German grocery chain Lidl has big plans for Philadelphia region
German supermarket giant Lidl is building up a real estate team in Philadelphia, establishing the city and environs as a beachhead in its aggressive U.S. expansion, the company's first foray outside Europe.
German supermarket giant Lidl is building up a real estate team in Philadelphia, establishing the city and environs as a beachhead in its aggressive U.S. expansion, the company's first foray outside Europe.
The discount chain, a unit of the Schwarz Group grocery conglomerate, is seeking an acquisition manager and three other real estate staffers in the city, according to its U.S. website.
Another acquisition manager is being sought in Pittsburgh, while more than a hundred additional slots are open - for jobs ranging from store managers to human-resources personnel - in a strip of East Coast states between Virginia, where Lidl U.S. is headquartered in Arlington, and Georgia.
The Philadelphia prong of the recruiting campaign comes as the region becomes a theater in Lidl's ongoing rivalry with fellow German-based deep-discounter Aldi, which has long operated in the area.
The companies are seeking to fill a vacuum in this region left by the bankruptcy of A&P - which owned Pathmark and Super Fresh stores here - and other discount-oriented grocery operators, said Burt Flickinger III, managing director of the retail consultant Strategic Resource Group in New York.
"It's one of the highest-opportunity markets across America," Flickinger said of the Philadelphia region.
Aldi's Batavia, Ill.-based U.S. operation, which now has more than 2,000 locations, has been especially adept at serving cash-strapped customers with its limited selection of deeply discounted private-label merchandise, he said.
Lidl is thought to be negotiating deals with food companies to sell mainstream brands at rock-bottom prices in hopes of tempting a similar band of customers away from Aldi's private labels, Flickinger said.
According to real estate criteria on its website, Lidl plans to open stores of about 36,000 square feet. That's about twice as big as a typical Aldi, but only about half the size of a standard supermarket.
Most of the locations Lidl is rumored to be pursuing in the Philadelphia area are in the Pennsylvania suburbs and South Jersey, said Douglas Green, managing principal at Philadelphia-based brokerage MSC Retail.
Lidl U.S. spokesman Will Harwood did not respond to a phone message seeking additional details about its plans.
Established U.S. operators such as Kroger Co. have experimented with a similar model of deep discounts, but have found it difficult to do so without cannibalizing their mainstream business, said Jim Hertel, a managing partner at supermarket consultancy Willard Bishop, based in Long Grove, Ill.
"Your goal is to build a strong value franchise, but you don't want to be so strong that you're trading people out of the conventional store and into the value store," Hertel said.
Aldi and Lidl are better able to pursue such a strategy because their exclusive focus is on value-minded shoppers, he said.
Lidl already has about 200 staffers preparing for its first U.S. openings, which are expected in 2018, chief executive Sven Seidel said in a November interview with Germany's Handelsblatt financial newspaper.
The chain has been vigilant about keeping specifics of its plans under wraps to avoid tipping off competitors, said MSC's Green, whose firm represents Aldi in the region.
That may be wise: Aldi is believed to have acquired Bottom Dollar Food's Pennsylvania and South Jersey real estate in 2015 to outflank Lidl in anticipation of its arrival, Flickinger said.
The company's U.S. locations will number "in the mid-double-digits" when it does open, Seidel said in the Handelsblatt interview.
"They want to plot, plot, plot, plot and then erupt and take the market by storm," Green said.
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