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Lidl threatens to fuel supermarket price war with launch of first stores in the US

Lidl plans to open 100 stores in the US by next summer and says its products will be 50% cheaper than competitors
Lidl will need to differentiate itself in the overcrowded US grocery market

German grocer Lidl plans to open its first US stores next month, threatening to tempt customers away with cheaper items compared to rivals.

Having already taken market share away from UK supermarkets, the company said it looks to do the same in the US by fuelling the price war with products that cost 50% less than competitors.

Over 20 stores this summer..

Lidl will open 20 stores over summer in North Carolina, South Carolina and Virginia. The company is launching stores in these states first due to their proximity to its headquarters in Arlington County, Virginia, which opened in June 2015.

Lidl plans to have opened up to 100 stories across the East Coast by next summer.

The stores will be open from 8am to 9pm, seven days a week.

"This is the right time for us to enter the United States," Brendan Proctor, chief executive officer for Lidl US., told Reuters at a media event in New York. "We are confident in our model. We adapt quickly, so it's not about whether a market works for us but really about what we will do to make it work."

Lidl, which already has 10,000 stores in 27 countries in Europe, and discount grocery peer Aldi have been partly responsible for a price war between Britain’s biggest supermarkets, including Tesco, Asda, Morrison Supermarkets and J Sainsbury.

US Grocery market overcrowded...

While Lidl could have a similar impact in the US, some analysts believe it will need to differentiate itself as the nation’s grocery market is overcrowded. Grocery chains Whole Foods Market Inc., Wal-Mart Stores Inc. and Kroger Co.  have been among those vying for market share in the US.

Rupesh Parikh, senior food analyst for food, grocery and consumer products at Oppenheimer & Company, said Wal-Mart is watching competition like Aldi and Lidl closely.

“If [Wal-Mart] reacts it can cause a chain reaction for others so they don’t lose share,” Parikh said. “If others have to follow, that can be an issue.”

To help differentiate itself, Lidl said its US stores will include responsibly sourced fresh and frozen seafood, an assortment of organic and gluten-free merchandise and an assortment of wines selected from tasting at least 10,000 types. 

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