Supermarket wars to escalate with Lidl’s entry

Eli Greenblat
JUNE 11, 2015
THE AUSTRALIAN
The supermarket wars will escalate when German powerhouse Lidl enters the Australian market, with the global discount chain applying for hundreds of trademarks covering thousands of supermarket products as a precursor to opening its doors here.
It is believed that Lidl has also been in contact with logistics providers in recent weeks in an effort to help create a network of distribution centres and transport links to shift food, groceries and merchandise around Australia.
Lidl, which was recently ranked by Deloitte as the fourth-biggest retailer in the world with nearly $US100 billion ($128bn) in annual sales, has applied for a portfolio of trademark classes with trademarks registry IP Australia covering thousands of items typically found in a full-line supermarket, The Australian can reveal.
Lidl is seeking to protect its name in Australia for a range of goods and services including paints, laundry and cleaning ­liquids, tools, cooking equipment, alcohol, stationery, furniture and camping equipment, household utensils, clothing, coffee, pastry and jams as well as meat, dairy, fruit and vegetable products.
Similar to its fellow German retailer Aldi, which has boomed in Australia since arriving in 2001 by stripping market share from Woolworths, Coles and independents, Lidl offers a no-frills shopping experience that includes private label groceries often displayed in their shipping pallets and with minimal store staff.
Lidl was expected to open in Australia last year, with speculation it had opened a corporate office and approached real estate agents to source store sites.
Documents lodged with IP Australia show Lidl is also seeking protection for its company logo featuring its blue, red and yellow colours that now dominate high streets and shopping centres of Europe.
Together with Aldi, Lidl has shaken up the supermarket sectors to strike a popular chord with shoppers from Britain to Bulgaria.
If Lidl, whose slogan is “where quality is cheaper”, does launch into the $90 billion Australian grocery sector, it will probably trigger even more pain for market heavyweights Woolworths and Coles, as well as independents, which have already seen Aldi snap up nearly 11 per cent market share on the east coast.
Although Lidl has a strategy similar to that of Aldi in selling a limited line of groceries based on a private label offer, the German discounter also has a range of premium brands and a strong range of high-end wines.
Both Lidl and Aldi have proved ferocious and successful competitors in the markets they have entered, especially in Britain where they have grown faster than major chains such as Tesco and Asda. In the past few years Aldi and Lidl have doubled their share in the British grocery market. In 2012, Lidl beat Twitter as British students’ favourite brand.
Commonwealth Bank analyst Andrew McLennan said the Australian market was large enough for “hard discounters” such as Aldi and Lidl to grab as much as a 20 per cent market share.
“We believe there is definitely room, when you look at most markets … particularly in Europe the share of the market grabbed by hard discounters tends to be around 20 per cent,” he said.
He said Aldi, which has more than 370 stores in Australia and is pushing into South Australia and Western Australia, was unlikely to hit 20 per cent on its own.
“There is an opportunity because Aldi can’t do it on its own, and in the short term there is definitely an opportunity for someone to step in and take some space,” he said.
Mr McLennan said local chain Franklins at its peak had 20 per cent of the NSW grocery market, with shoppers keen to embrace low-cost supermarket operators such as Lidl