Management Issues and Solutions for Lidl

This article discusses the management issues faced by Lidl, a global retailer, and provides potential solutions to overcome these challenges. It explores the company's poorly designed strategy for entering the US market, intense competition, and the need for innovation and differentiation. The article suggests strategic partnerships, acquisitions, and benchmarking as possible solutions for Lidl. It also emphasizes the importance of understanding the US grocery retailing market and conducting competitor analysis.

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To: B
From: A
Re: V
Date: July 12, 2019
Question presented: management issues being faced and solutions to it
The company undertaken for review is Lidl’s. The company has been facing certain issues.
This could be said from the fact that the retailer has been operating with about 10,500 stores
around the world in 28 different countries and the company is considered to be one of the
best retailers in the world. But still, the company went on to enter the market of the United
States with such a poorly designed strategy. The company did not achieve nay success even
then.
The company is facing issues due to an intense amount of pressure from its competitors.
There has to be reduction in the amount of the margins or the profits if the company wants to
maintain their respective share in the market. The advantage of the price and the discounters
does not have much to offer to the consumers.
The company has failed to understand the difference which exists between the grocery and
the retailing in the areas of Europe and the United States. Further, the company does have a
very different culture and it is very proud of it and of its operating model. Another company
like Tesco had some similar issues and still failed to make its mark in the country of the
United States. There is no need of repeating the history. If the company under review does
not change its course even little, then it will have to exit the market of the United States and
this have the impact of harming the company’s entering into Canada and Mexico and the
Latin America.

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The company also is exposed to the risk of losing hundreds of millions over the period of
next 3 to 5 years, if does compromise on the price that t is charging for its products. The
company is very much vulnerable without scale and the company will not be able to scale
without undertaking innovation and differentiating its business model. There is an option
which does not involve the forming of the strategic partnership. The team of the company is
very much skilled in the digital and in the e-commerce and has a very strong market place in
the world.
If the partnership between the company Lidl and Boxed is successful, then that would be able
to equip the customers with the buying of the branded and the items of the private brand in
bulk and that would give the company an ability of buying the groceries in the stores of Lidl
or the company could also order the groceries from Lidl for the purposes of delivering them
at home. The partnership would be able to offer much exceptions to the customers. This
would allow the company to differentiate its business model and would be able to make it
difficult for the competitors to enter into the industry or the market.
The company Lidl should consider an acquisition of the smaller grocery retail chains that are
located in the East Coast and other such geographic locations. The example include Ruler
foods and the Food 4 Less. Also, the company has another option to acquire in the Save a lot
which is able to rebrand each banner of the company. The company could also think of
acquiring another store by the name of Family Dollar. If the company goes for this, then it
would be able to select from amongst the best properties from its stores and would be able to
introduce the different formats and also divest in the stores that do not invest into the
ecosystem. The company should evaluate the acquisition of the Sprouts and also re-open its
stores. These stores of the company should offer an exceptional choice and pricing of the
vegetables and the items. The stores of sprouts and Lidl would a strategic fit for each other.
They form a lethal combination for catering to the needs of a large segment of the industry of

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groceries. Sprouts also offers many interesting possibilities in the terms of the format of the
stores and the assortment of the products. It would be wise for the company if it goes for the
employing of the team of the grocery and the digital professionals that are able to understand
the US consumer and the US grocery retailing stores in the country of the United States and
that of England. This strategy would be able to help the company in expanding its business
operations to America too. Target also has the capabilities of leveraging the customers of the
company and shipment could be delivered along with the general merchandise of the
customers of the Lidl and the Target. Target is able to divest the brands to the company or it
could go onto find another buyer.
The products that are being sold by Lidl are capable of generate about 80% of the total sales
in the traditional grocery stores. Target has the capability of shrinking the square footage and
can still provide a format to its customers so as to meet in the grocery and the general
merchandise needs of the customers. This strategic relationship between the two companies
would allow the company to open many new stores and the company would be able to derive
benefit from the supply chain and the distribution capabilities so as to replenish the products
to its stores in a cost effective manner. The company would also be able to differentiate itself
from its competitors which would provide to be successful in the future and this would help
in capturing an increased market share. This partnership would have many more advantages
as well such as the fact that the company would be able to create a loyalty program that
would be able to reward its customers of shopping and this would be able to generate an
immense amount of value for the customers.
The company would become much more innovative and also unpredictable for its
competitors. The company would also be able to eliminate many of its contracts. This would

