Lidl Strategy Analysis

1.0 INTRODUCTION

1.1 Company Profile

The Lidl brand was founded in Germany, launched in the UK in 1994 opening its first store in

Great Britain and after over 26 years, it operates over 860 stores and regional distribution centres

across Britain (Lidl, n.d). Its first Germany store opened in Ludwigshafen in 1973 with just three

employees and about 500 products. Around 1990, it begun expanding out of Germany and a few

years later, had stores across Europe (Lidl, n.d1). It now has over 11,200 stores in about 32

countries

Lidl has been growing tremendously since its entry into the UK often registering double-digit

growth figures and the discounter amassed a revenue of over £6.9 billion as of February 2020

(Statista, 2021). Over the past years, the discounter’s sales have been increasing in the UK with a

growth of 2.9% realized in the first quarter of 2021 following an increase that begun in late 2019

continuing on into 2020 (Statista, 2021a).

The discounter has done well in spite of the poor economic situation owing to the fact that

shoppers had limited budgets and this has made it a strong competitor not just against its main

competitor Aldi but also other supermarkets such as Asda (IBISWorld, 2021).
 Market share of grocery stores in Great Britain in April 2021

Market share
Lidl
Aldi 7%
10% Tesco
33%
Morrisons
12%

Asda
19% Sainsburys
19%

Adapted from: Statista

1.2 Industry Overview

In spite of the economic downturn caused by the pandemic, the revenue accumulated by the

supermarket industry grew by 5.5% amounting to £189.9 billion and the profit made stood at

£4.7 billion (IBISWorld, 2021). In addition, the market size of supermarkets grew at a faster rate

than the UK economy, that is to say, 6.6% to amount to £204.6 billion in 2021 (IBISWorld,

2021a). These significantly contributed to the UK supermarket industry being one of the best

performing categories of grocery retailers in 2020 (Euromonitor, 2021).

After the onset of the pandemic, the supermarket industry’s supply chain faced disruptions,

industry prices rose and consumers’ shopping habits changed in favor of home delivery,

prompting players to invest more into this channel (IBISWorld, 2021). Despite these challenges,

supermarkets still remained the dominant channel ahead of others like online channels and

hypermarkets
 United Kingdom: grocery retail market value 2020, by channel

2020 2022

100
90.2 89.3
Market value in billion British pounds

90
80
70
60
50 44 46.4
40 30.9
30 26.9
16.3 16 18 18.9
20
9.8 9.6
10
0
Hypermarkets Supermarkets Convenience Discounters Online Other retailers
Source: Statista

While the discount channel is growing steadily in the UK due to the emergence of discount

chains such as Poundland and B&M, German discounters Lidl and Aldi still remain the most

prominent in the UK (Nazir, 2021).

Discounter store numbers in the United Kingdom (UK) in 2018, by chain

1,000 913
826 820 775
800

600 538
423 390
400
Number of stores

200

0
s) di nd dl s s er
d Al la Li
ga
in on ch
F oo n d r i ns re
n u Ba ilk st
ero Po m
e W u nd
H Ho Po
ng
u di
cl
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M
B&

Source: Statista
 EXTERNAL ANALYSIS

2.0 PESTLE ANALYSIS

Key Learning Outcomes

By the end of the case, students should be able to:

 Understand the broad macro-environment of Lidl and the supermarket industry

in terms of political, economic, social, technological, environmental and legal
factors (PESTEL/PEST/STEEPLE).
 Use our business strategy case studies to understand real life strategy
applications
 To apply strategy business models and frameworks such as Pestle/Pest/Steeple
etc. to real company cases.

Pestle introduction paragraph

All organisations within an industry, such as the supermarket industry, are affected in one way or

another by factors presented within the macro environment in which they exist.. In a bid to get an

understanding of the different factors that is to say, political, economic, social, technological,

legal, environmental that could impact on an organisation, the PESTLE analysis will be

undertaken (Johnson et al, 2008).

