Creating Value For Customers: Lidl’s Approach And Competitive Analysis

Value Creation at Lidl

1. Creating Value for Customers

Lidl is a global discount supermarket chain which is a subsidiary of Schwarz Gruppe. The company creates value for the customers by offering good quality products at affordable prices. The company also offers value to the customers by being the go-to shop for any grocery needs of the customers. As stated by Wicker (2016) Lidl mainly focuses on creating value for the customers who are price sensitive in nature and those who have a limited budget for shopping. The main mode of value creation of the company for their customers is to offer products at a competitively lesser price than other competitors in the market that can suit to their requirements.

1. The role of the customer in the company’s strategic planning

The customers of Lidl play a great role in the strategic planning of the company as the goals, objectives and strategies of the company are determined based on the needs and requirements of the customers of the company. Without the customers, the company will fail to be in the business as their entire business relies on their customers. As stated by Yeh (2016) the customers plays the most decisive role in determining the pricing strategy of Lidl as well as play significant decisive role in the product design of the company. Further customers of Lidl act as adecisive factor in determining the marketing and advertising strategies of the company and therefore the customers play a major role in the strategic planning of the company.

1. SWOT analysis

• Strong business structure allows the company to sell their products at incredibly lower prices  which implies that there is a high demand for the products of Lidl in the market
• As opined by Yin & Zhang (2017) wide range of product labels of the company implies that it provides them with exclusivity and security
• Large number of stores of Lidl located across Europe implies that they are subjected to a high level of exposure.
• Strong online presence of Lidl implies that they can easily showcasetheir products and offerings to the customers.

The weaknesses of Lidl are as follows:

• Lack of effective operation outside Europe implies that the brand value of the company is only limited in Europe.
• Wrong perception regarding the quality of the products of Lidl because of their extremely low prices implies that it creates a negative impression of the company in the market.

The opportunities for Lidl are as follows:

• Successfully expanding their operations outside Europe which implies that they can operate in a more profitable manner and can experience high growth.
• Expanding their websites to accept orders and sell products which implies that Lidl can offer convenience to the customers that they seek for.

• Price war in the retail sector which implies that there is a high level of competition in the global retail sector.
• International expansion of other retail supermarket brands which implies that there is a limited scope for the company to succeed in new international locations.

1. Competitive analysis

The major competitors of Lidl are Aldi and Tesco both on domestic and international level. Aldi and Tesco are both globally renowned established retail brand which ranks among the top retail supermarket chains in the world. There are various criteria which are important for the target customers of these supermarket chains when they are making a purchase decision regarding their preferred product purchase. As opined by Ingene (2014) in case of retail supermarket sector it is observed that the various criteria which are important for the target customers regarding making a purchase decision are price, quality and convenience. The comparison of Lidl with Aldi and Tesco based on the above stated criterions is as follows:

From the analysis of the above table it can be stated that the competitive rivalry in the retail sector is very high in nature owing to the presence of large number of companies and also due to the various benefits and offerings which are offered. From the above table it is even observed that based on the price criteria Lidl overpowers its competitors, while based on the quality and convenience criteria, Tesco overpowers its competitors. While adding up the three categories it can be observed that Tesco overpowers its competitors not onlybecause it offers high quality products at affordable prices but also it offers high level of convenience to their customers by offering various benefits and experiences during shopping. Also Tesco overpowers their competitors because it is easily accessible by the customers through both online and offline platform.

Role of Customers in Lidl’s Strategic Planning

Customer expenditure per visit (s) = 6.90 (USD)

(Average of 5 customers)

Number of Visits per week (c) = 4

(Average of 5 customers)

Avg customer value per week (a) = 22.30 (USD)

(Average of 5 customers)

Avg Customer Lifespan (t) = 10 years

Hnece, LTV = 52(a) X t

                     = 52 (22.30) X 10

                     = 11,596 (USD)

Lidl empowers their customers by providing information regarding their products and offerings through both online and offline platforms. As opined by Galán-Ladero& Galera-Casquet (2015) in the online platform, the company empowers its customers by providing details about its products and offerings through the website of Lidl long with the prices of the product and their availability. While, in the offline platform Lidl provides information about its products through in-store promotional activity and outdoor advertisement. The company also uses social media platforms to promote their products and offerings to the customers by making interactive and engaging videos.

