How can Lidl create a customer experience by implementation of new services and creation of a new shopping atmosphere in the age of digitalisation?

Table of Contents

List of Figures

List of Abbreviations

1 Introduction of Lidl and description of the research problem
1.1 About Lidl
1.2 Description of the research problem
1.3 Learning objectives

2 Analysis of the components of the customer experience model
2.1 Shopping atmosphere
2.2 Service design

3 Recommendations

4 Conclusion

List of References

List of Figures

Figure 1: Customer experience model

Figure 2: Furnishing and lighting in a Lidl store in Muelheim an der Ruhr

Figure 3: Presentation of non-food products in a Lidl store in Muelheim an der Ruhr

Figure 4: of non-food products in a Lidl store in Muelheim an der Ruhr

List of Abbreviations

CE Customer Experience

E-Commerce Electronic Commerce

HRW Hochschule Ruhr West

POS Point of Sale

1 Introduction of Lidl and description of the research problem

1.1 About Lidl

The story of Lidl began in 1930 (Lidl Stiftung & Co.KG). Josef Schwarz entered as shareholder in the wholesale „Lidl & Co. Südfrüchtehandlung“(Zweites Deutsches Fernsehen). It developed to a foodstuffs wholesaler and he renamed it in „Lidl & Schwarz KG“ (Zweites Deutsches Fernsehen).

In 1973 his son Dieter Schwarz opened the first Lidl branch according to the discounter principle in Ludwigshafen (Zweites Deutsches Fernsehen). The company expanded fast and had 460 branches Germany-wide in 1988 (Lidl Stiftung & Co.KG). From 1989 Lidl began to expand abroad in France (Lidl Stiftung & Co.KG).

Today Lidl is the biggest discounter concern of the world and currently more than 10000 Lidl branches exists almost throughout Europe and in the USA (Zweites Deutsches Fernsehen).

1.2 Description of the research problem

There has been a competition between food retailers for years.

Due to the implementation of Amazon fresh and the delivery service of Rewe Lidl stands under pressure in the age of digitisation. The company must therefore adapt to be able to withstand this due to the intensive use of smartphones and other devices by customers (Gläß and Leukert, 2017).

For this reason, it is important that Lidl meets today's requirements for a modern Point of Sale (POS) and makes appropriate changes to create a Customer Experience (CE).

Through the sufficient assortment and the purchase cost benefits Lidl would have optimal conditions to invest in digitisation (Handelsblatt GmbH, 2019). But the courage is missing (Handelsblatt GmbH, 2019) and Lidl is underestimating the threat of Electronic Commerce (E-Commerce).

Customers will order articles online of their daily need like flour, butter or pasta of brands which they known and have trust (Handelsblatt GmbH, 2019). The core business of discounters is that the consumers have no preferences in brands and can select between no-name products for cheap prices (Handelsblatt GmbH, 2019).

If ten percent of the consumers decide to buy online Lidl will get a problem because of the low margin (Handelsblatt GmbH, 2019). If the trend with E-Commerce in the food sector will develope fast, the competitors which already had invested money and have efficient processes will take a leading role (Handelsblatt GmbH, 2019).

In order to remain competitive in the market in the future, CE is the most important factor (Rusnjak and Schallmo, 2018,).

1.3 Learning objectives

The description of the research problem points out why Lidl has to invest in CE to keep the market position and be still successful and win against the competitors. The research question of this report is as follows: How Lidl can create a customer experience by implementation of new services and the creation of a new shopping atmosphere? Following questions will be answered:

- What are the components of the customer experience model?
- What are the mistakes which Lidl are making actually?
- Which recommendations should Lidl realize?

The analysis begins with the description of the current situation based on the components „Shopping atmosphere” and „Service design” of the Customer Experience model. This is followed by some recommendations for the realization. The last chapter summarizes the most important points regarding to this case study.

2 Analysis of the components of the customer experience model

For the analysis, the customer experience model will be used, which consists of the following components (See figure 1):

- social environment
- shopping atmosphere
- service design
- loyalty measures
- assortment
- other channels
- brand experience

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Customer experience model

Source:Adapted from: Toth, 2019,p.19 (based on Verhoef et al. 2009) and designed by the author

As mentioned in the last chapter the analysis is focused on the components „Shopping atmosphere” and „Service design”. Due to the given restrictions of this report the other components will not be explained.

