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Lidl will not move from Sweden unlike previous speculation

Friday, 11 November 2011
Discount chain Lidl is in Sweden to stay and grow according to its Sweden manager, Werner Evertsen in an interview with the Swedish business daily, Dagens Industri, castigating previous rumours that the company was planning to pull out of Sweden.

Not so long ago Lidl in Sweden gave no interviews. It was part of the German parent group's media policy. Confidentiality is no the only a thing that Werner Evertsen changed since he took over as head of Sweden in autumn 2009, openness and confrontation with the media became a fashion.

"We have made blunders, to customers, media and public. It has led us to be treated with scepticism, and it creates myths that do not match. We are like any other business, "says Werner Evertsen when Dagens Industri contacted him at their head office in Solna, near Stockholm.

Last year it was speculated that Lidl Swedish operation was to close down and move away from a country that many foreign firms think it is hard to crack. A market dominated by the likes of Axfood with ownership of stores - Willys whch is also a discount chains, Coop Forum among others. They are viewed by many people that the Swedes are so driven to consume product sold by their own store rather that open to other options.

However, today Lidl can boost nearly 160 stores in the country and expected to expand.
The German food chain, according to Werner Evertsen, pointed out that the scale has not been reached without some effort. Sweden manager speaks of self-criticism of a process to adapt to the Swedish market.

"Today we take a greater responsibility for the cultural differences, "says Werner Evertsen.
This is evident in many ways than he talks to journalists. For customers, it is such that the proportion of Swedish brand in Lidl stores today is greater.

The company has also adapted itself to another important point.
"We used to have large stores where you had to get to by car. In the past two years we have invested in housing near shops we notice that accessibility is increasingly important for customers, "said Werner Evertsen.

About how he sees their growth opportunities in the future, he said that "We have had a very strong growth. We have now reached the number of stores which means we have economies of scale. We will continue to grow both in and outside the cities. But equally important is to increase sales at existing sales area, "said Werner Evertsen.

Geographically, northern Sweden a large white spot on Lidl's expansion map. Werner Evertsen suggests that the logistics and supply chain management is a challenge. But growth ambitions have also encountered resistance from unexpected quarters.

Werner Evertsen sees no limit to how many Lidl stores that Sweden can accommodate the long term before the market is saturated.
"We can not talk numbers. If we get ten top positions and we will take them, the four of us and we'll take them. There are competitors who want to be the biggest and best. But our goal and strategy is to grow qualitatively, in quantitative terms, "says Werner Evertsen.
Quality is a word that Lidl's head often use. It is even so important that the company has invested in an image campaign and TV commercial - also is an adaptation for a media-shy company to Swedish conditions.

"Anyone can sell food cheaply if the quality of the product is cheap. Our challenge is to sell top products at a reasonable price. That is the important difference (between Lidl and other low-cost competitors), "said Werner Evertsen.

But the distance (in prices) between the discount chains such as Lidl and ordinary food chains are shrinking. Supermarkets are investing in low-priced products. Lidl strengthens grip on fresh produce. The trend is here to stay, according Werner Evertsen. He does not, however, think that Lidl is a supermarket in the long run.

"Our philosophy is based on efficiency, to pick and choose those products that meet our quality standards. It allows one to have a product, instead of several. Then you can have a third of the range compared to conventional grocery stores. I see no reason to broaden the range, "says Werner Evertsen.

Relating to the effects of the economic turmoil, "We see no noticeable slowdown. It may well have done that chopping patterns have changed. Customers may purchase more of the goods that are cost-driven than before. For us it is not negative, "says Werner Evertsen.

Question: You abandoned the Norwegian market a year ago when you sold your business to the Rema. How about speculation that you are on the way from Sweden?

"I fully understand that the rumours may arise. But they are not of our creation and we have no such plan. We have a long term strategy in Sweden and there is no equal sign with Norway. We are here to stay, "Werner Evertsen.

How well Werner Evertsen succeeds with his strategy in Sweden longer term remains to be seen. The company has come a long way, both geographically and in economic terms. But perhaps the most important conquest to date is another.

"Earlier, I saw that people carried our goods in Ica-bags. Now you see Lidl bags everywhere, "says Werner Evertsen.

Question: Why do many Swedish people always believe that when a foreign company sets up in Sweden the next step is for the company to close up and move away?
There is this perception in Sweden that foreign companies operating in their “comfort zones” will not make it although the country is driven largely by franchises. Swedish companies love operating aboard but would not feel comfortable when foreign companies would want to operate in their own small market.
By Scancomark.se Team

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