Dive Brief:

• Lidl will open its first nine stores in cities along the east coast at 8am on Thursday, June 15th, according to a company release. Stores will open in Kinston, NC; Greenville, NC; Sanford, NC; Rocky Mount, NC; Winston-Salem, NC; Spartanburg, SC; Greenville, SC; Virginia Beach, VA; and Hampton, VA.
• Each of the 20,000-square-foot stores will feature fresh bakery offerings, organic and gluten-free products, sustainably certified seafood, and a rotating selection of nonfood products known as “Lidl Surprises.” About 90% of store products are private label, and feature prices up to 50% less than other grocers offer, according to the company.
• “Every day in our stores, customers will enjoy the smell of Lidl’s freshly baked breads, a selection of sustainable products like our certified fresh and frozen fish, and top-quality wines from around the world available at market-beating prices,” Lidl CEO Brendan Proctor said in the release. “Our mission every day is to deliver our customers less complexity, lower prices, better choices, and greater confidence.”

Dive Insight:

A closer look at the new store locations reveals that Lidl is focusing primarily on population centers outside of large metropolitan areas and suburbs. These include cities like Rocky Mount, NC; Spartanburg, SC; and Hampton, VA — places with steady economies often bolstered by a major industry or a university. The new stores’ proximity to dollar stores, Wal-Mart and fellow discounter Aldi, meanwhile, show the German retailer is also targeting low- and middle-income consumers.

But Lidl also appears to have mainstream grocers in its sights. A Google Maps search of each location revealed Food Lion, Ingles, Giant and even Harris Teeter stores in close proximity to some of the new builds.

Indeed, if there’s one major takeaway from this announcement, it’s that Lidl is ready to mix it up with some of the industry’s most entrenched retailers.

“They’re definitely going to take on the incumbent players head-on,” Doug Koontz, head of content at Planet Retail RNG, a research and consulting firm, told Food Dive on Tuesday.

Koontz, who has studied Lidl’s planned sites and visited a few in Virginia earlier this month, said these initial openings are indicative of where the company will expand over the coming months. The focus on price-sensitive consumers, he said, is consistent with the company’s expansion strategy in Europe over the past decade.

“They started with a customer on the lower end but gained comfort and acceptance with middle-income shoppers, and certainly became a household name with many of those customers,” said Koontz.

Can that same plan deliver results in the U.S. market? Much of Lidl’s European success, analysts agree, is due to the fact it caught competing retailers by surprise. That won’t be the case in the U.S., where grocers have closely followed the discounter’s moves and are bracing for impact. Wal-Mart, which will be right across the street from some of the new Lidl stores, has been aggressively lowering prices while also remodeling stores. During his recent site visits, Koontz said he noticed many grocers with low-price messaging in their stores, as well as what seemed like an increased emphasis on fresh foods and local products.

“There’s an emphasis on making sure consumers see the store as price competitive,” he said.

Lidl plans to open 20 stores throughout the summer and have 100 locations up and running by the middle of next year. Over the next few years, it hopes to open as many as 600 stores across the country.

Can the discounter deliver on this ambitious plan? Considering its strength as a company and reliance on scale, Koontz says yes. Planet Retail RNG predicts that by the end of next year, Lidl will have 180 stores and just over $2 billion in sales. By 2025, the firm forecasts Lidl as having 780 stores and just over $13 billion in sales.