If your town has a Lidl, your grocery prices are lower

If your town has a Lidl, your grocery prices are lower

When Lidl opened its first U.S. stores in June 2017, KeyBanc’s consumer analyst team wrote in a note to investors: “this could be one of the most disruptive recent entrants in U.S. retailing and could drive both grocery deflation as well as competitor store closures.”

However, longtime retail analyst and Telsey Advisory Group CEO Dana Telsey said Lidl has had some struggles in the U.S. in the early going.

“They haven’t gained the share, I think, originally expected. But you are seeing U.S. retailers come down and … match those prices, I don’t know for how long, though,” she said.

Don’t count out the big existing grocery players as Lidl finds its footing in the U.S., Telsey added. “The pricing power of Walmart, of Costco, is extensive. Getting consumers to recognize the brand name of Lidl takes time.”

The competition has been clear since Lidl began opening its doors.

“We have seen the pricing pressured in every market since we entered last summer,” said William Harwood, Lidl’s U.S. spokesman. “There is a dramatic price drop just around our stores, so we wanted to look at how vastly different those prices are from those retailers just down the road.”

While Walmart declined to comment on the study itself, the retailer did point to its ongoing strategy to lower prices in certain, unspecified categories. Spokesman Lorenzo Lopez said in part Walmart looks for a way to lower costs and pass along the savings to shoppers.

“That’s why we’re giving customers in select markets even lower prices on the national and private label brands our customers want and trust,” Lopez said.

Analysts expect Walmart and others to keep up the pricing pressure given the expected windfall from a lower corporate tax rate.

CNBC reached out to Kroger, Aldi, Publix and Food Lion but did not hear back before publication.

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