Analysis Of “Lidl” Essay

creationLidl is a German discount supermarket, operational a orbit of oer 9000 stores across Europe. In Germany Lidl has an upmarket image attracting the middle class. However, Bulgarian consumers recognize Lidl to be d avow market retailer attracting low income families.History of the political f on the whole inySchwarz Beteiligungs GmbH is the holding company of the Handelshof and Kaufland store twines and Lidl Stiftung & Co KG, a wholly-owned hyponym which owns supermarket Lidl. The company was founded in Germany in the 1930s by the Schwarz family as a wholesale feeds company downstairs tha name Schwarz Assorted Wholesale Foods. The credit line was then destroyed in 1944. After ten years the rail line was rebuild and the first Lidl store opened in 1973. By 1977 the Lidl chain comprised 33 discount stores. Today Lidl operates approximately 9000 stores across 20 Europeans countries. In Bulgaria, Lidl opened the first store in 2010 and now services 64 stores across the co untry. The latest history of the company Lidl was clouded by the bill s substructuredal in 2008. The company was accused of observing their lend oneselfees. This scandal modify their image. Lidl has appologized for the incident and has assured that they would promote immediate moves to prevent such incidents to emit a deduct in the future.Retail market in BulgariaRetailers in Bulgaria shortly hold a market sh argon of 35% and it is worryly to advance 50% in 2014.At the said(prenominal) time, according to the Bulgarian Retailers Association, the market has shrunk with hotshot billion Euro for the last fewyears delinquent to the declining expending. While in 2008 the market was estimated at 12 billion leva, in 2010 it was estimated at 10.7 billion leva and 10.5 billion leva in 2011 (source ICAP consultancy).CompetitorsTop three retailers in 2013 argon Metro Cash&Carry, Kaufland and Billa. The largest chain continues to be Metro. However, in 2013 it showed 12% lower sales alt hough it has very good profitability of 9.5%. Kaufland makes every movement to take over the leading position although their profitability is behind the loss leader with 2.36%. It made more sale due to the refreshing outlets. Billa ranks third (profitability of 2.48%). Its pelf decreased substantially. The second group of chains is those which are comparatively freshly on the market. Slovenian Mercator (Roda Market) has 4 outlets ( dickens in Stara Zagora) and be afters a new one in Sofia. The retailer operates at a loss and does not plan to make a profit although the strategy is to become at to the lowest business office point the 5th largest retailer in Bulgaria.Penny Market entered the country in concert with Lidl and they became true competitors. In 2010, the chain is on 12th position with ampere-second million leva (51.1 million Euro) sales. German HIT withal registered a diminish in sales. Maxima (T-Market) works at a loss due to spring of new stores, and plans t o open 15-20 new outlets. A third group consists of small topical anaesthetic chains. In most cases, they were acquired by larger retailers. Kaleia became a part of T-Market, and Verde was sold to a new owner in 2011. Increasingly, independent stores re soft touch under the brands of larger retailers.Lidl currently differentiate themselves in the market by oblation whole step products at a low toll. However, the main reason why Lidl is not among top three retail companies in Bulgaria is that the company is sensed by the Bulgarians as being low quality and low determine. active brands and strategy of LidlLidl stock lists very few market leading brands and mainly stocks their own unfamiliar captive brands, which encompasses aliment and non-food products. Many lops focus on the ethnical origin of products. Its Italian brand Combino covers everything from dry pasta to pasta sauces El Tequito signals Mexican food. Lidl offers also a fair trade brand, Free Globe, which counten anceLidl consumers with an ethical alternative. Captive brands are in line with Lidls operating strategy as a discount retailer. Own tag, captive brands are bald-faceder than branded label products as Lidl controls the courts and production thereby ensuring eminent profit margins.Competitive AdvantageConsumers like private labels due to their price/quality ratio which is almost always good. Lidl tries to cover the full kitchen stove of consumer products under their private label lines in order to attract as large number of consumers as possible. Private labels also bring benefits to local food manu concomitanturers which are the usual suppliers. Lidl offers small local manufacturers the chance to rat their private label products abroad as well as in the country. Overall, however, these advantages remain underestimated by food producers. Most are distillery act to maintain own brands but admit that the price difference for the same product under the own brand and under the p rivate label is almost double, and the cost of keeping own brands grows so significantly that it becomes unaffordable for small companies. Ultimately, Lidl is more emulous, ensures a higher(prenominal) image, achieves a greater turnover, makes cost saves, achieves higher revenue and profits and creates guest loyalty through their private labels. accessible ResponsibilityIn the matter of the grievous topic Corporate hearty Responsibility, Lidl started a project called ECO2LOGISCH. This project is about building stores that are energy-efficient and sustainable. This is a new store generation. For example the new stores will be light speed% heated using the waste heat from the refrigerated sections. Lidl plans that from 2010 on all Lidl-stores should be build ECO2LOGISCH. With this project Lidl is the first food retailer which sets sustainable building services engineering as a standard. An different important social activity is the Green bus line Vitosha. This line is financed by LIDL Bulgaria and transports citizens and guests from the National stadium Vasil Levski to Zlatnite mostove in Vitosha for free. The bus is in harmony with personality and everybody experiences positive emotions.Organisational strategyLidls no frills approach to retailing enables them to hand all extra be such as carrier bags and customer services. It avoids expensive flooring, furnishing and uses sanctioned fixtures such as pallets and simple shelving. Lidl do this in order to keep their operating costs as low as possible which allows them to maintain low product prices and offer