, you can see the changes. They’re doing it cleverly and effectively.”

Convenience underdeveloped
A gap in Lidl’s fresh produce assortment is the convenience segment. “The processed and pre-cut vegetable range isn’t very exciting compared to that of other retailers. For example, there’s only a small range of stir-fry vegetables. That’s because the risk of loss is much higher for these products, so they’ve consciously decided not to expand in this field. However, it’s remarkable they have fresh ready-to-cook pizzas in their convenience refrigerator for 4-5 euro.”

According to Melanie, Lidl isn’t anticipating a certain target audience with their assortment, but they’re managing to bind a very broad audience to them. “Their customers are very diverse. You can find people who shop there out of necessity, a group you won’t soon find in full service supermarkets. But you can also find consumers with more money. People are no longer hesitant to shop at Lidl.” Melanie doesn’t expect the customers will leave Lidl now that it’s going better economically. It’s not an objective figure, but Lidl has many fans on social media. The number of Facebook likes is much higher for Lidl (700,000) than for Albert Heijn (400,000).

Basic design
Lidl isn’t expected to apply diversity within the formula like the city shops focused on convenience, which are shooting up in urban areas. Melanie: “The mental reach, that is the willingness to get in your car to drive to a certain shop, is very high for Lidl. Lidl is present in cities, but in general, the locations have been chosen in such a way that they’re very accessible and have plenty of parking spaces.” Full service supermarkets are mostly distinctive from discounters due to the experience when doing your shopping. Lidl won’t add that value to its shops, design will remain basic. “People don’t expect it to be otherwise. This also means consumers accept it when shelves are empty. The bar is lower, which is why it’s easier for discounters to exceed consumers’ expectations. The title of ‘best in fruit and vegetables’ is purely based on the perception of Lidl’s own customers. Experts would judge quality differently.”

Fresh produce is therefore an important pillar in the development of Lidl as a corner shop, and an odour of success is surrounding the discounter. But how well the discounter is doing compared to other formulas still remains to be guessed at. Like the other discounter, Aldi, Lidl doesn’t report its turnover figures, Melanie concludes.

More information:
EFMI Business School
Melanie Murk

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