Figure 1: PESTEL framework

2.1 Political factors

No-deal Brexit

As a result of Britain’s departure from the European Union, there has been an increase in wages

due to the decrease in supply of low-cost Eastern European workers and high freight costs which

have increased costs for supermarkets (Eley, 2021). Moreover, Lidl has voiced concerns to

suppliers in regard to the expected increase in prices as a result of the Brexit where its movement

of products into and out of the EU would be heavily impacted by tariffs under the World Trade
Organisation (Retail Gazette, 2021). Increase in operation costs poses a threat to Lidl as it makes

it very challenging for it to sustainably keep prices low without making substantial losses.

2.2 Economic factors

Rising supply chain costs

Supply chain costs in the UK are increasing due to a rise in commodity and shipping costs and

the shortage of labour, materials and drivers which has subsequently led to supermarkets

increasing prices by 5% in order to be sustainable (Sweney, 2021). There has been a substantial

shortage of lorry drivers, high wage costs and an increase in fuel prices making price increases

almost impossible to prevent (Eley, 2021). However, the impact of this threat is minimal on

discounters such as Lidl compared to larger supermarkets and this is due to their business model

that involves selling large volumes of private label products and having a restricted number of

stock keeping units (Hanbury, 2021).

2.3 Social factors

Increasing price sensitivity

The downtrading trend (increasing price sensitivity) is quickly gaining ground and it is being

exacerbated the growing demand for both price and quality with over 34% of consumers wanting

to save money while shopping in the future and 17% wanting to move to cheaper products

(McKinsey & Company, 2021). This price sensitivity has affected brand loyalty with over 49%

consumers switching from branded to private label products to cut on their expenditure (Briggs,

2021). This provides opportunity for Lidl given its low price strategy and private label offering.

Growing gravitation towards healthier, sustainable and local products

The pandemic has heavily influenced many consumers’ shift with over 30% asserting that they

will put more emphasis on consuming healthier foods, 24% claiming they will purchase more

local products and 19% saying they will purchase more sustainable products (McKinsey &

Company, 2021). Lidl GB plans to launch a traffic light labelling system that assigns an echo-

score to products stretching from green ‘A’ for low impact to red ‘E’ for high impact to support

amidst accusations of using “fake farm” names on their private label meat products (Forbes,

2021).

2.4 Technological factors

Shift towards online shopping.

Online sales of groceries grew in 2020 to reach over 14% in the UK, doubling from the sales in

the previous year as shoppers were swayed to shop from their homes due to the pandemic

(Butler, 2021). While Lidl initially begun launching its brand into the digital realm by setting up

Lidl Digital logistics and partnering with Buymie in the UK, the discounter later, in accordance

with its business model decided to close this digital logistics arm and revert its focus to its

bricks-and-mortar business (Stevens, 2020).

Resisting the move online could pose a threat to Lidl through losing sales from the predicted

10% of UK shoppers who will continue shopping online post pandemic, however, with the

continued roll out of the vaccine and its £1.3 billion investment plan to continue opening new

stores, there will be opportunity for Lidl to effectively harness the remaining 90% of shoppers

who will return to shopping in-store (Nazir, 2021a).

Self-scan technology

Lidl plans to roll out its self-scan app called ‘Lidl Go’ to stores across the UK to allow shoppers

to scan and pay for their purchases using their smartphones shortly after it launched its ‘Lidl
Plus’ loyalty app (Stevens, 2021). The loyalty app is a mix of scratch cards, coupons and digital

receipts and this has resonated well with shoppers in the UK giving the discounter a semblance

of digital services to its customers (Nazir, 2020).

2.5 Legal factors

Gender equality and human rights policies

Lidl scored among the worst supermarkets in Oxfam’s Supermarket Scorecard as it was

discovered that the supermarket’s supply chain was teeming with violation of human rights,

labour as well as rights for women and it lacked numerous policies against forced labour and

unfair trading practices among others (Oxfam International, 2019). This poses a threat to the

supermarket as customers demand for transparency and ethically produced commodities.

However, following mounting pressure from Oxfam, Lidl released a renewed human rights

policy for its supply chain and gender policy for 2021 (Farrell, 2020).

2.6 Environmental factors

Regulations regarding plastic packaging

The UK is looking to set stricter regulations regarding plastic reduction and plastic footprint

transparency. According to Laville (2021), supermarkets have continued to release an increasing

amount of plastic packaging prompting the government to make publishing of verified audits of

their footprint mandatory for them. However, Lidl was recognised for good progress reducing

over 2.6% of plastic in its brand since 2007. Farrell (2021) mentions that the discounter has

rolled out recycling points in its stores and also plans to substitute all the single-use plastic bags

currently used fruits and vegetables with an environmentally friendly replacement.

