Lidl Finland's sales growth halved in the last financial year. And in this case, the company cannot blame the economic crisis caused by the coronavirus, since the figures released Tuesday by the company correspond to the financial year ended in February 2020, before the outbreak of the global pandemic.
Lidl's latest financial statement show moderate growth. Net sales increased 3% and the company's turnover was 1,681 million euros.
Growth is always good news for any business, but in this case the signs are contradictory.
Lidl's growth in Finland has slowed by half compared to the previous financial year, when the turnover (1,632 million euros) grew by 7.1% year-on-year. And that slowdown came despite the company opening six new stores in the cities of Turku, Hyvinkää, Kotka, Helsinki, Sipoo and Espoo.
Lower operating profit
The company's operating profit was "approximately 63 million euros", slightly lower than 63.9 million reported in the previous financial year. The company's gross investments during the financial year amounted to 64.7 million.
"Our store network will continue to expand at an annual rate of 5–10 stores, but in other respects large real estate investments have now been made so far. Now, we primarily invest in the customer, for example, by lowering the prices of hundreds of products," said Lidl's Chief Finlancial Officer Sami Pyykönen.
That strategy of lowering prices took shape a month ago in the announcement of price reductions in more than 300 products in all its shelves. But it may not be enough. The business context is one of fierce competition with Finnish S and K groups, which have already said that they are ready to wage a price war with Lidl.
Lidl marked a milestone by entering the Finnish market in 2002. Since then, and despite a certain initial rejection by the public, the growth of the company has been steady and today it is the third largest food chain with a market share of 9.6%.
Some customers still reluctant
Now, the great challenge for the German retail giant is to attract thousands of consumers to its premises who are still reluctant to buy food in stores that they consider foreign.
Until a few years ago, Finland knew little variety of products compared to other European countries and the Finns had always preferred to buy local products, especially food.
Now, things are changing and fewer Finns identify foreign products with bargains or poorer quality. Lidl continues to play an important role in that change of mind.