When low-priced German grocer Lidl opens a new store, it brings a food fight, and consumers are the ultimate winners.
A new study shows if there's a Lidl store, competing grocers drop their prices by more than when Walmart enters a new market.
The University of North Carolina Kenan-Flagler Business School conducted the pricing study, looking at six cities where there is a Lidl store and six nearby cities without a Lidl store, comparing pricing on 48 frequently purchased food products at Walmart, Kroger, Aldi, Publix and Food Lion.
"On average, competing retailers near Lidl stores set their prices approximately 9.3 percent lower than in markets where Lidl is not present, which is more than three times as much as was typically reported in other academic work on Walmart's entry in a new market," said Katrijn Gielens, an associate professor of marketing at UNC who led the study.
Lidl commissioned the study, but UNC said it had control over its methodology and analysis.
Lidl is in the midst of a U.S. expansion and plans to open as many as 100 stores by mid-2018. As of Thursday, Lidl has opened 48 U.S. stores in six states along the East Coast from New Jersey to Georgia.
The grocer was expected to shake up the already competitive category with its entry. Lidl has said it sells products for as much as 50 percent lower than rival stores, as around 90 percent of its products are private label rather than national brands.
Gielens' work shows grocers set the price for a half gallon of milk about 55 percent lower in Lidl markets compared with markets without a competing Lidl store. Avocados and bread-related products are 30 percent lower in markets with a Lidl store. Prices for ice cream, bananas and cheese are more than 15 percent lower at grocers competing in a city with Lidl.