In the following the current situation of Lidl regarding to the two components will be explained in the coming subchapters.

2.1 Shopping atmosphere

Atmospheric influencing factors for the shopping atmosphere include the sales room design, product presentation, music in the sales room and the effect of light as a perception of experience (Puccinelli et al., 2009). These components can be used with and without reference to the assortment (Schröder, 2012).

In addition, these are important factors for the customer experience (Toth, 2019).

The atmosphere at the POS can be influenced by the activation of different senses.

Through music retailers can trigger certain emotions. Loud music distracts the customer while shopping (Zentes et al., 2012). Whereas customers feel less watched if quiet music will be played (Zentes et al., 2012). In this case Lidl does not play music to make the atmosphere more comfortable.

Visual factors also contribute to the design of the atmosphere. This includes lighting at the POS. The lighting in the branch has a huge impact on its atmosphere (Zentes et al., 2012). A bright light with a slight shade of blue should emphasize that the products are cheap (Zentes et al., 2012). Accent lighting reflects the high quality of the products and creates a feel-good atmosphere (Zentes et al., 2012). Lidl uses a lighting with cool light (See figure 1). In addition, it can be said that the branch is insufficiently lit. The two factors just mentioned do not contribute to the improvement of the atmosphere and are also not stimulating purchase.

The sales room design is also an element that influences the atmosphere. The branch is simply furnished (See figure 2). Products from the non-food sector are presented disordered (See figure 2)

The factors mentioned above contribute to the fact that no pleasant atmosphere can be created.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Furnishing and lighting in a Lidl store in Muelheim an der Ruhr

Source: author’s own photograph

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: Presentation of non-food products in a Lidl store in Muelheim an der Ruhr

Source: author’s own photograph

2.2 Service design

For retailers the service culture is an unavoidable requirement (Goworek and McGoldrick, 2015). To protect themselves against the online competitors, it is important that traditional retailers introduce services to continue to be successful in the future (Heinemann, 2017). It has long been assumed in the stationary retail that advice and service are equated and that these are significant reasons for the visit at the POS (Heinemann, 2017). Examples are repair services and the home delivery (Heinemann, 2017).

In addition to the already mentioned traditional services, digitisation offers stationary retailers the opportunity to integrate new services. These services can be categorized in Web-to-Store services, Store-to-Web services and Digital-in-Store services. Typical examples for Web-to-Store services are the online availability check or the online reservation (Heinemann, 2017). Store-to-Web services are appropriate to keep undecided customers, if they cannot decide at the POS for the purchase (Heinemann, 2017). This service component offers the possibility to inform and to advise customers about goods before buying. Furthermore, it contains the trial of products at the POS or give customers the possibility to take the products home to try them out (Heinemann, 2017). Like mentioned before Digital-in-Store services represent another component of digital services. Examples of this are the navigation to the desired article or to obtain product information from smartphones or other mobile devices (Heinemann, 2017).

Mobile payment is also one of the digital in-store services (Heinemann, 2017).

Lidl offers for example a service hotline where customers can ask for product information or if they have questions regarding others matters. In order to clarify questions before the call, Lidl has created questionnaires for the topics store and online shop. From the registration in the online shop, about questions about ordering to questions about warranty everything is answered. Lidl offers for a few branches in Mannheim, Ludwigshafen, Heidelberg und Speyer a pick-up service for non-food products. Lidl offers in the online shop a significantly wider range of non-food items. Mattresses or garden furniture are delivered to the customer by a forwarding agent.

Lidl also offers a service at the POS. This includes the baking station (See figure 3). Customers here receive fresh baked goods every day. In the online questionnaire it is made clear that the possibility to collect previously ordered food in the store does not exist. In summary, after considering the currently offered services, it can be said that this does not correspond to the current needs of the customers. The connection between the physical visit to the POS, online applications and technological innovation is becoming increasingly important for stationary retailers (Gläß and Leukert,2017).

[...]