Analysis: Lidl poised to disrupt metro New York grocery market

The entry of hard discount grocer Lidl stands to stir up the already highly competitive retail grocery market in metropolitan New York.

Industry observers say Lidl’s acquisition of 27 Best Market supermarkets in New York and New Jersey will push incumbent grocery stores to trim prices, thinning already narrow profit margins. What’s more, they will need to accelerate efforts to add more fresh and prepared foods, bolster private brands and expand online grocery service. Those failing to address the pricing challenge and drive differentiation stand to relinquish market share.

At the center of the battle is suburban Long Island, N.Y., where Best Market has 24 of its stores. Germany-based Lidl, whose U.S. headquarters is in Arlington, Va., edged into the metro area in late 2018 with the opening of stores in Union, N.J., and Staten Island, N.Y. Also, two of the Best Markets purchased by Lidl are in New York City and one is in New Jersey.

“There’s a tremendous population density in the New York metropolitan area, obviously in the city itself but also out on Long Island and Staten Island and in areas of North Jersey,” said Bill Bishop, chief architect at strategic advisory firm Brick Meets Click. “Once it became evident that Lidl was willing and able to morph its stores, the sales potential in a market like metro New York will allow them to grow very quickly. That’s what they were able to do in London.”

Lidl plans to convert the Best Market stores to its banner over the next two to three years in a “step-by-step transition process,” according to William Harwood, director of communications for Lidl US. Currently, the retailer operates more than 65 stores in Virginia, the Carolinas, Georgia, Maryland, Delaware, New Jersey, Pennsylvania and New York.

“It’s not new for Lidl to move into the more metropolitan areas, and what you have now is a sort of double shot,” said Katrijn Gielens, associate marketing professor at the University of North Carolina Kenan-Flagler Business School. “Yes, they are price fighters. But on top of that, they are on the side of convenience, in the sense that you don’t have to look for a store because they want to move as close as possible to consumers.”….READ MORE