Pestle conclusion paragraph

While many supermarkets have invested heavily into offering online grocery shopping to their

customers following the pandemic-induced move to shopping from home, Lidl has resisted the

move unlike fellow discounter Aldi and instead invested more into expanding its store numbers.

With the shift to online shopping as one of the biggest trends in the industry since 2019, Lidl’s

sales plummeted during the lockdown but have begun to slowly pick up with the removal of the

lockdown and massive vaccine rollout which presents hope for the discounter.
 Political Economic
No-deal Brexit Rising supply chain costs

Social Technological
Increasing price sensitivity Self-scan technology
Growing gravitation towards healthier, Shift towards online shopping
sustainable and local products

LIDL PESTLE

Legal Environmental
Gender equality and human rights policies Regulations regarding plastic packaging

123writing.com
3.0 PORTERS FIVE FORCES ANALYSIS

Key Learning Outcomes

By the end of the case, students should be able to:

 Use Porters five forces model to analyse an industry on the basis of the five
competitive forces.
 Analyse the UK supermarket industry and how the five forces have affected
Lidl and rival firms and the impact on industry structure, attractiveness, and
profitability.
 Understand how Lidl has managed to defend against intense competition and the
strategies it uses to create 'blue oceans' that are defensible, helping it capture
market share and maintain competitive advantage.

Porters introduction paragraph

Determining the degree of competition is very useful in establishing the attractiveness of the

industry. In order to do so, Porter’s Five Forces framework will be employed to understand the

major forces that affect the profitability of the industry (Johnson et al, 2008).

3.1 Competition from existing rivals

According to Johnson et al (2008), there is low rivalry in industries where only one or two

competitors dominate. The competition between discounters in the UK is majorly between the

two German discounters Aldi and Lidl which dominate the industry. According to Euromonitor

(2021a), the percentage retail value share of Aldi and Lidl, in 2020 was 61.7% and 37.7%

respectively, clearing dominating the industry and only followed by Jack’s with 0.6%.

Meanwhile, other discounters such as B&M, Savers, Poundland and Russian discount chain-

Mere have been gradually expanding their presence in the UK and posing a growing threat to
Lidl and Aldi. IGD (2021) states that these variety discounters will be worth over £12.6 billion

by 2022, an increase from £11.1 billion in 2020, will control a market share of 5.8% of the entire

grocery market of UK and experience a 6.8% yearly growth.

3.2 Competition from substitutes

The level of competition from substitutes is high and this emanates from external rivals such as

supermarkets, department stores and online-only stores (IBISWorld, 2021). Moreover, during the

lockdowns in the UK, discounters such as Lidl lost out to supermarkets and convenience stores

as customers’ shopping behaviour shifted towards online shopping and larger store formats with

an extended variety of commodities that would support less shopping trips (Euromonitor, 2021a).

In addition, the factor that has made discounters gain popularity in the UK, that is to say, lower

prices which are possible in part due to discounters offering mostly own-label products, has been

replicated by larger supermarkets which have increased their own-label offerings that are cheaper

and also launched price match promotions which have placed immense pressure on discounters

(Weinbren, 2020).

3.3 Threat of entry/Barriers to entry

The barriers to entry that have to be overcome by emerging players make the threat of entry in

this industry low. Aldi and Lidl have accumulated the experience and scale to dominate the

market even amidst the emergence of other discounters such as Home Bargain, B&M, Poundland

and savers. According to Euromonitor (2021a), Aldi and Lidl’s number of outlets in 2020 stood

at 880 and 825 respectively and the two have set out aggressive expansion plans with Aldi

aiming for 1,200 stores by 2025 and Lidl looking to 1,000 by 2023. This makes it increasingly
difficult for new comers to enter the industry and compete effectively with these already

established rivals.

3.4 Bargaining power of suppliers

The presence of innumerable suppliers to this industry makes the switching cost low thereby

influencing a low bargaining power for suppliers. Lidl has expanded its portfolio of British

suppliers and in order to foster great relationships that result into unbeatable price deals, the

discounter introduced longer-term contracts to support the growth and expansion of these

suppliers and also promised to invest over £15 billion with them over the next five years

(Reuters, 2019).

