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Germany: Lidl wants more returns

Discount Retail Chain Lidl Germany (owned by the German Schwarz Group) is now pursuing a new strategy under the new CEO Kenneth McGrath, which is less focused on price competition than on returns. Whether in terms of personnel or sales prices, the new boss Lidl has increasingly trimmed for better returns. This also means that Lidl no longer emulates its main competitor Aldi. A good example of the new way at Lidl is the article Milka chocolate, which is now listed again at Lidl for 1.35 euros. The competitors usually charge only 1.29 euros. Or the product organic milk, which Lidl had not reduced in price despite the lower Aldi price. (see also our post Germany: Lidl is no longer competing in a price war with Aldi (discountretailconsulting.com)


New pricing policy also for special offers

The new step is now also reflected in Lidl's special offers. The discounter had already significantly reduced its promotions last year. And this in a competition where, for example, EDEKA had reduced its prices. In addition, ALDI South increased its revenues by around 40 percent with promotional items. On the other hand, however, Lidl was able to record a double-digit increase in sales in its shelf prices. The discounter was also able to continue to grow with its own markets. Almost the same applies to sales of meat products, where Lidl was behind its competitors, but here the gap to ALDI was significantly smaller. One reason was the new pricing policy. In addition, Lidl also sees further savings potential in store opening hours. Here, the times have been shortened in some branches, but this was already an issue last year due to the extremely rising energy costs.


Lidl: Saving is also the order of the day in the USA

The new course of Lidl boss McGrath is also recognizable abroad. In mid-February, between 250 and 300 jobs were cut in the US. However, store staff is not under discussion. It was simply a question of cutting jobs at headquarters in order to improve results here as well. This was a significant reduction in jobs at the US headquarters in Arlington.


In the USA, the withdrawal from the USA was even discussed in 2020. Recently, however, the discounter had opened new locations again. Lidl currently operates around 175 stores in the USA. ALDI, on the other hand, already had 2258 locations in the US market in 2022. It should also be noted that when McGrath took office about a year ago, the EBIT margin in the foundation was about 4.25 percent. In Germany, sales rose by around EUR 2.5 billion to around EUR 27 billion in the financial year 2022/23. Still a good result, considering that sales in the German retail sector in 2022 fell by 0.6 percent in price-adjusted terms compared to the previous year.



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