After shaky start, can Lidl take a bite out of supermarkets at the Jersey Shore?
David P. Willis, Asbury Park Press
Updated 7 min read
Lidl Food Market
Nearly five years ago, Lidl, a German discount grocery giant with a dominating presence in Europe, stepped into the market at the Jersey Shore and opened a store on Route 35 in Eatontown.
Since then, Lidl, pronounced Lee-dul, has grown its number of stores in Monmouth and Ocean counties, but, as recently as this past summer, has suffered some setbacks as its sought to hold its own against a host of competitors, including its fellow German discount grocer and nemesis Aldi, and regional large supermarkets like ShopRite, Stop & Shop and Wegmans.
"We're getting some mixed messages from Lidl," said Michael Infranco, assistant vice president of retail intelligence provider RetailStat. "The signs that have come out of the company leads us to believe that things have not been going so well."
A spokesperson for Lidl could not be reached for comment for this story.
'It's been very haphazard'
What's Going There has talked to several industry analysts to figure out what's happened so far.
Lidl, which has more than 12,000 stores in 32 countries, came to the U.S. in 2017, eyeing its first stores in Virginia and North Carolina.
Lidl promised to "rethink grocery" with its smaller stores and low prices. About nine out of 10 products sold at Lidl are its private label brands. There's organic fruit, vegetables, dairy, meats and packaged foods sold there too.
It pushed its way into the U.S. market by buying land and opening stores. They were "lousy locations," Infranco said. "They weren't performing well from the get-go.
"They popped up stores up and down the East Coast without really trying to get a hold of a market, then building on that and moving to another market. It's been very haphazard," Infranco said. "And at this point, it seems as though they're paying the price for it."
Work continues at the new Lidl Monday, September 18, 2023, inside the Freehold Raceway Mall.
"They bought too many secondary sites in places likes Howell, New Jersey, where the real estate is expensive," Flickinger said. "ShopRite took the proverbial burning bridge to Lidl's entry the same way ShopRite has in the past with the expansion of Costco as well as the expansion of … Walmart food retailing."
Besides the store closures, Lidl laid off 200 employees from its corporate offices in Virginia earlier this year, according to news reports. Meanwhile, Lidl US is on its fifth chief executive officer, naming Joel Rampoldt, partner and managing director of consulting firm AlixPartners, in July.
Turnover has extended into some stores too, said analyst Bob Gorland, vice president of Matthew P. Casey & Associates' office in Harrisburg, Pennsylvania. "A lot of people they have in management have never worked in a supermarket before."
Lidl's experience has been "hit and miss," Gorland said.
"They have had a few good stores in areas that have done well," Gorland said. "If you try for the dart board, after 100 times, you should have a few that come right in the center of the board."
Work continues at the new Lidl Monday, September 18, 2023, inside the Freehold Raceway Mall.
But Lidl has made some changes and has shown signs that it's in it for the long haul. For instance, the company now is leasing locations rather than buying property outright, Infranco said. It opened a store at Riverwalk at Brick in December 2020, adding its name to the Hooper Avenue center's tenant roster.
And its German parent company, the Schwarz Group, has "deep pockets and competes extremely well against Aldi in Europe," Infranco said. "They are sending signals that they're committed to the U.S. They keep opening stores. They have more in the pipeline."
In Monmouth and Ocean counties, Lidl is a relatively small player. In Monmouth County, it ranked 21st among retailers that sell food, with a market share of 0.72% with $19.2 million in sales, according to a 2023 survey by Food Trade News. Ocean County's two Lidl stores accounted for a 0.49% market share, with sales of $10.4 million, the survey said.
As it does in Europe, Lidl faces stiff competition from Aldi, a similar discounter also known for its smaller stores, discounted prices and private label brands.
They're not afraid to open stores across the street or up the road from each other.
In the Aldi vs Lidl debate, Eatontown resident LaDena Rawlings, who shops at both, gives points to Lidl.
"I actually feel that I prefer Lidl better," Rawlings told What's Going There. "Their prices are lower. I prefer their meats, fruits and vegetables over Aldi." And, she added, Lidl's "bakery entices me."
But Aldi, which has been in the U.S. since the 1960s, has been more successful overall, said Flickinger, managing director of Strategic Resource Group in New York City.
"Aldi studies the market very thoroughly and it has the right strategy in terms of staffing, in terms of product," Flickinger said. "Aldi can meet Walmart and Costco on price and quality because they move merchandise so effectively and cost efficiently and are able to go toe-to-toe with Wakefern ShopRite and everybody else."
"Aldi has an unstoppable expansion plan literally from Australia to every state in the continental U.S., across America," Flickinger said.
David P. Willis, an award-winning business writer, has covered business and consumer news at the Asbury Park Press for 25 years. He writes APP.com's What's Going There column and can be reached at dwillis@gannettnj.com. Please sign up for his weekly newsletter and join his What's Going There page on Facebook for updates.
