Best In France Case study : LIDL Guillaume ADIN Harold GUERIF Antoine GUILLIER DE CHALVRON Maxime ROSENWALD Best In France Case study : LIDL

LIDL and the hard discount market 6800 stores in Europe 3100 stores in Germany 1319 stores in France Average size: 687 m² Rank 7 in food retailers

Background Lidl & Schwarz : 1970 in Souabe (Germany) Two mains activities were developed: Food discounters : Lidl Retailers : Kaufland and Handelshof were grouped into self-service markets and superstores. Establishement of Lidl in France in 1988 with the opening of the first store in Colmar (Haut-Rhin). In 1989, Lidl opened in the east of France, whereas his major competitor, Aldi, arrived in the north.

1400 stores all over the country Between 50 and 100 openings a year Strengths 1400 stores all over the country Between 50 and 100 openings a year 50% of French consumers go to a LIDL shop Located in 24 countries : used to deal with different cultures Good knowledge of european suppliers Power of negotiation with classical big brands Since 1973 in Germany : efficient logistic system Weaknesses External communication : reduced to the minimum The LIDL stores are sinister Any improvement of the products’ visual : everything stay in transportation’s boxes The working conditions are one the worst of the distribution’s sector Threats Classic supermarkets deal more and more cheap products but keep their good reputation Sometimes classic dealers create their own hard-discount brand (Carrefour) The security of the stores is not at the top : 6 hold-ups during the month of august 2008 Opportunities People want products which are always, but with the same level of quality Bio and fair-trade products, are still expensive and could be new markets for the hard discount LIDL understood how to use the « loi Raffarin » to optimize their implantation all over the country

What problems did LIDL encounter ?

The growth strategy : to go faster than ALDI Quick coverage of the French territory Huge investments to build warehouses Agreements of recovery (Dia, Europrix...) The outlet profile have to fit to the LIDL’s standard Saving on market researches Opportunistic acquisition Several regions at a time

The growth strategy : to go faster than ALDI « Loi Raffarin » 1 000m²  300m² : administrative authorization of establishment needed Defend “small business” against major distributors Limit the expansion of hard-discounters LIDL’s stores : 300m² + expansion requests Easier than build requests Requests Applied Permitted Permitted Rated 2007 Evol Building 68 -32% 34 -26% 50% Extension +26% 45 +22% 66%

How to fit to the french market ? German Hard Discount Little sized shops (less than 600m²) Single reference by type of product Lowest prices Fair Trade Minimalist presentation of products Weekly prices’ reductions on non-food products Reduced staff Only own-label or unbranded Some of national and historical big brands More fresh vegetables and fruits, more types of fresh meal… French Hard Discount Fair Trade

Relationship between employees and management Difficult working conditions Spying of employees Bad intern communication Poor picture of the company for the consumers

Thank you for your attention