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WalterLoebContributor

Icovermajordevelopmentsintheretailindustry.
OpinionsexpressedbyForbesContributorsaretheirown.

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10/30/2013@7:54AM 19,200views

WhyAldiandLidlHaveWhatItTakes
ToBeatTheBestandTheBiggest
Thereare15,477fooddiscountstoresin
Germanymakingitthemostoverstoredcountry
intheEurope,andthemostcompetitive.Asa
matteroffact,therearemorediscountstoresin
Germanythantherearegasstations.Toprosper
amongtheintensecompetitionrequires
consumersavvyandexcellentoperations.Aldi
andLidlhavemasteredboth.Theseleadersin
discountretailinghaveacombined7,540unitsin
Germanyor37%ofalldiscountstores.Othersin
discountGermandiscountarenaare
TengelmansNetto(18%share),Penny(11%),
Norma(4%)andothers(5%).Withsuch
ferociouslowcostcompetitors,eventhemighty
WalmartleftGermanyin2006afterjustnine
years.
Understandingthecustomerwantsqualityboth
AldiandLidlhavetradeduptheirmerchandise
assortmenttohigherqualityproducts.In
additioneachhasintroducedfreshmeat,baked
goods,organicfruit,freshnoodles,specialty
soups,aswellexpandingtheirnonfood
assortments.ForinstanceLidlnowcarriesthe
Silvercrestlineofelectronics.Asaresultofthese
merchandisestrategiesthestoreshavebecome
moreattractiveandappealingtoanaffluent
customer.
Withamoreupscaleofferingandimageboth
companiesarenowexpandingrapidlyinthe
EuropeanUnionwheretheyarejuststartingto
becomeafactorinanumberofmarkets.Intime,
theyplantoblankettherestoftheworldwith
theirstores.Today,AldiNordalreadyhas1,188
storiesintheUnitedStatesand270inAustralia
whileAldiSdhasmorethan370TraderJoes
storesintheUnitedStates.Lidlhas11storesin
Cyprus,5storesinMaltawhileLidlisnotyetin
theUnitedStates,itisatargetmarket.

Inissue42/13datedOctober14,2013ofFocus,
theweeklyGermanmagazinepublisheda
definitivestudyonAldiandLidl.Thestudy
projectsthattheAldicompanieswillincrease
theirglobalsalesvolumefrom56.8billionin
2012to65.8billionin2016a15.8%increase.
Lidlisforecastedtorisefrom54.0billionin
2012to65.8billionin2016a21.9%increase.
With135,250associatesworldwide,including
61,600inGermany,thetwoAldiorganizations
(NordandSd)havebeengearinguptoachieve
thisgoal.Thisreflectstheworldwideoperational
interestincludingTraderJoes.Lidl,whichis
ownedbytheSchwarzGroup,has175,000co
workersinternationallyand65,000German
associates.Lidlhasindicateditsintentionto
expandacrosstheAtlanticOcean.
ManyyearsagoIvisitedanearlyAldistoreinthe
UnitedStates.Itsmerchandisedisplaysfeatured
cardboarddeliverycartonsandwasvery
rudimentary.Todaytheoperationsarevastly
moresophisticatedbutstillretainastrongvalue
appealtothebudgetconsciousconsumer.The
companysstrongexpansionintoGreatBritain
servesasasuccessfulprecursorinthatregard.
Lidlnowhas586storesintheUK,whileAldiSd
has429.
TheFocusstudyprovided,forthefirsttime,that
actualsalesfiguresforthesesecretiveretailers,
showingthestrengthofthetwoprivatelyheld
companies.In2012AldiNordachievedsalesof
11.5billion,AldiSd15.0billionandLidl
recorded18.0billion.AsIhaveoutlinedin
previousblogposts,thetwoAldiorganizations
areoperatedseparatelybytwoAlbrecht
Brothers.TheoAlbrecht,thescionofAldiNord
passedawayin2010andhissonBertholddiedat
theyoungageof58in2012.Thiswasdisruptive
andslowedtheoperationuntilitwasreorganized
undertheleadershipofMarcHeussling.AldiSd
ismanagedbyKarlAlbrecht.Lidlwasfoundedin
1930andisownedbyDieterSchwarz.Schwarzis
thethirdwealthiestmaninGermany(afterthe
twoAlbrechtbrothers.)

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