No Longer “Little”: Lidl plans mass store opening
December 12, 2021
3 min read
What's going on here?
Lidl, the German discount supermarket chain, has recently announced that it will be undertaking a mass opening of stores to stay on track for its goal of 1,100 UK stores by 2025.
What does this mean?
In August of last year, Lidl announced a 50% expansion with plans to open at least 50 stores by the end of 2021. The German brand was on track to have 1,000 stores by the end of 2023 and following a 12% increase in revenue, Lidl plans to further expand its retail store base by another 100 stores by the end of 2025. The expansion will create 4,000 new jobs.
Lidl Great Britain’s former CEO and new Lidl Germany CEO Christian Härtnagel credited the supermarket’s success to “an impressive trading performance in the period which was supported by our continued investment in new and existing stores, product innovation and our people”. Profits have risen significantly from a loss of £25m last year to a profit of £9.8m this year. Lidl has the opportunity to grab larger portions than the 6.2% of the UK supermarket shares it currently holds with the rise in revenue, opportunities for mass hires and further business expansion plans.
What's the big picture effect?
Lidl’s expansion points towards progress in issues over the global supply chain. Lidl’s UK branch has reported numerous problems that it has faced due to Brexit including significantly increased administration due to import and export limitations, additional certification, border checks, and extensive delays at the border. However, despite these issues, Härtnagel has stated that the “store-first” strategy has alleviated pressures over the supply chain and that “the kinds of empty shelves that we undoubtedly had a couple of weeks ago or a month ago, they have gone”. The initial supply chain crisis saw prices of goods and services, especially those coming across the border from the EU, shoot up significantly. However, supermarket chains as a whole have been able to adapt to the onslaught of logistical problems as they learned to deal with post-Brexit supply delays, the COVID-induced shrunken economy and the newest issues with energy shortages. While Härtnagel acknowledges the difficulties to come over the Christmas holiday period, he states that “[Lidl] is in a much better place on availability”. The head of HR has also ensured that prices of goods at Lidl will not be affected by or will only be minimally affected by Lidl’s business strategy.
In addition, we can observe Lidl looking to massively expand internally and invest back into the UK’s economy. Reports show that Lidl will align with the UK’s leading position in tackling climate change with its newest stores offering solar-powered energy and electric vehicle charging points. The supermarket chain has also increased efforts to decrease its carbon footprint with the opening of its eighth till-free store in London and a 40% reduction in plastic packaging on its products. Lidl’s improving ESG practices can also be seen with its pay rises. After Morrisons became the first supermarket brand to offer a minimum £10 wage for entry level workers, Lidl announced plans to increase entry level pay from £9.50 to £10.10 outside of London and £11.30 in London. Lidl GB’s Head of HR, Nan Gibson, noted that this pay rise was also in efforts to not only retain current employees but also to attract new ones as the country continues to battle unemployment rates and compete with other retailers. The recent uptick in investments in ESG and ESG-compliant companies may see Lidl attracting investors and growing its market shares and presence among supermarket competitors.
Report written by Woojin Nam
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