3.5 Bargaining power of buyers

The cost of switching between discounters is low which makes the bargaining power of buyers to

go up. Between the number of discounters present in the UK now, convenience stores,

supermarkets and online stores, buyers can quite easily move their shopping to any of the

alternatives. This was very evident after the onset of the pandemic which prompted buyers to

quickly shift to competitors like Tesco, Sainsbury’s and Asda that were offering online shopping

leading to a loss in markets share for Lidl (Butler, 2021a). However, discounters are anticipating

a turn of events with the lifting of lockdown and vaccine roll-out with shoppers returning to

discounters amidst the economy that is still recovering to in search of lower prices (Eley, 2020).

Porters conclusion paragraph

The above analysis shows that external competition is mounting on discounters as other formats

like supermarkets continuously come up with new ways to direct their efforts to counter

discounters through offering similar low prices while providing an extensive range and online
channels-two of the areas where discounters are falling behind due to the nature of their business

model.

INTERNAL ANALYSIS

4.0 SWOT ANALYSIS

Key Learning Outcomes

By the end of the case, students should be able to:

 Understand the internal environment of a company using the SWOT framework.

 Use our swot analysis example to gain an overall understanding of
Lidl's strengths and weaknesses and strategic options arising from the
opportunities and threats that have been identified from the Pestle analysis
example on its business environment.
 To apply strategy business models and frameworks such as Swot etc to real
company cases.

Swot introduction paragraph

SWOT stands for Strengths, Weaknesses, Opportunities and Threats and this analysis will study

how the Strengths of Lidl could effectively take advantage of the opportunities and mitigate the

threats in the industry in which it operates (Johnson et al, 2008).

4.1 Strengths

Strong brand presence. Lidl is the second largest discount chain in the UK after Aldi and

it has been named the cheapest supermarket several times. It is present across Europe, Asia and
America in over 32 countries (Lidl, n.d2). The discounter also ranks as the third most famous

and popular supermarket chain of 2021’s third quarter according to YouGov (2021).

Rapid growth and expansion. As a strategy to competing even more effectively against

the ‘Big Four’, Lidl has embarked on a quest to expand its store presence in the UK (Reuters,

2021). It has dedicated over £1.3 billion into its expansion plan in the UK through to 2022 with

a target of opening over 50 stores in 2021 (Farrell, 2021a), and accumulating a total of 1000 by

the end of 2023.

Strong supplier relationship. Lidl puts considerable efforts into building and

maintaining a good rapport with its suppliers and this has most recently included committing £15

billion over 5 years to British suppliers and providing certainty as well as enabling future

development through offering long-term contracts (Hart, 2019).

4.2 Weaknesses

No e-commerce channel. The pandemic saw major supermarkets unlike Lidl scramble to

provide online shopping, a move that saw these supermarkets reap big while Lidl lost market

share for the first time in over 10 years (Butler, 2021a). However, the discounter cannot visualise

a way in which e-grocery would be profitable and for this reason, it is not setting up an online

shopping channel (Davey, 2021). Lidl is as a result, losing out on a potential brand new category

of shoppers who might probably have a larger shopping basket and expenditure (Nazir, 2021a).

Accumulating losses. Lidl Great Britain reported a significant loss of over £13.6 million for

the year 2019/20 despite a growth in sales during the pandemic due to its large investments in

stores and supply chain which included £1.4 billion between 2019 and 2020 and £1.3 billion over
2021 and 2022 (Davey, 2021). This move represents the company’s mission to concentrate more

on long-run opportunities rather than profits immediate profits.

4.3 Opportunities

New store formats and expansion plans. Despite the challenges resulting from the

pandemic, Lidl has been able to remain on track to achieving its UK expansion target by

launching at least one store weekly (Lidl, n.d3). Moreover, Lidl has also ventured into opening

stores with formats that are more characteristic of a convenience store than a typical discounter

as well as expanding more into urban centres, which is expected to boost its race against Aldi

according to Euromonitor (2021a).

