Lidl is to invest €350m in Spain this year by adding 40 new stores, which gives a clear signal of the discounter’s intentions in the country.
Lidl CFO Ferrán Figueras said: “This is a very important step for the company, as it is a figure twice as large on average than in recent years.”
He added: “We are convinced that we still have much potential for further growth and continue to gain market share.”
The expansion programme will see it add another 800 employees. The retailer already has a network of 535 stores and 11,500 employees in Spain.
As well as developing the range and the size of the outlets, Figueras was clear on Lidl’s competitive position in the market by stating: “We will remain aggressive in pricing.”
This announcement follows news earlier this year of a major investment in distribution facilities with the opening of a new centre near Madrid. As reported by Planet Retail in June, the new development in Alcala de Henares is Lidl’s largest and most advanced logistics platform in Europe, at an investment of €70m. It can service at least 150 stores.
Lidl clearly sees an opportunity to progress quickly in Spain as the Spanish shopper warms to its discount format.
The market is already price-focused, with formidable competitors such as market-leader Mercadona.
“With Mercadona well positioned on price and its many private-label brands trusted by shoppers, Lidl’s growth is likely to put more pressure on hypermarket operators such as Carrefour and Alcampo”
Howard Lake, Planet Retail
However, Lidl has successfully tailored its range and offer and has evolved a format that is more relevant. With Mercadona well positioned on price and its many private-label brands trusted by shoppers, Lidl’s growth is likely to put more pressure on hypermarket operators such as Carrefour and Alcampo.
Spain is a market only recently emerging from a deep recession, being a nation hit hard by the Eurozone crisis. As the UK has seen, times of economic hardship afford significant opportunity for discounters to gain traction with consumers. Moreover, the affection for the channel does not dissipate once the worst of the crisis passes.
Lidl clearly foresees an improved economic climate ahead for the majority of its key European markets, hence its decision to upscale its offer across multiple territories. As shoppers enjoy relatively more affluence, Lidl is evidently minded to likewise enhance its offer in terms of shopper experience and the standard of assortment.
Planet Retail has lately observed similar moves in markets across the Continent. While no-one can genuinely describe these tactics as moving Lidl ‘upmarket’ per se, the retailer is displaying considerable shrewdness in how it is tracking its target shopper’s needs and desires.
- Howard Lake is senior editor at Planet Retail