their customers value for funds. It also has a narrow product assortment, offering one or two items in each category. Therefore, the company is able to buy large amounts of stock achieving economies of scale, enabling Lidl to offer quality products at a low competitive price.PEST analysisPolitical factor This factor determines on what degree the government intervenes in the economy. This can affect supermarkets such as Lidl in a number of ways. For instance, the minimum wage in Bulgaria is 340 leva. Not totally does it affect Lidl, but also it affects the low-skilled workers. The reason is that the company would prefer to employ fewer workers because of the minimum wage. measureation in Bulgaria also affects the company. The higher the income tax, the slight disposable income consumers have. Therefore, Lidl makes less sales. Generally, the government plays a big role in the economy. Economic factors The economic factors that influence Lidl include interest rates and cost of living. The interest rates affect the companys cost of capital, which determines whether it can grow or not. Lidl is stimulated to invest in Bulgaria by a favorable fiscal policy, flat corporate tax of ten per penny (lowest level in the European Union) and low operational costs.Nevertheless, the country is still ranked as the lowest income member of the EU. As revealed by Eurostat data, the gross domesti c product per capita in Bulgaria expressed in Purchasing Power Standards stands at 40% of the EU-27 average based on latest GDP data. That is one of the reasons for the declining consumption in the country. Social factors It is very important for Lidl that consumers spend more money in their stores. However, according to Industry Watch, private nest egg have increase with 30% during the last few years as a aftermath of the economic crisis, which has bratened the financial security of many citizens. Households prefer saving in this difficult time and they cut largely on their consumption. Families are more conservative. Another problem is the demographic crisis in Bulgaria. The population has been increasingly declining for the last twenty-four years.PoliticalGovernment policiesCurrent legislationTax policyEmployment legislationEconomicalInterest rates financial policyCost of livingSocialEducationConsumer attitudes and opinionsPrivate savingsMajor eventsTechnologicalInnovationCommu nicationsNew technology trick up analysisSthrengthsWeight1. Has private labels and a good range of other branded products too.2. Strong online presence and online selling.3. Placement, they build in deprived areas where cheap food is required. They sell reasonable food that appeal to all incomes.4. brusk on Sundays and holidays.5. Has over 9,000 stores across Europe0,350,260,220,120,05Total 1WeaknessesWeght1.Still relatively small as compared to other brands2. Hasnt been able to impact globally as there are a few other chain stores3. Observation scandal0,670,220,11Total 1OpportunitiesWeight1.To gain a further strong hold in European markets2. Expanding into growing economies like Africa, Asia etc0,60,4ThreatsWeight1. International expansion of other brand would increase ambition2. Price war with other retail chains brands0,50,5Five forces frameworkBuyer powerThere is one important change in the consumers demeanor to which the retailers have to respond to. Nowadays the importance of health gets bigger and bigger. The convenience food becomes less important and consumers are more interested in fresh and healthy food. Another important fact is the price. Because there is a wide range of large retailers in Bulgaria, the consumer faces no switching costs and thereby the retailers have to have an attractive price scheme. All in all the buyer power is moderate.Supplier powerThe big Bulgarian retailers often have a large range of suppliers. With thisstrategy the retailers ensure stability. They avoid possible delays in deliveries and price fluctuations. In addition to that some large retailers have started to sell own brand products. These two facts weaken the supplier power in the Bulgarian food retail industry. Generally, the supplier power is moderate.New entrantsIt is not easy for new entrants to enter the market because of the aggressive marketing and pricing schemes of the large retailers in the industry. Nevertheless there are low entry and exit costs in t he food retail industry and the changes in consumers behaviour gives new entrants a possible niche to enter the market successfully. as well as the low growths rate makes the industry not that attractive to new entrants. In conclusion the threat of new entrants is moderate.SubstitutesThe only real substitute to the food retail is the food service represented by fast foods restaurants, model restaurants and delivery services. But for consumers the food service is more a equilibrize than a substitute. A more direct substitute are individuals and families who mould their own food. This is no longer used nowadays but in the long term it is possible because of the changes in the consumers behaviour and the threat of economically and politically instability. The threat of substitutes is therefore weak.RivalryA high competition in the food retail industry exists. The main reasons for this are not the existing switching costs for the consumers. The similarity in the basic products of th e large retailers pushes them into a competitive pricing scheme. This leads the price wars. These are boost by the consumers who are now comparing more and more. They have a look on special offers and the lowest price. The Bulgarian food retail industry has a lot of competitors. Therefore, rivalry is strong in this industry. expiryThe financial crisis has a negative impact on shopping in Bulgaria. Therefore, Lidl needs to be able to compete on more than proficient price in order to retain more affluent consumers in the future. Thus, the companys personality should be distinct from its competitors offerings. Lidls brand personality reflects an outdated and cheap product range, which is negatively perceived by some consumers. In Bulgaria, Lidls products lack symbolic meaning and have few strong associations with the company. In order to gain more market share, Lidl should be presented as honest and trustworthy, offering quality and fresh products at competitive price.Resourceswww.i cap.bghttp//www.capital.bg/klasacii/kapital_top_100/2013/07/16/2103477_k100_riteil_edna_malko_po-dobra_godina/ Retail market enshroud (from 2012, prepared by Mila Boshnakova)