German market chain Lidl maps its first U.S. stores

Zlati Meyer | USA TODAY

Show Caption Hide Caption Find out if a Lidl grocery store is opening near you The popular German chain is opening its first U.S. stores next month.

The latest German supermarket chain to try to get a foothold in the cutthroat U.S. grocery market, Lidl, plans to start with nine locations on the East Coast.

In releasing a list Tuesday of its first locations, due to start opening June 15, Lidl said it will focus on Virginia, North and South Carolina. But it plans to grow quickly.

Lidl (its name rhymes with "needle") intends to open 100 stores by the end of summer 2018.

The chain's strategy includes smaller stores -- 20,000 square feet on average with six aisles -- and a very heavy emphasis on exclusive brands. Besides packaged food goods, the Lidl stores will sell wine, fresh fruits and vegetables, fresh and frozen fish, gluten-free and organic items and baked goods.

“We cannot wait to open our first U.S. stores and introduce customers to grocery shopping refreshed, retooled and rethought to make life better,” said Lidl US CEO Brendan Proctor. “Our mission every day is to deliver our customers less complexity, lower prices, better choices and greater confidence.”

In Virginia, Lidl is opening stores in Virginia Beach and Hampton, while in South Carolina, it will have stores in Spartanburg and Greenville. In North Carolina, Lidl plans to initially open stores in Kinston, Greenville, Sanford, Rocky Mount and Winston-Salem.

Lidl will be going up against fellow German chain Aldi, which opened its first American store in 1976 in Iowa and now has 1,600 stores in 35 states. Aldi also uses the same smaller store, limited assortment approach.

Today, shoppers have a wide variety of choices when it comes to the American supermarket industry. Despite being notorious for slim profit margins, the market includes everything from big, full-service chains like Kroger to upscale or more specialized choices like Whole Foods Market. Walmart and Target also compete vigorously for grocery shoppers as discounters.

An analysis by brokerage Oppenheimer of the 20 locations Lidl previously said it plans to open during the summer shows that 90% of them are within 5 miles of a Walmart and 55% of them are within 5 miles of a Kroger.

"They’re trying to gain market share from competitors like Walmart and supermarkets, so you want to be situated near them," said Rupesh Parikh, Oppenheimer & Co. senior analyst for food, grocery and consumer products. "The real question is how successful will that concept be."

Consumers are the ones who will gain from Lidl's U.S. debut, because food retailers near the new stores will likely lower prices in order to get their customers to stay put.

"You will see players, like Kroger and Walmart, will probably be more aggressive in those markets with with their front-page ads and circulars," Parikh said. "When you have a competitor opening, you might have others become competitive, so they don’t lose market share. ... Anytime a new grocery store opens, customers will leave the existing grocery stores to try it. The question is will they stick around."

The Oppenheimer & Co. research noted that in Atlanta, Kroger has cutting prices on some private-label foods and put up many in-store signs and highway billboards boasting about "new lower prices, tactics likely in response to Lidl store openings in the Southwest and to face off against Walmart.

Parikh hypothesized that Lidl decided to open stores in the Mid-Atlantic region first, because the company has its U.S. headquarters is in Arlington County, Va. and distribution centers in Spotsylvania County, Va.; Alamance County, N.C.; and Cecil County, Md. That they chose to come ashore in the region to begin with might be, because that area is closer to Germany than the West Coast is.

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