Lidl bound to rebound in 2018, Daymon says

Daymon on Monday reported that more than 63% of consumers surveyed indicated that Lidl's entry into the U.S. market had exceeded their expectations.

And yet Lidl's U.S. debut, by many accounts, fell flat.

"While there have been mixed reports about Lidl's initial U.S. success, rest assured, they are in for the long haul," Daymon noted in its first-ever Private Brand Intelligence Report. "Lidl has a proven track record of adaptability if they are faced with market challenges or in a position to gain a competitive advantage. ... Lidl in 2017 is not the Tesco of 2009 when the company launched its ill-fated 'Fresh & Easy' U.S. concept. Being a private company that does not answer to shareholders has its benefits, and Lidl is not arriving at the start of a recession either."

So what happened?

"We don't believe Lidl put their best foot forward, likely due to their rush to enter the market and inability to meet minimums," Carl Jorgensen, director thought leadership for Daymon, wrote. "But that doesn't mean they won't succeed over the long haul. One of our predictions about Lidl is that because they are privately held and have resources, they have the luxury to work on this and to learn from their mistakes."

While Lidl is expected to improve in the coming year, own brand-focused retailers in search of strategies to build upon private label success stories won't have to look far. According to Tom Stockholm, CEO Experticity, the biggest retail success of 2017 was the introduction of Nordstrom Local. "The new store is only 3,000 square feet and while you can return or pick up online orders at the store, there's not actual inventory," he told Daymon. "The whole purpose of the physical store is to delivery expertise and help customers have better buying experiences. The trend of increasing the customer experience will be increasingly important as the buying landscape continues to evolve."

Other own brand success stories include Walmart's focus on digital, as evidenced by its launch of Uniquely J, a digital-only own brand for its platform. "We designed Uniquely J for e-commerce and not for a store, though it could be sold in a store," Dan Hooker, general manager, private brands, and Walmart ecommerce, said at the time of the launch. "Really three things went into developing this brand, such as quality ingredients. ... We also took into consideration the things that millennials find to be important, like fair trade and sustainably sourced. That was the foundation of the brand."