Groceries at Publix, for example, are twice as expensive, according to a new study.
We predicted Lidl’s entrance into the U.S. would make a splash—but we had no idea how much it would disrupt grocery store prices. Not only are Lidl’s products significantly cheaper than most (if not all) of its competitors, but it has forced nearby supermarket chains to lower their prices, according to a new study released by the University of North Carolina Kenan-Flagler Business School.
The study, commissioned by Lidl US, found that prices at grocery stores in areas where a Lidl is present are, on average, 25 percent higher than those at Lidl. Specifically, prices are twice as high at Publix, 50 percent higher at Kroger, 36 percent higher at Food Lion, nine percent higher at Walmart, and five percent higher at Aldi.
The strength of Lidl’s price-cutting effect was also a significant finding in the study. In areas with a Lidl, prices at neighboring grocery stores are up to 55 percent lower than in areas without a Lidl. That’s three times stronger than the effect of Walmart’s entry into a new market.
“We know that supermarket chains systematically compete with each other on price,” Katrijn Gielens, associate professor of marketing at UNC Kenan-Flagler and leader of the study, said in a statement. “The level of competitive pressure Lidl is exerting on leading retailers to drop their prices in these markets is unprecedented.”
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The degree to which the prices are adjusted greatly depends on the grocery store, but, on average, shoppers save $22 on groceries in areas with a Lidl.