Report on Lidl's Low Prices: Business Development Strategy Analysis

This report explores the reasons behind Lidl's consistently low prices, which have fueled its successful expansion across Europe. Through a literature review, it examines various perspectives on Lidl's pricing strategy, including its focus on low prices for grocery staples, efficient quality products, and psycho-graphic segmentation targeting price-sensitive consumers. The report highlights how Lidl's low prices impact competitors, forcing them to lower prices as well. Lidl's ability to maintain quality while offering affordable prices has solidified its position in the market, even during challenging times like the COVID-19 pandemic, ultimately attracting loyal customers and driving business development. Desklib offers a range of solved assignments and study resources to support students' academic needs.

Reasons for low prices
of Lidl

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Reasons for low prices of Lidl....................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Academic skills are considered as the core skills and talents which are been used to
encourage and develop all students in order to become more effective learners. It involve
different elements like academic writing, referencing, different ways of giving presentation and
so on. To achieve success it is very important as well as necessary to have academic skills. An
individual who have good level of confidence then it totally depends on their academic skills
because they influence their overall performance (Mitríková, Marchevská and Kozárová, 2021).
Academic skills are of different types in terms of academic integrity, online learning, searching
for information and employability. The below report is based on Lidl. It is a German
international supermarket chain. The company was established in 1973 by Josef Schwarz. The
below report involves literature review in context with small prices of Lidl.
MAIN BODY
Reasons for low prices of Lidl
Literature review is defined as an article which is a scholarly paper that determines
current knowledge. It involves different findings and the contributions been done with respect to
a particular topic. It includes three elements which are the introduction of specific topic, body of
review that include all sources and finally it is followed by conclusion (Schumann, Wied and
Krahl, M., 2021).. The below literature review is based on the small prices been set by Lidl. The
company is a successful chain of grocery stores which has led to expansion throughout Europe.
The literature review with respect to this is further been explained as below:-
 As per the view point of Kenan Flager,2021, it is considered that even if consumers don't
shop at Lidl they still get different benefits from its lower prices. The main strategy of
company is to offer low prices around the selection of all grocery staples. The company
got established in US market in 2017 and opened around 10 stores (Berezvai, 2021). As
there were other companies also which were providing lost cost like Walmart so it was
necessary for them to offer unique and completely different products but at low prices
only. The company provided substantial savings to all customers even if they have not
purchased anything from their showroom. The prices were been compared for specific
products and it was seen that in context with food products like bread price were getting

reduced around 30%. The prices of product like cheese and ice-cream it got reduced to
around more than 15 %.
 As per the view point of Sophie Harris, 2020, Lidl had became the most popular
supermarket and is at the top level in terms of grocery stores. The company sells grocery
as well as household items at a low price in comparison with other supermarket grocery
chain. They has always provided efficient quality products at low price. They also offer
good and effective deals within their store and customers also get an opportunity to have
special products also. They developed a website “ Love money” which involved to share
certain tricks as well as hacks that determine how to save money while doing shopping at
their company. It has been analysed that Lidl has build up their market share to around
5.9%. The company presented different deals at their website like they launch various
food deals on weekly basis which is also defined as pick of the week. In relation with this
deal it includes both meat as well as veg grocery product and it was done to plan all
meals for a week and can save their level of fortune (Lutge and Uhl, 2021). These deals
are launched each Thursday which offers spinach at a discounted price and the meatballs
for 2.89. The company also provide the deal of giving special welcome cards that allows
to receive a free item after paying £20 and just show the card.
 As per the view point of Hitesh Bhasin,2019, Lidl always had the strategy of low pricing
in order to provide a trouble free shopping experience to all customers due to which it
became simple for them to do shopping. The company got started with a very small store
that involved only 3 people and offered 500 products and in context with today's
condition it got enhanced in around 29 countries. They always used the strategy of
psycho-graphic segmentation whose main focus was on targeting those people who are
price sensitive and will not indulge in purchase high priced products. The main reason
behind offering products at low prices was due to its private brand and they also had less
number of employees in order to save their overall cost.
 As per the view point of Hollie Borland,2020, Lidl beats Tesco and Aldi in order to win
the cheapest supermarket chain for around 78 essential items. It was been analysed that
around 78 grocery products as well as household items were been involved like in context
with pasta, olive oil and many more (Gaspars-Wieloch, 2021). There was high amount of
price differences due to different promotional offers on specific products which they were

offering. It was analysed that in relation with different brands like Aldi, Sainsbury,
Waitrose their cost was less like in case of Lidl the cost was around 72.02 but in case of
Aldi it was 72.23, In Tesco it was 88.28 and so on.
 As per the view point of Bill Bishop, 2017, Lidl has always been successful and the main
reason for it is their low priced products. They attracted large number of customers with
respect to setting up less prices. Due to low prices been set they generated high amount of
sales and it didn't affected their organisation at all in terms of its efficiency (Kianto,
2021). The company provided premium quality products which offered consumer an
opportunity to trade up and through this they were generating high profit margins for
themselves.
 As per the view point of Marianne Wilson, 2020, Lidl was generating huge effect on its
competitors due to the effect of COVID. The company was always offering low priced
products and after this pandemic also their prices were much lower than other national
grocery retailers. As company's main target was to offer best quality products at low
prices due to this other competitors were been in pressure as they also had to offer low
priced products in order to attract all consumers towards their brand. When Lidl entered
the market it was seen that Aldi decreased their prices to around 15% and in relation with
Walmart also the prices got reduced by around 9%.
 As per the view point of Russell Redman, 2018, Lidl led to huge impact on other
supermarkets during first 2 months only. Their stores were offering low priced products
with best quality and always had one focus which was to carry on stable products as
reduce other national brands (Trigeorgis, Baldi and Katsikeas, 2021). In terms of its
store they affected recent supermarkets as their sales got reduced with around 9.2%.
 As per the view point of Reel, 2021, all consumers have always been excited to purchase
products from Lidl because they were offering quality products and almost all consumers
want that they get items at reasonable prices. The company is still offering suspicious low
priced products which was effective for them in a major way. As per the view point of
Molly Donovan, 2018, Lidl grocery stores are very small but at the same point of time
offer maximum variety of products at affordance prices. They implement the strategy of
couponing to a new level. With the help of this it became simple for all customers by

