Organisational Analysis of LIDL in the United Kingdom, Papers of Marketing Management

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EXECUTIVE SUMMARY

This study has discussed and analysed effective business strategies and organisational

structures for a successful business expansion. In order to evaluate these strategies, this study

has selected Lidl which is one of largest retail industries. Lidl has incorporated a strategy of

business expansion in UK. Apart from it, this study has evaluated company’s external and

internal environment through analysis. This retail sector has opened approximately 1000

stores which are essential for business expansion. Lidl has provided essential commodities

with low prices and discounts which helps to retain a large number of consumers in UK. has

followed a “flat organisational structure” to operate and expand its business in a market.

However, this organisational structure will help Lidle for business expansion in UK.

1. Introduction

This assignment has focused on Lidl's organisational goals, which deal with retail products in

UK. organisational strategy has been analysed and discussed to understand which strategy

can enhance business productivity in a market. This study has evaluated company’s external

and internal environment through SWOT and PESTLE analysis, which helps to get

significant outcomes of business strategy and goals throughout project. Apart from it, a

strategic recommendation has been provided which helps Lidle to enhance its business in

UK.

2. Company overview

Lidl is considered one of largest retail industries which deal with various kinds of products

and a large number of consumers in UK. Data has revealed that first quarter of 2021, sales of

Lidl has increased by 2.9% within British market. Lidl has experienced low sales in first

quarter of 2022 which amounts to 1.2% (Statista, 2022). However, this low sales growth of

Lidl can be countered by incorporating an effective business strategy to expand their market.

Figure 1: Sales growth of Lidl in UK (Source: Statista, 2022)

Lidl has implemented strategy of employee and consumer retention in business. report has

revealed that this retail sector has paid high wages to their employees. It has been estimated

that overall revenue of Lidl is £ 6,885 in UK. On other hand, Lidl has advertised for more

fresh vacancies in UK by October 2022.

3. Justification

This study has followed and selected organisational structure and business goals of Lidl in

UK. This retail industry has aimed to expand its market to retain a large number of

consumers in UK. Authorities of Lidl have increased “entry-level wages” for their employees

from £10.85 to £11.30 per day (British Broadcasting Corporation, 2022).

4. Organisational goals

Lidl has aimed to enhance its number of shops and consumers by implementing an effective

business strategy in UK. Management of Lidl has analysed and recognised significant

strategies which need to be discussed to understand its outcomes in business. Major vision of

this retail industry is to deliver qualitative products at a market-leading value which ensured

consumer satisfaction in business (Robbins et al. 2020). Business expansion is real concern

for Lidl in UK, however, management of this retail sector constantly optimising and

innovating a production process which is driven by employees and technology.

5. PESTLE Analysis

In this section, political factors of PESTLE analysis have revealed that UK government

supported business organisations which are useful for Lidl in business expansion. Economic

factors have explained a balanced GDP rate that can be effective for Lidl’s profit in a new

market. Social factors have explored that consumer demands for a qualitative product are

high which is positive for Lidl’s business expansion in UK (Lidl, 2022). Technology factors

have been discussed that consumer service becomes faster through technological adaptation

in business. Legal factors have demonstrated that consumer rights in UK help to gain

customer reliability towards company. Environmental factors have revealed that using

sustained resources enhances a path for Lidl in an aspect of business expansion.

government has supported business organisations through agreements with various countries

and initiatives. Apart from this, Brexit has created uncertainty within countries that have

decreased investment rates by 5.5% in UK. However, political condition of UK is stable and

economic factors have indicated a total GDP of UK which is 3.75% (Legislation.gov.uk,

2022). Apart from it, economic factors have revealed rate of annual inflation which has

increased up to 9% by 2022 in UK. This higher inflation has created a negative impact on

market and economic aspects.

Social factors have been exposed to consumer demands within retail industry have increased

which is £ 465.25 Billion in UK (Legislation.gov.uk, 2022). Technological aspects have

indicated that Lidl retail sector has incorporated advanced technologies to deliver good

quality services and online shopping trend has been through technology. In UK, legal factors

have revealed that “The employee act 2008” and “Consumer act 2015” protect rights of

employees and consumers in businesses. UK government has imposed “Environment Act

2021” to increase usage of sustained resources and reduction of waste in businesses. These

legal and environmental factors will create a valuable impact on a business expansion of Lidl

in UK. Legal factors will help Lidl to protect each right of employees and consumers in

business.

6. SWOT Analysis

In this section, SWOT analysis has demonstrated that “low pricing” and “consumer

satisfaction” is strengths for Lidl that can be effective in business expansion. Maintaining

product price is a weakness for Lidl that can be reduced through market analysis in business.

Introducing new segments and adapting ongoing trends can be opportunities for Lidl in

business expansion in UK (Lidl, 2022). Higher competition is a threat to Lidl that can be

mitigated through qualitative service and products.