Growth of discount channel. The discount channel is forecasted to be the fastest growing

channel between 2021 and 2026 with the expansion of discount stores, increase in range by

variety discounters and the need for buyers to limit their spend (IGD, 2021a). The uncertain

economic condition coupled with the low-price offering by discounters will likely to encourage

more sales in the next five years (Euromonitor, 2021a).

4.4 Threats

Strong competition. The industry is expected to continue experiencing intense competition

from various players who include convenience stores, department stores, online-only stores and

supermarkets which to the detriment of discounters gained an upper hand in the past year due to

their capacity to invest in the online channel (IBISWorld, 2021). While an economic decline

makes shoppers more mindful about value, supermarkets are likely to introduce price cuts to

compete effectively with discounters (Eley, 2020a).

Swot conclusion paragraph

With the above strengths, Lidl can take advantage of the emerging opportunity and curb some of

the looming threats; however, it will also need to work on its weaknesses in order to remain

competitive.

Lidl SWOT Analysis 2021

STRENGTHS WEAKNESSES

1. Strong brand presence 1. No e-commerce channel

2. Rapid growth and expansion 2. Accumulating losses
3. Strong supplier relationship.

OPPORTUNITIES THREATS

1. New store formats and expansion plans 1. Strong competition

2. Growth of discount channel

5.0 VRIO/VRIN Analysis

Key Learning Outcomes

By the end of the case, students should be able to:

 Understand how dynamic resources and capabilities can play a role in corporate success.
 Examine how the resources and capabilities of Lidl have contributed to its competitive
advantage.
 Be able to apply strategy frameworks such as VRIO to real company cases.
VRIO introduction paragraph

A resource must be valuable, rare, inimitable and unique to the organization so as to sustain a

long term competitive advantage. The VRIO framework which stands for Valuable, Rare,

Inimitable, Organization will be employed to determine the relative strength of the company’s

resources and capabilities (Grant, 2016).

5.1 Tangible resources

Physical stores. It operates stores in over 32 countries and is presently among Europe’s

largest grocery chains (IBISWorld, 2021). The discounter had opened over 860 stores by the end

of June 2021 and is proceeding with its expansion plan to accumulate a total of 1,000 stores by

2023 (Lidl, n.d3).

Human resources. Lidl holds a total of over 26,000 employees in its UK store operations

(Butler, 2021). Because it considers its employees immensely valuable, the discounter pays them

well and in November 2020, it further raised its employees’ hourly wages to £10.85 in London

and £9.50 elsewhere making it the best paying chain in areas excluding London (Farrell, 2020a).

5.2 Intangible resources

Strong brand name. According to Statista (2021c), Lidl ranked as UK’s fourth most

popular supermarket chain as of the second quarter of 2021 with a 73% score, only closely

trailing Tesco, M&S Food and Morrisons that tied with a score of 75%. It is a well regarded

brand

Most popular supermarket chains in the United Kingdom (UK) as of 2nd quarter 2021
Source: Statista

Experience. Lidl Great Britain begun operations in 1994 and is successfully running more

than 800 stores years after it initially begun operations in its country of origin- Germany in 1973

with just one store, three employees and a mere 500 products (Lidl, n.d1). With over 27 years of

experience, the discounter has been able to grow its market share over the years by efficiently

running its low-cost operating model by delivering value at the lowest possible prices (Eley,

2020).

5.3 Capabilities

Business strategy management. The discounter has been able to efficiently run its low-cost

strategy to become the second biggest discounter after Aldi. Lidl Group’s restructuring and the

adjustments to its UK business strategy have enabled the discounter to effectively streamline its

operations and dramatically increase its turnover in 2020 to over £6.9 billion (Statista, 2021b).

This reorganisation involved the merging of formerly independent divisions of Lidl UK and is

expected to influence long-run growth (Jahshan, 2021).

Turnover of Lidl in the United Kingdom (UK) from 2012 to 2020*(in million GBP)

Source: Statista

Operation efficiency. Lidl has been able to run efficiently and keep prices low through

offering fewer products which translates into greater buying power, running of smaller shops,

paying lower rent, lower utility costs and overheads resulting into sizeable profits (Hoare, 2020).

It also owns most of its major supply chains allowing for cost control as well as efficiency and it

bases on its philosophy of simplicity and maximum efficiency to mostly provide private label

products and a limited range of popular brands at greatly reduced prices (Lidl, n.d4).

