German supermarket chain Lidl reels from failed U.S. expansion: report

Source: Xinhua| 2018-01-19 00:37:09|Editor: yan
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BERLIN, Jan. 18 (Xinhua) -- The entry of German supermarket-chain Lidl into the large U.S. consumer market has turned into a debacle, according to a report released on Thursday by the German business publication "manager magazin".

So far, only 47 out of a planned 100 U.S. discount stores have been opened. Klaus Gehrig, director of the Schwarz-Group which owns Lidl, only expects a further 20 locations to be completed in 2018.

In the interview with "manager magazin" Gehrig has described his firm's transatlantic expansion as a "single catastrophe". As a consequence, Lidl forecasts that it will only experience revenue growth of between 5 percent and 6 percent in 2018 compared to a rate 9.5 percent during the previous fiscal year which was unsurpassed throughout the international retail industry.

According to the article, Gehrig admitted that "several things have gone wrong" in Lidl's U.S. strategy. "When one recognizes a mistake, one must also correct it," he added. The business leader attributed the botched expansion to a poor selection of store locations, building stores that were too large and expensive, and failing to take into account peculiarities of American consumer behavior such as an increasing preference for ready-made meals.

Among others, Gehrig has reacted by firing Lidl Chief Executive Officer Sven Seidel, as well as reducing the Schwarz-Group's emphasis on online retail operations. The firm will also have to inject more than the originally-planned 2 billion euros into the market-entry process.

"We must return to many of the old Lidl virtues which made us so successful," Gehrig told "manager magazine".

These measures including strengthening individual branches, devoting less financial resources to experiments and fancy stores, and reducing complexity instead of expanding product ranges. He further highlighted the fact that the Schwarz-Group was not a publicly-listed corporate entity as giving it an advantage in implementing re-structuring measures.

Together with Kaufland, its German sister company in the Schwarz-Group, Lidl has nearly 400,000 employees and 10,450 discount stores across the world. The Schwarz-Group is the globally fourth-largest retailer by revenue.