Strategic Analysis of Lidl, 2023
Mariam Peyton is a professional Financial Analyst. She holds a Masters degree in Economics. She specialises in financial analysis and forecasting. Her expertise includes studying the financial performance of companies, markets and entire industries looking for trends, insights and information that can help you glean rich insights for use in academic and market research.
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The Lidl brand was founded in Germany, and launched in the UK in 1994 opening its first store in Great Britain after over 26 years, it operates over 860 stores and regional distribution centers across Britain. Its first German store opened in Ludwigshafen in 1973 with just three employees and about 500 products. Around 1990, it began expanding out of Germany and a few years later, had stores across Europe (Lidl, n.d1). It now has over 11,200 stores in about 32 countries
The report used a number of strategic tools including PESTLE, Porter's five forces, SWOT, VRIO, and the Value chain to examine the company’s internal and external environment. The report analyzes the company’s strategic positioning in the market and how it can be strengthened.
An analysis of the Lidl brand and its business environment reveals a number of challenging trends and issues that it needs to address in order to needed to become a leaner and more efficient organization that can compete against rivals.
Some of the recent macro and micro challenges include the increasing supply chain costs in the UK due to a rise in commodity and shipping costs and the shortage of labor, materials, and drivers which has subsequently led to supermarkets increasing prices by 5% in order to be sustainable, strong competition from other discount retailers, online platforms and traditional supermarkets, especially in the UK and Germany markets, the impact of the COVID-19 pandemic on the supply chain, consumer behavior and demand, and employee safety and well-being among others to be addressed in the essay below.
This analysis answers key questions such as; what are the strengths of the Lidl brand? What are its weaknesses?
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Strategic Analysis of Lidl, 2023 Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Understand the broad macro-environment of Lidl and the supermarket industry in terms of political, economic, social, technological, environmental, and legal factors (PESTEL/PEST/STEEPLE).
- Use our business strategy case studies to understand real-LIFE strategy applications
- To apply strategy business models and frameworks such as Pestle/Pest/Steeple etc. to real company cases.
1.0 INTRODUCTION
The Lidl brand was founded in Germany, and launched in the UK in 1994 opening its first store in Great Britain after over 26 years, it operates over 860 stores and regional distribution centers across Britain. Its first German store opened in Ludwigshafen in 1973 with just three employees and about 500 products. Around 1990, it began expanding out of Germany and a few years later, had stores across Europe. It now has over 12,000 stores in about 31 countries
Lidl has been growing tremendously since its entry into the UK often registering double-digit growth figures and the discounter amassed a revenue of over £7.8 billion as of 2022. Over the past years, the discounter’s sales have been increasing in the UK with a growth of 2.9% realized in the first quarter of 2021 following an increase that began in late 2019 and continuing on into 2020.
The discounter has done well in spite of the poor economic situation owing to the fact that shoppers had limited budgets and this has made it a strong competitor not just against its main competitor Aldi but also other supermarkets such as Asda.
This report uses the case study of Lidl to examine the macro and micro environmental changes in the UK and EU supermarket industry. Using frameworks such as PESTLE, SWOT, Porters Five Forces, VRIO, and generic competitive strategies, the report will undertake a strategic overview of Lidl, including its financial performance, competitive microenvironment, competitive advantage, technological improvement, pricing strategy, and many others, over the last 2-3years.
Key questions to answer include; what is the Lidl brand’s current strategy? What are the strengths of the Lidl brand? What are its weaknesses? Who are the competitors of the Lidl brand? What is the competitive strategy of the Lidl brand?
The report will conclude with suggestions and a discussion of strategies and tactics that could be used by Lidl to respond to the major changes occurring in the supermarket industry.
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