As stated by Singhal & Kaur (2017) the rate of customer satisfaction is generally high in Lidl which is evident from the fact that the customers communicate their satisfaction through the various surveys which are conducted in the official website of the company and also in the stores of Lidl. As opined by Solate (2018) the survey conducted by the company indicates that the main reasons for high rate of customer satisfaction are high quality shopping experience and effective staff service in the stores of Lidl.

As stated by Kavita (2017) there is no specific approach towards customer relationship management which is observed in case of Lidl as there is no particular software which the company utilizes for customer relationship management. As opined by Mahesar, Chaudhry & Tariq (2017) as Lidl offers high discounts to their customers, therefore the company does not offer any sort of special rewards and incentives to their customers compared to other competing supermarket chains such as Tesco and Sainsbury. In order to build relationship with their customers, Lidl focuses on sending direct mails and messages to the customers in order to inform them about their product offerings.

Lidl has a strict privacy policy in place in order to ensure the confidentiality of the information of their customers which they collect through various surveys. The employees of the company are prohibited to leak or utilize any of the information of their customers for any sort of benefits and strict actions are taken by the company in case of leak of any sort of customer information As stated by Plazibat&Dadi? (2017) however the customers of Lidl feel that the company does not utilize the information provided by them to provide customized shopping experience and seek to receive more personalized benefits from the company. Also the customers of Lidl feel that their information is not dealt with attentiveness by the company as compared to other competitors such as Tesco and Sainsbury’s.

References

Galán-Ladero, M. M., & Galera-Casquet, C. (2015). THE ROLE OF THE RETAILERS IN CAUSE-RELATED MARKETING. .EkonomskiVjesnik, 28(1), 97-109. Retrieved from https://search.proquest.com/docview/1695026419?accountid=30552

Ingene, C. A. (2014). Retail evolution. Journal of Historical Research in Marketing, 6(2), 279- 299. doi:https://dx.doi.org/10.1108/JHRM-12-2013-0067

Kavita, A. (2017). Case study: Effectiveness of CRM strategies in global era. Advances in Management, 10(9), 14-21. Retrieved from https://search.proquest.com/docview/1933116884?accountid=30552

Mahesar, H. A., Chaudhry, N. I., & Tariq, U. (2017). INTEGRATING CUSTOMER RELATIONSHIP MANAGEMENT WITH BIG DATA ANALYTICS IN RETAIL STORES: A CASE OF HYPER-STAR AND METRO. Journal of Business Strategies, 11(2), 141-158. Retrieved from https://search.proquest.com/docview/2033627367?accountid=30552

Plazibat, I., &Dadi?, M. (2017). Contemporary issues in retail industry. International OFEL Conference on Governance, Management and Entrepreneurship, 525-536. Retrieved from https://search.proquest.com/docview/1945552920?accountid=30552

Singhal, P., & Kaur, T. (2017). A comparative study of customer satisfaction in three different supermarkets. Sankalpa, 7(1), 43-48. Retrieved from https://search.proquest.com/docview/2178877486?accountid=30552

Solate, A. O. (2018). Customer satisfaction on supermarket retail shopping using web-based participatory GIS. London: Retrieved from https://search.proquest.com/docview/2058266693?accountid=30552

Wicker, K. D. (2016). A study of customer value and loyalty in the supermarket industry. Business Premium Collection. Retrieved from https://search.proquest.com/docview/1752059303?accountid=30552

Yeh, Y. (2016). Market orientation and service innovation on customer perceived value. Management Research Review, 39(4), 449-467. Retrieved from https://search.proquest.com/docview/1986727692?accountid=30552

Yin, C., & Zhang, M. (2017). Research on the key issues of “farming-supermarket” docking under the background of “internet plus”. Management & Engineering, (26), 74-82. doi:https://dx.doi.org/10.5503/J.ME.2017.26.010

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