Lidl hits the brakes on N.J. grocery store as other store plans scrapped

Updated on Dec 08, 2017 at 07:45 AM EST

The first Lidl store in New Jersey opened Thursday in Vineland (Nov. 16, 2017) (Chris Franklin | For NJ.com) (Chris Franklin | For NJ.com)

(From left to right) Elizabeth Tyree, Lou Bickell, Winnie Clark and Sophina stand outside the ne Lidl store in Vineland(Nov. 16, 2017) (Chris Franklin | For NJ.com) (Chris Franklin | For NJ.com)

Plans by German discount grocer Lidl to begin construction on its second New Jersey store have stalled as the company hits the brakes on several proposed locations in other states.

Lidl, which operates about 10,000 stores globally, entered the U.S. market in June with several store openings in the southeast as part of a plan to open up to 100 stores in the U.S. by the end of next year.

Industry watchers say customer traffic at Lidl’s new locations has slowed following its initial success and warn that the company will need to find ways to keep curious shoppers coming back.

Its first New Jersey location, in Vineland , opened last month. Work on a Mantua Township store in Gloucester County was expected to begin soon.

Lidl purchased a 4.8-acre spot at Woodbury-Glassboro Road and Mantua Boulevard in August for $3.25 million and received its approvals to begin construction. The company recently told Mantua officials, however, that the project is on hold due to “budgetary constraints,” according to Michelle Bruner, the township’s economic development coordinator.

The company is looking at options to reduce costs in hopes of moving the project forward, Bruner said.

Lidl has scrapped plans to open a store in Staunton, Virginia , according to a report from newsleader.com.

“The only explanation they gave was they were no longer going to the smaller markets,” David Brown with Brown & Co. Realtors told the news website in Virginia.

Plans to open stores in East Lampeter Township, Pennsylvania , and Austintown Township, Ohio , have also been abandoned, according to reports.

Lidl’s American debut began strong, drawing 11 percent of consumer visits to traditional grocery stops in nine markets in Virginia, North Carolina and South Carolina in June, according to marketing firm inMarket. By August, their share in those markets had dropped below 8 percent.

Industry experts say Lidl’s competition is figuring out how to fight back against the vows of lower prices and superior products from the newcomer.

“After an initial shift of traffic to the new kid on the block, things have slowed down at Lidl in Virginia and the Carolinas, and the indigenous players have recovered their market share ,” wrote Jim Dudlicek, of industry publication Progressive Grocer, in a post about Lidl’s progress.

The company must now find ways to build loyalty among its new customers, observers say.

“Lidl’s June success doesn’t seem to have maintained itself,” inMarket notes in its Lidl report card. “While the low-cost grocer has seen some initial success, they’ll need to inspire customer loyalty through great in-store experiences if they want to truly gain SOV (share of visits) from the established players in the space.”

Mantua Township officials were shocked to learn their project had stalled.

“We were really excited about getting this going,” Mayor Pete Scirrotto said. “I’m very disappointed.”

How does N.J.’s new discount grocer compare to the competition

Just the same, the township isn’t giving up and Scirrotto doesn’t expect Lidl will either, given how much money the company has already spent to acquire the property.

Township and Lidl officials are meeting in the next few weeks to discuss possible incentives, including a tax abatement plan, according to Scirrotto.

“That doesn’t mean they don’t pay taxes,” he noted. “It’s just phased in over a five-year period.”

Such an offer is in the township’s interest, too, he added. “We desperately need a grocery store.”

The township’s last grocery store — an Acme — closed in 2013.

The township is also examining any assistance the county and state could provide in keeping the project on track.

Lidl spokesman Will Harwood declined to comment on the Mantua situation, but did say the company has big plans in the Garden State.

“We opened our first store in New Jersey last month in Vineland, and we are preparing a number of sites in the state,” he said. “We look forward to serving more customers and opening more stores in New Jersey.”

Lidl has plans to open locations in Camden, Burlington and Monmouth counties. In addition to its Vineland location, the company apparently still plans to open additional Cumberland County stores in Millville and Upper Deerfield. The company recently purchased a property on Route 77 in Upper Deerfield Township for $1.6 million.

As for the company’s overall experience in the U.S., Lidl is making plenty of progress, Harwood said.

Almost six months since opening its first U.S. stores, Lidl now has 47 stores up and running.

“We’re making really good progress in terms of the expansion to date,” he said. “We feel pretty good with where we are.”

The company is focused on listening to customer feedback and fine-tuning its operations as it grows, Harwood said.

He pointed to a consumer survey by management consulting firm Oliver Wymanthat found 56 percent of all Lidl shoppers said they will shop there more frequently — once a week or more — in the future.

Lidl continues to make store opening announcements and the reaction from customers remains strong, he noted.

“The reception among customers to the stores to date has been absolutely phenomenal.”