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be done through the minimisation of the deterrent strategy which could be used as against its
competitors.
The company could also benchmark its business operations and compare its operations with
its competitors. This way, it would be able to learn some new things and understand as to
what could be done to improve its operations. It is one of the main concepts and the company
Lidl could know the operations that could be undertaken, be it the competitive synergies etc
that could be considered for the purposes of improving its business operations. In my opinion,
the company should conduct a competitor analysis of itself with its competitors and then
ascertain the changes that could be done so that the profitability of the company could be
improved. Further, it could look into the options that are available to it so that the business
synergies could be achieved.
Benchmarking is the process of obtaining some measure to benchmark the company as
against its competitors. Before undertaking an opportunity to benchmark it, a through
understanding of the guidelines of the company are imperative. The benchmarking would
depend upon the size of the company and are based upon the information which is to be
gathered and the way in which the same could be used (I six sigma, 2019).
The following are the stages of benchmarking that Lidl could undertake in order to improve
its business operations:
 Planning: this is very important for the corporate stakeholders since this seeks for the
identification of the activities that needs to be benchmarked. The processes usually
include a high amount of cost, volume and value. The inputs and the output needs
some redefinition. Merely improving one core competency would not prove to be
helpful since that would be of a little use for the company.

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 Collection of information: in this, the information is broadly classified into the
primary and the secondary data. The company Lidl in the given case must undertake
some exploratory research, some market research, information conversations,
interviews and the questionnaires that would be able to help it in achieving its target.
 The data which has been then collected must be analysed so that apt action could be
undertaken. The performance gap must be identified and the results of the various
operations could be ascertained with ease.
 Then is the step of implementation which involves the mandatory to do. The analysis
done above would decide the performance gap that exists and the steps that needs to
be undertaken in order to make improvements. It is possible that Lidl is engrossed in
some activities that are a mere waste and could be eliminated. This would lead to
reduction of costs (NAP edu, 2019).
 Then all the required information could be assembled and the systematic evaluation of
the dame could be done (Tutorial points, 2019).
There are some types of benchmarking sub as internal benchmarking, competitive
benchmarking, functional benchmarking and the geographical benchmarking.
Ratio analysis could be done so that the areas of improvement could be identified and the
way thee company could improve its business operations (OSHA train, 2019).
The company that could be compared with is ALDI or the Metro group. Lidl could conduct
SWOT, PESTEL analysis of its competitors and can know what areas require improvement
for it.

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References:
Ladd, B. (2018). Lidl USA: What Went Wrong And What It Can Do To Recover. [online]
Forbes.com. Available at: https://www.forbes.com/sites/brittainladd/2018/07/08/lidl-usa-
what-went-wrong-and-what-it-can-do-to-recover/#3a9a14ca29c8 [Accessed 9 May 2019].
iSixSigma. (2019). Understanding the Purpose and Use of Benchmarking | iSixSigma.
[online] Available at:
https://www.isixsigma.com/methodology/benchmarking/understanding-purpose-and-use-
benchmarking/ [Accessed 12 May 2019].
Oshatrain.org. (2019). Benchmarking. [online] Available at:
https://www.oshatrain.org/notes/2fnotes04.html [Accessed 12 May 2019].
www.nap.edu. (2019). The Benchmarking Process. [online] Available at:
https://www.nap.edu/read/11344/chapter/5 [Accessed 12 May 2019].
www.tutorialspoint.com. (2019). Benchmarking Process. [online] Available at:
https://www.tutorialspoint.com/management_concepts/benchmarking_process.htm [Accessed
12 May 2019].