Has Lidl taken on too much in US expansion plans?

While few predicted Lidl’s  expansion slowdown in the UK, Lidl’s US operation has been harder hit, in a move that was arguably more foreseeable.

In February, Lidl let go of around 200 US employees, primarily in its head office in Arlington, Virginia. The HQ was opened in 2017, when Lidl entered the US with its eye on 330 US stores by 2020. It currently has about 180, and the attempted expansion has been “very costly and still brings no money”, says DRC’s Marc Houppermans.

“The US is a very strange expansion development. In Europe they are expanding country by country, and yet now they have one country which is far away, where they have no scale. It will cost a long time and especially a lot of money to get a healthy business there.”

Aldi, on the other hand, does have scale there, with over 2,000 US stores. Its success may make retreat a bitter pill to swallow for Lidl execs.

DRC’s William Snollaerts says: “If your main competitor that you’ve known for decades is doing that well in the US and you are not doing that well – you cannot leave that easily.”

Nevertheless, says Houppermans: “I think there’s a big discussion [at Lidl] at this moment on how to continue in the US.

“They need more than 500-600 stores before they become profitable, and they’re a long way from that.”