2017-05-24

No Growth at Home: German Grocers Invade America

U.S. Grocer Kroger Has Gone Berzerk Because It's About to Be Invaded by a Ruthless German Rival
As grocer Lidl plans its U.S. launch, American incumbents like grocer Kroger (KR) are bracing themselves for heightened competition from the low-cost German rival.

Lidl plans to open its first U.S. stores on June 15, with 20 stores opening this summer in Virginia, North Carolina and South Carolina and a total of 100 East Coast locations by next summer. The privately held German chain operates over 10,000 stores in Europe and is known for its price competitiveness.

According to an analysis by Oppenheimer analyst Rupesh Parikh, there will be four Lidl stores within one mile of a Kroger location and nine within one mile of a Walmart (WMT) . Expanding the radius to ten miles, all 20 Lidl locations overlap with a Walmart, while 13 of them overlap with a Kroger.

Parikh also noted that in some southern stores, Kroger is cutting prices primarily in private label products and advertising its price cuts on giant billboards. The cuts are "mainly in center of store categories and in some private label perishables" and average 20%.

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