Strengths Weakness ● Consumer satisfaction ● Low prices ● Private labels ● Appropriate operation strategy ● Focusing on general merchandise

● Pricing problems ● Ethical issues

● Incapacity to enter successfully into

a foreign market

Opportunities Threats ● New segments ● Higher competition

● Analyse ongoing trends ● Increased spending

● Various substitutions ● Concerning low-income groups Table 2: SWOT Analysis (Source: British Broadcasting Corporation, 2022)

This above table of SWOT analysis has discussed four major aspects of Lidl retail industry

which have revealed its internal environment in business. However, several strengths are

identified and discussed which refer to consumer satisfaction, low prices, private labels,

proper operation strategy and focusing on general merchandise. Lidl has provided essential

commodities with low prices and discounts which helps to retain a large number of

consumers in UK (British Broadcasting Corporation, 2022). Apart from it, Lidl has

incorporated an effective strategy for consumer satisfaction which refers to faster checkout,

reducing waiting time, low prices and better services. These strategies have been acquired by

Lidl by offered prices with “mainstream retail” prices.

This retail has been introduced successfully “private label brand” in most “top-selling

categories” through strategy of competitive pricing. Lidl can influence its competitors and

suppliers to cut down their product prices rapidly (Mullins, 2019). Lidl is concerned with

general merchandise which usually provides store discounts with higher margins than other

product categories. Apart from it, new segments and analysing ongoing trends created

opportunities for Lidl. On contrary, higher competition and several substitutions is a major

thread for Lidl that needs to be resolved for a successful business expansion.

7. Organisation strategy

Price Controlling Technology-based Service

is effective it increases responsibility of each individual and there is no system of middle

management. Apart from this, operation costs can be lowered through such an organisational

structure in business. Lidle has strengthened their coordination system by following this

organisational structure in its workplace. Moreover, this organisational structure helps Lidl

by increasing higher productivity and creating a positive company culture.

9. Strategic Recommendation for future:

Figure 2: Strategic Recommendation (Source: Self-developed)

Recommendation 1: Strategy of Market Penetration

From the PESTLE and SWOT analysis, it can be stated that “Market penetration strategy”

can be successful when “cost leadership” is properly implemented to gain a competitive

advantage in markets. Lidl can expand its business and consumer services by incorporating a

“Market penetration strategy” in UK. This retail industry can acquire “differentiation” which

determines value creation for consumers. Lidl can incorporate innovation, improving product

features and consumer services in business. In this aspect, “cost leadership” reduced budget

for manufacturing products which is effective for business sustainability in markets

(Onyusheva, 2020). However, business expansion can be possible for Lidl by adapting cost

leadership which reduces competitor threats to an organisation.

Recommendation 2: Promotion and Marketing

In terms of the PESTLE and SWOT analysis, it be mentioned that the Promotion and

marketing strategy can be effective for Lidl in terms of business expansion in UK. This retail

Strategy of Market Penetration^ Strategy of Market Penetration Recommendation 1^ Recommendation 1

Promoting and Marketing^ Promoting and Marketing

Recommendation 2^ Recommendation 2

Practicing New Product Development^ Practicing New Product Development Recommendation 3^ Recommendation 3

industry has followed and incorporated a strategy of digital marketing rather than traditional

marketing in business. Lidl can use social media platforms such as Twitter, Facebook,

Instagram and YouTube in implementation of digital making (Trabucchi and Buganza, 2020).

These systems of digital marketing are effective because a large audience is activated on

these social media platforms. On other hand, Lidl can reach its new audiences through brand

awareness and promotion in business. This retail industry can present its detailed product

features, transparency in consumer services and reasonable product prices through marketing.

consumer gets a company’s overall information through digital marketing which is effective

for business expansion.

Recommendation 3: Practicing New Product development

“New product development” can be an essential strategy for Lidl because several retail

sectors have already existed in UK. From the undertaken PESTLE and SWOT analysis, Lidl

can maintain a competitive edge over its competitors through a product development process.

It has been revealed that several competitors and substitutions are major challenges for Lidl

in an aspect of business expansion. However, Lidl can expand its business by developing its

new product which helps to attract a large number of new customers in UK. As defined by

Kim (2021), product development includes a product pricing strategy because it needs to be

controlled for business expansion in UK. Lidl deals with various segmented products which

determine quality control within a production system. These factors are required for gaining

consumer interest and satisfaction which is essential in business expansion.

10. Conclusion

In conclusion, Lidl can expand its business by incorporating an effective business strategy in

UK. However, this retail industry has targeted to open more shops in upcoming years within

UK. This study has evaluated and presented a company’s external and internal environment

to understand which strategy can be useful for business expansion in UK. However, these

existing strategies of Lidl help in consumer satisfaction on large scale. Apart from it, a major

vision of this retail industry is to deliver qualitative products at a market-leading value which

ensured consumer satisfaction in business. It can be concluded that these analysed strategies

need to be incorporated by Lidl to expand their business in UK.

https://www.researchgate.net/profile/Jamshid-Ali/publication/335490658_The_impact_of_or

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Website

British Broadcast Corporation (2022). Lidl to become UK's highest-paying supermarket

Available from: https://www.bbc.com/news/business-59306232 [Accessed 15 July, 2022]

Legislation.gov.uk, (2022). Consumer Rights Act (2015). Available from:

https://www.legislation.gov.uk/ukpga/2015/15/section/2/enacted [Accessed 15 July 2022]

Lidl (2022). Big on Quality, Lidl on Price. Available from: https://www.lidl.co.uk/

[Accessed 15 July, 2022]

Statista, (2022). United Kingdom: Real gross domestic product (GDP) growth rate from 2017

to 2027. Available from: https://www.statista.com/statistics/263613/gross-domestic-product-

gdp-growth-rate-in-the-united-kingdom/ [Accessed 15 July 2022]