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Lidl, the fast-growing German discount retailer, has bought a site near Leeds to build its 17th regional distribution centre (RDC) in the UK. The company currently has 12 RDCs in operation and the Leeds site is the 5th in their pipeline of new warehouses: Doncaster, Bolton, Peterborough and Luton.

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Single-use plastics is a growing concern in the grocery retail industry due to its environmental impact. We are seeing increased activity in the retail and FMCG sector to reduce single-use plastics in-stores, and Lidl's sister company, Kaufland, is one of the latest retailers to make such a commitment.

Kaufland announces strategy to reduce plastics by 2025

Kaufland alongside its sister company, Lidl, launched a comprehensive 360-degree strategy to reduce single-use plastics in their stores by 2025. The retailer aims to:

  • reduce consumption of single-use plastics by at least 20% by 2025
  • increase share of recyclable packaging in private label to 100% by 2025
  • delist selected plastic items, such as straws, until the end of 2019 and offer alternatives

Kaufland will apply three core tactics in reducing single-use plastics in-store. Use of alternative packaging, increase share of recyclable products, and make some ranges or categories plastic-free.

How will Kaufland implement its 360-degree strategy?

The 360-degree strategy has a three-prong approach to reducing single-use plastics in-store.

  • Educating shoppers to adopt environmentally responsible consumption behaviour, by informing them about alternatives, causes, and recycling.
  • Set up a recycling infrastructure in and around Kaufland stores such as collection points, self-service recycling machines, and rewarding them with discount coupons.
  • Work with the suppliers to reduce SKUs with single-use plastic packaging and encourage use of sustainable packaging.

Lidl is to invest €100m in Portugal 2018, whilst in Spain, it’s furthering its sustainable programme by eliminating plastic bags.

Supply chain investments in Portugal

According to Hipersuper, Lidl Portugal will split its investment between opening new stores and remodelling exiting ones. €20m of the €100m will be spent on the modernisation of the Torres Novas warehouse. The warehouse will be extended by 10,000 sq m.

€70m will also be invested over three years to build a new warehouse of 50,000 sq m. This will replace the Famalicão warehouse and should be operational by 2020.

Reducing plastics in Iberia

In Portugal and Spain Lidl aims to reduce plastic consumption by at least 20% by 2025. Furthermore, it will ensure that all plastic used in its private label products is 100% recyclable by 2025. This effort is part of Lidl’s sustainability strategy.

Lidl will achieve this through adapting the packaging of its private label ranges, which represent 80% to 90% of the products it stocks. Measures like reducing plastic packaging, using more sustainable alternatives, and selling unpackaged/bulk items will be used.

In Spain, Lidl will eliminate plastic bags by the end of 2018. The initiative was rolled out first in Lidl’s Balearic Island stores from May 2018 and will continue to be rolled out nationwide throughout the year.The campaign is being advertised on Lidl.es, as the company seeks to promote its sustainable vision.

These plastic-reducing initiatives fit into the European strategy for plastics, presented by the European Commission at the beginning of 2018 – by 2030 all plastic should be recyclable or reusable. Lidl’s engagement with circular economy principles aligns with the European Commission’s plan for circular solutions, particularly when considering the entire lifecycle of plastics.

Lidl plans to grow its ecommerce sales to one billion euros in 2018.

International growth

Lidl has been focusing on growing its online business, particularly in its international markets. It has trialled a grocery offer in Germany but has since stopped selling food through the service, focusing on non-food for the time being. However, in the USA it has partnered with Shipt to offer grocery delivery in select areas. New digital director, Thorsten Reichle, stated that digital sales in the last financial year grew by more than 50% and says the relevance of e-commerce for Lidl is increasing.

Lidl online in Poland

The retailer has developed an online platform in Poland selling wine. The site allows customers to reserve their products, however it is not a full online service and does not offer delivery options. Customers get notified when their order is ready (usually three to seven days) and can then pick it up from store. The wine is packed in specially prepared cardboard boxes, in crates of either four, six or nine. First time visitors to the website get 10% off the cost of their order if they subscribe to the newsletter.

Mobile technology

Lidl has also been developing a new app called Lidl Plus, building on its existing app offer. The new platform will incorporate special discounts and also provide electronic receipts. In the future, it plans to give customers the ability to pay through the app, increasing the convenience and ease of the shopping experience. The app has so far been tested in Spain and will initially be rolled out in Austria. We expect to see continual developments in the ecommerce and technology space from Lidl over the coming year.

Bricks and mortar investment

Fellow Schwarz Group subsidiary, Kaufland, has expanded its distribution network with the launch of an automated warehouse in central Poland. The warehouse is considered one of Kaufland’s most modern facilities of this type in Europe. The investment is a response to market needs to process distribution orders more efficiently and with a higher turnaround. The new warehouse is equipped with automated picking stations that run at a rate of 500 to 600 packages per hour. This is a threefold increase in the internal flow of goods in the warehouse.

13 November, London

With the theme of SUPPLY CHAINS FOR GROWTH, the interactive programme will allow you to create a day that will give you everything you need to enhance your food and grocery supply chain.

Presentations

20/09/2016
The discounters are looking for growth – in some markets this entails rapidly expanding store numbers and investing in online, in others product categories are growing and new convenience style shops are opening. This presentation looks at the latest developments and innovations in discount retailing and the impact each has on supply chain and the discounter operating model.
11/07/2016
Every week we publish the key news stories from the international FMCG supply chain. Here we look specifically at what we’ve seen from retailers in the first half of 2016 in the following channels.
17/08/2015
Two Sisters Food Group (2SFG) has made significant progress to develop a more collaborative relationship with Aldi and Lidl. The companies have worked on a number of supply chain projects, helping to drive efficiency and improve capability, marking a collaborative change in the relationship.

Discover how segmenting your customers can help drive profitable growth within your business. This presentation and accompanying practical tool will help you manage your resources more effectively.

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A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.