Lidl CEE to improve market position and outlook for 2017 | Progresiv
Lidl CEE grew by 10% in 2016 to reach 9.2 billion euros making up nearly 14% of the discounter’s global turnover that year. Lidl CEE’s performance was supported by mid-single to double digit growth across the region’s operations. Romania and Czech Republic led the region’s performance whereas Hungary showed the least vigour. IGD looks at what drove Lidl’s performance in the CEE. 
Poland is Lidl CEE’s biggest turnover market with 13.7 billion zlots (3.2 billion euros) that makes 34% of the discounter’s regional 2016 turnover. Although market performance was below average for the region with growth around 7%, Lidl fared better than some international competitors in 2016. We expect the discounter to frog-leap Auchan into second position in 2017. In relation to Biedronka, we expect Lidl’s turnover by 2021 to remain a third of the size of the Portuguese discounter.
Czech Republic makes up 15% of Lidl CEE 2016 turnover at 38.3 billion crowns (1,4 billion euros) after reported growth of 14%. Lidl CEE’s second biggest market in the region, and second-best performer added only three new stores in 2016. We gauge that the Czech Republic achieved one of Lidl CEE’s most dynamic like-for-like results that year. We expect such performance to continue over 2017-2021 so we forecast Lidl to reach third position by 2020.
Romania is Lidl CEE’s best performer in 2016 with a turnover growth of 18% to reach 5.6 billion lei (1.2 billion euros) to make up 14% of the discounter’s regional turnover. Although much of the growth is attributed to the net addition of 15 new stores. Store expansion in Romania over 2017-2021 will be one of the highest amongst Lidl CEE operations. We forecast Lidl to jump into third position by 2020 overtaking Carrefour Romania. Local reports suggest an Aldi (Hofer) entry into Romania, so this might disrupt Lidl’s growth trajectory over 2018-2021.
Hungary is Lidl CEE’s least dynamic market around 7% growth to reach 314 billion forints (1 billion euros) in 2016 and make up 11% of the discounter’s regional 2016 turnover. We believe that Aldi’s consistent double-digit growth here and Lidl’s limited store expansion resulted in lower market consolidation for the Schwarz Group subsidiary. Lidl still highlights a healthy like-for-like performance since only one new store opened that year. We forecast Lidl to outperform domestic retailer, Real Hungaria, to reach fifth position by 2017, and remain as the country’s top discounter.
Croatia reported 7.7% growth in 2016 to reach 4 billion kunas (536 million euros) to make up 6% of Lidl CEE’s 2016 turnover. Performance here is below regional average due to increased market consolidation and investment from SPAR Croatia after the Billa acquisition in 2016. As a result, Croatia will be one of few Lidl CEE operations to drop in rank - third to fourth by end of 2017. Opportunity for further market consolidation in 2017 is likely as Konzum loses sales due to debt-repayment commitments that year.
In 2017, IGD expects Lidl CEE to continue 2016 performance and grow by around 10% to reach 10.1 billion euros. Lidl CEE growth is likely to slow down from a double-digit rate in 2016 to high single-digits by 2021 and still make up around 14% of global Lidl turnover. We expect key markets Poland and Romania will drive store openings in 2017, and Czech Republic to sustain solid like-for-like growth the same year.
It is not expected that Lidl will announce new market entry in 2017 as efforts will be to concentrate on expansion in the US. For the remainder of 2017 Lidl will prepare to open at least 12 stores in Serbia after the postponement of a 2017 entry. Local Estonian reports suggests interest from Lidl to enter the Baltic state. A move that makes sense since there is only one discounter in Estonia, ICA’s Säästumarket, that will convert into a supermarket banner. Reports of the purchase of national internet domain www.lidl.ba by Lidl also highlights the possibility for a future Bosnia and Herzegovina (BiH) entry. (www.igd.com)