VRIO conclusion paragraph

Some of Lidl’s resources and capabilities satisfy all the VRIO criteria, that is to say they are

valuable, rare, inimitable and unique which gives them the ability to generate sustainable

competitive advantage for the supermarket chain. They are presented in the table below.
 Table 1: VRIO Resources & capabilities table

Valuable? Rare? Inimitable? Organization? IMPLICATION

RESOURCES AND CAPABILITIES

Human Yes Temporary

resources competitive
X X X advantage

Physical stores Yes Yes Yes Competitive

advantage
X

Strong brand Yes Yes Yes Yes Sustained

name competitive
advantage

Experience Yes Yes Yes Yes Sustained

competitive
advantage

CAPABILITIES/CORE COMPETENCIES

Operation Yes Yes Yes Competitive

efficiency. advantage
X

Business Yes Yes Yes Yes Sustained

strategy competitive
management advantage

6.0 Value Chain Analysis

Key Learning Outcomes

By the end of the case, students should be able to:

 Apply the value chain to a real-world company using the example of Lidl.
 Understand how to use Lidl’s value chain framework to examine the sources of
competitive advantage for the discounter.
  Understand which value chain activities have helped Lidl become a low-cost leader in the
global supermarket industry. You will discover what these are and much more...

Value chain introduction (paragraph)

According to Johnson et al (2008), the value chain help us understand whether or not the

activities a company is implementing to gain competitive advantage are actually relevant in

deriving that value for the company. The value chain is classified under two groups- Primary and

Support activities (Johnson et al, 2008).

5.1 Primary
Activities

According to

Johnson et al (2008), those activities that are directly concerned with the development of a

product or delivery of a service are regarded to as Primary activities.

5.1.1 Inbound Logistics

Goods are transported from suppliers to Lidl’s distribution centres using lorries from partner

haulage companies (Stevens, 2021a). Lidl also included the PAKi e-Voucher into its supply

chain and the selection of this digital pooling service has provided better flexibility for its
hauliers, eliminated empty pallet transport as well as shorter distances for the relocation of

pallets which have also cut down on CO2 emissions (PAKi, 2020).

5.1.2 Operations

The retailer is running initiatives to improve its packaging department and this includes its

strategy to substitute single use fruit and vegetable plastic bags for compostable bags that is

expected to take effect in January 2022. Moreover, Lidl produces products that have a striking

similarity to popular brands, with similar packaging designs and colour themes but at cheaper

prices (Moncur and O’Sullivan, 2020).

The German discounter’s checkouts are notoriously fast as their highly efficient cashiers hurry

through the scanning since multiple bar codes are placed all over the products make it easier to

scan it and shoppers do the bagging themselves, away from the checkout point. In addition, all

employees including bosses step in anytime as required, to take care of tasks such as cleaning

aisles and restocking shelves among others (Moncur and O’Sullivan, 2020). This increases

efficiency and the retailer is also able to serve many more people that it would have served

otherwise.

5.1.3 Outbound logistics

Lidl is opening new larger distribution centres to support its rapid store expansion plan that is on-

going. One such regional distribution centre located in Petersborough is the size of over 8

football pitches and uses a natural refrigerant system that handles the heating and cooling of the

whole building, together with solar panels that produce 10% of the total power needed by the

structure. This has reinforced the retailer’s logistics and processes enabling it to continue

supplying more consumers with quality goods at Lidl prices (Andrews, 2020).
It also ensures that products exit the warehouses in the precise arrangement in which they will be

set on shelves which improves efficiency and reduces costs (Moncur and O’Sullivan, 2020).

5.1.4 Marketing and Sales

Lidl launched a new ad campaign in 2019 that seeks to portray Lidl as being big on quality and

not just price. According to Hammett (2019), the campaign launched in 2019 by Karmarama

dubbed “Lidl Big on 2.0” with the by-line ‘Big on quality, Lidl on price’ mainly focuses on

making the discounter as famous for quality as it is for price. A new campaign hinged on

Karmarama’s 2019 ‘Big on’ campaign has been launched in June 2021 strongly highlighting the

affordable quality as well as range across categories and it will include TV ads, print, radio,

digital, cinema, in outdoor spaces over the summer, social media, in-store and at point-of-sale

(Little Black Book, 2021).

