The expansion of Lidl discount grocery stores into New York’s Long Island market spurred price-cutting by up to 15% from other retailers, a new study reports.
The study, released July 8 by the University of North Carolina Kenan-Flagler Business School, was commissioned by Lidl. Katrijn Gielens, professor of marketing at UNC Kenan-Flagler, led the research and had full control over its content, according to a news release.
The research looked at prices of 47 grocery products, including dairy, meat, produce and canned and frozen goods. In addition to pricing data from four Long Island Lidl stores, Gielens collected product prices at Aldi, BJ’s Club, Costco, King Kullen, Stop & Shop, Target, Trader Joe’s and Walmart before and after Lidl entered the market, according to the release. Data was collected on mostly private label products during visits to 27 stores on Long Island between April 2019 and March 2020.
“Given that U.S. households are facing the fastest-rising rise in food prices in a generation and a looming recession, understanding how supermarket competition can keep grocery prices at bay is more important than ever,” Gielens said in the release. “Lidl’s competitive price-cutting effect is continuing to pressure other retailers to drop their prices.”
The data shows the effect is greater than Walmart’s entry in a new market, as reported by previous academic studies, according to the release.
For fresh tomatoes, Lidl had an average price advantage of 36% over competing Long Island grocery stores in March 2020, according to the report. The Lidl average price advantage for fresh peppers was 9.3% in March, while Lidl’s banana prices averaged 16.5% more than its competitors at that time.
Lidl’s food prices were substantially lower compared to competing retailers on Long Island, according to the release. The release said that before COVID-19, Lidl’s food prices were:
- 45% lower than Trader Joe’s;
- 39.6% lower than King Kullen;
- 33.8% lower than Stop & Shop;
- 18.5% lower than Target; and
- 10% lower than BJ’s.
For Costco, Aldi and Walmart, no price differences with Lidl were found.
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