Lidl: First US

Market structure is the focus real-world competition and refers to the physical characteristics of the market within which firms interact. A market structure comprises of four different classes - a monopoly, oligopoly, monopolistic competition, and perfect competition. This paper will elaborate on the market structure of monopolistic competition and how the article entitled, Lidl: First U.S. stores opening June 15, written by Jon Springer relates to the class. Monopolistic competition lies between the two extremes of a market structure, monopoly and perfect competition. Entry or exit into the market is relatively easy for a monopolistic competitive firm. The market structure of monopolistic competition has many firms that offer a service or

A primary advantage of being a monopolistically competitive firm, is being able to set prices of goods or services, (Rittenburg & Tregarthan, n.d). Lidl being monopolistically competitive, will decide on its profit maximizing quantity and price. It must be competitive with other grocery stores on the west coast. Despite having to compete, Lidl has differentiated products. Some of the products that it will introduce to the supermarket industry are its private brands. These private brands will highlight a line of international specialty items under the Preferred Selection brand noting its country of origin. It will also offer exclusive wines and award-winning cheeses, organic and gluten-free items. Its frozen and fresh seafood items will also be certified

grocery markets that have already established itself. Its entry into the supermarket industry that is already struggling with overcapacity, sales affected by deflation and threatening profits, will put more pressure on its competitors. The already established firms in the supermarket industry, have an advantage over Lidl’s entry though. Since the vast majority of the general public are already familiar with the brands that other grocery stores have, Lidl will offer products that differentiates itself through its private branding. Already established firms such as, Walmart with its private label, Great Value, Target with its private label, Market Pantry, other grocery stores such as Publix, Winn-Dixie, Aldi, to include many others, has its private brand. The CEO of Lidl, says in the interview that, “The feedback we got from customers in the U.S. was very clear. People have been compromised. They feel you can get quality, but it’s extremely expensive or you can get cheaper product, but the value reflects that. The other compromise is time: The amount of time it takes to do a grocery shop” (Springer,