placing the deals front and centre at the store entrance as well as exit. With respect to this
it involved various discounted products also.
 As per the view point of Laura bill, 2018, Lidl has achieved worldwide success on the
basis of just two factors as they were offering good quality products at low prices. The
company offered small selection of products and it was also to limited branded lines
(Hanssen and et.al, 2021). It received effective popularity in comparison with other
grocery stores because they also selected non-branded products but they also led to
positive results which was beneficial for them. Now the company also started changing
their marketing strategy in order to secure high profile advertising slots. As per the view
point of Sabrina Sahota, 2018, customers have always been loyal to the discount
supermarket of Lidl. The company are rated at large level by customers and the reason
behind it was that they provided high quality fresh food and at the same point of time
provided branded family staples also. They always kept their prices low but never
decreased the quality of products.
CONCLUSION
From the above report it is been concluded that in today's world it is important for
companies to set up good range prices in order to attract customers. As in context with the
grocery store of Lidl the main reason of its success was that they provided good quality products
at low prices. The company had many competitors like Aldi, Tesco and everyone was at the top
level but as Lidl got established in market the other company profits were getting affected
because of this they also had to lower their prices. Even during the pandemic of COVID Lidl set
up good marketing strategy and selected non branded products also but it also led the company in
a positive way.

REFERENCES
Books and Journals
Mitríková, J., Marchevská, M. and Kozárová, I., 2021. Retail Transformation and Changes in
Consumer Behaviour in Slovakia since 1989.
Berezvai, Z., 2021. Kiskereskedelmi stratégiák és hatásuk a vállalati teljesítményre= Retail
strategies and their effects on performance (Doctoral dissertation, Budapesti Corvinus Egyetem
Lutge, C. and Uhl, M., 2021. Business Ethics: An Economically Informed Perspective. Oxford
University Press, USA.
Gaspars-Wieloch, H., 2021. Scenario planning combined with probabilities as a risk
management tool-analysis of pros and cons. International Journal of Economics and Business
Research, 21(1), pp.22-40.
Kianto, V., 2021. Customer data utilization in grocery retail.
Trigeorgis, L., Baldi, F. and Katsikeas, C.S., 2021. Valuation of brand equity and retailer growth
strategies using real options. Journal of Retailing.
Hanssen, O.J., and et.al, 2021. Monitoring Food Waste and Loss in the Nordic region:
Definitions, methods and measures for prevention. Nordic Council of Ministers.
Schumann, A., Wied, L. and Krahl, M., 2021. Sustainability and Digitalization in the Global
Textile Value Chain. In Sustainable Textile and Fashion Value Chains (pp. 437-453). Springer,
Cham.
ONLINE
Bishop,2017, Digging into why Aldi and Lidl are so successful and what this means for future
[Online] Available Through:
<https://www.brickmeetsclick.com/digging-into-why-aldi---lidl-are-so-successful-and-what-this-
means-for-the-future>
ONLINE
Wilson, 2020, Lidl has big impact on grocery prices

[Online] Available Through:
<https://chainstoreage.com/study-lidl-has-big-impact-grocery-prices>
ONLINE
Redmen, 2021, Smaller shopper base pulls down February online grocery sales
[Online] Available Through:
<https://www.supermarketnews.com/online-retail/smaller-shopper-base-pulls-down-february-
online-grocery-sales>
ONLINE
Reel, 2021, Lidl debunks suspiciously low prices conspiracy
[Online] Available Through:
<https://reel360.com/article/lidl-debunks-suspiciously-low-prices-conspiracy/>
ONLINE
Bill, 2018, What we can learn from the rise of Lidl
[Online] Available Through :
<https://www.inspiringinterns.com/blog/2018/08/the-rise-of-lidl-what-we-can-learn-from-the-
shift-toward-cheap-supermarkets/>
ONLINE
Bhasin, 2019, Marketing strategy of Lidl
[Online] Available Through:
<https://www.marketing91.com/marketing-strategy-of-lidl/>
ONLINE
Flager, 2021, Even if you don't shop at Lidl, you benefit from its lower prices
[Online] Available Through :
<https://www.kenan-flagler.unc.edu/news/even-if-you-dont-shop-at-lidl-you-benefit-from-its-
lower-prices/>
ONLINE
Sahota, 2018, The reason why shoppers are more loyal to Lidl than the four big supermarkets
[Online] Available Through:
https://www.thesun.co.uk/money/6905461/supermarket-shoppers-lidl-aldi-loyalty-reasons/
ONLINE
Donovan, 2018, 8 budget friendly reasons to start shopping at Lidl

[Online] Available Through:
https://www.eatthis.com/lidl-shopping-tips/