Shoppers can only purchase lidl products from its stores (more than 800 in number) located in

various cities of the UK since the discounter does not offer online shopping services.

5.1.5 Service

Lidl gives rewards, discounts and prizes to its customers through its Lidl Plus app that customers

can download, register and get more savings (Lidl, n.d5). Customers using the app will be

provided with special discounts and benefits from its partners like Sky TV, digital scratchcards

and receipts to monitor their expenditure, four distinct weekly coupons and a reward system

where they will receive £10 of their next shop if they spend £200 and more in a month (Radojev,

2020).
5.2 Support Activities

Johnson et al (2008) defines Support activities as those activities that assist in improving the

efficiency of primary activities. The different categories of primary activities also have a link to

the various support activities.

5.2.1 Procurement

Lidl enjoys the benefits from having enormous buying power as a result of a pan European bulk

purchasing policy , allowing the company to realise substantial economies of scale that are

transferred to the customer as low prices for quality goods (Lidl, n.d4). Lidl is also planning on

revising its purchasing practices to better the lives of farmers in its tea supply chain through

among other things, enhancing certification schemes with Fairtrade and the Rainforest Alliance

in its sourcing of black, green and rooibos tea (Patchett, 2020).

5.2.2 Technology development

The Lidl app for iPhone and Android is available for customers to download from which on-

going and upcoming offers can be viewed by the user at the store of their choice.

Lidl partnered with UK technology firm Virtual Resolution, which focuses on 3D visualisation

and augmented reality (AR). 3D visualisations and CGIs are developed by the company and

these have been very useful in the areas of public engagement and new store planning (Retail

Week, n.d).

In-store lights are motion sensitive and only turn on when a shopper triggers sensors installed.

This means that the discounter’s spend on electricity is much lower than other supermarkets

(Moncur and O’Sullivan, 2020).

5.2.3 Human Resource Management

Lidl offers extensive training for its employees, continuous opportunities for career growth as

well as international experience through placements at its out-of-nation stores translating into

increased efficiency. The retailer supports advancement of its employees through Store Manager

development programmes and international job rotations as well as offering placement

opportunities for both graduates and undergraduates (Lidl GB, n.d). In addition, as a way of

appreciating and rewarding their employees, Lidl offers very competitive pay for instance, the

retailer increased employee wages in 2020 making it the best-paying supermarket outside

London (Farrell, 2020a).

5.2.4 Infrastructure

Lidl undertakes various quality control measures to ensure food security and one of these is

auditing brand suppliers in line with their internal quality management system as well as

ensuring they are striving for certification to globally recognised safety standards such as the

British Retail Consortium (BRC). In addition, private brand products are put through thorough

quality testing by the quality assurance department as well as specialists from certified testing

laboratories (Lidl GB, 2020)

 LIDL VALUE CHAIN 2021
FIRM Audits brand suppliers in line with internal quality management system and private brand products are put
INFRASTRUCTURE through thorough quality testing by the quality assurance department to ensure quality
HRM Offers extensive training for its employees, very competitive pay, continuous opportunities for career
growth as well as international experience through placements at its out-of-nation stores translating into
increased efficiency

TECHNOLOGY Technology such as the Lidl app, 3D visualizations, CGIs for public engagement and new store planning as
DEVELOPMENT well as motion sensitive in-store lights are being used to increase efficiency and reduce costs
SUPPORT ACTIVITIES

PROCUREMENT Enjoys the benefits from having enormous buying power as a result of a pan European bulk purchasing
policy , allowing the company to realize substantial economies of scale that are transferred to the customer
as low prices for quality goods

INBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTICS MARKETING & SALES SERVICE

Its supply chain and the Checkouts are notoriously fast Constructed more large Focuses on creative and Special
selection of this digital due to the multiple bar codes distribution centers and engaging ad campaigns discounts and
pooling service has that are placed all over the products exit the with interesting slogans benefits for Lidl
provided better products and shoppers doing warehouses in the precise Plus app users
flexibility for its the bagging themselves which arrangement in which they
hauliers, eliminated reduces costs will be set on shelves
empty pallet transport which improves efficiency
thus creating value for and reduces costs
the retailer
PRIMARY ACTIVITIES
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