Retailers near one of the new Lidl US stores set prices for key staples up to 55% lower compared to markets without a Lidl, according to a new study by the University of North Carolina.
The study, authored by Katrijn Gielens, associate professor of marketing at UNC’s Kenan-Flagler Business School analyzed prices at 12 markets, six with a Lidl and six without, in Virginia, North Carolina and South Carolina.
Analysis included 48 products, including dairy, meat, produce, canned and frozen goods collected during store checks.
“We know that the supermarket chains systematically compete with each other on price,” Gielens said, in a news release. “In fact, the competitive price-cutting effect of Lidl’s entry in a market is more than three times stronger than the effect of a Walmart’s entry in a new market reported by previous academic work.”
Researchers found the cheapest baskets were consistently at Lidl, with prices 25% lower on average than competitors, with conventional supermarkets like Kroger and Publix “markedly” higher.
Hard discounter Aldi, a Lidl competitor in Europe and elsewhere, isn’t safe from the affect of a new Lidl in town. While Aldi has operated in the U.S. for decades, the Batavia, Ill.-based retailer is still a newcomer in many markets, with aggressive expansion plans over the next several years.
Aldi’s prices were found to be 19% lower in markets with a Lidl, and Food Lion and Kroger were 15% and 13% lower respectively.
Walmart and Publix lowered their prices 4%.
Coverage of Lidl’s entry into the U.S. has been both positive and negative. The company reportedly is pulling back on some locations, and reducing the size of new builds in a reevaluation of its strategy. A Bloomberg report also suggests the market share Lidl has gained over the past six- to eight months is significant.
According to a Second Measure study of credit-card purchases in Winston-Salem, North Carolina, Lidl picked up 3% of market share among local competitors.