Advertising Management

Final Group Report

Group 12
Household Products Industry
Lidl

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 Table of Contents
Page

1. Overview 1

2. Household Industry Introduction 1

3. Lidl Stiftung & Co. KG 2

4. Competition and Placement 3

5. Legal Requirements 4

6. Lidl’s Current Environmental Strategies 5

7. Criticism 6

8. New proposed strategy 7

9. New event/strategy 8

10. Conclusion 10

11. Bibliography and References 12

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 1. Overview

According to the Plastic Garbage Project, a worldwide average of 35 kilograms of plastic per capita
are consumed annually. This figure increases to 92 kg in Western Europe and although efforts are
being made to reduce it, worldwide consumption of plastic is still rising. The largest amount of plastic
waste comes from the packaging industry, which includes plenty of different areas, activities and
corporations. The objective of this report is to analyze the household industry; see how big is the issue
of plastic, what strategies are being taken and how we could make it more sustainable in the long-run.
For this purpose, we have selected the international chain Lidl, which is actively carrying on actions
to reduce its environmental footprint, especially regarding plastic waste.

2. Household Industry Introduction

The household products market consists of a broad range of goods applied in an expansive assortment
of household activities. Household equipment covers but does not restrict to kitchen utensils,
household appliances, pieces of furniture, detergents and laundry care goods. It is made up of a range
of businesses and such big companies as Procter & Gamble Co., Colgate-Palmolive Co., L’Oreal, and
Reckitt Benckiser Group PLC. Most of them are structured as conglomerates which produce
consumer items and sell them to wholesalers and retailers. Multinational corporations frequently
produce these basic commodities and offer a wide range of brand name products. Many of them have
a diverse product line that includes brand-name, generic, and private-label items to cater to a range of
customers. Maintaining and increasing sales requires a diverse range of new and old items. To stay
competitive, most household product firms aim to acquire smaller product lines.

The household goods industry is at a mature stage of the business cycle, with little to no growth and
stable sales and profits. Owing to steady demand, regardless of economic situations, household goods
firms are considered low-risk enterprises.

In some sectors, such as the furnishing industry, market competition has become increasingly fierce
under the condition of increasing demand, and an oligopoly competition pattern has been formed,
implying that there are only 6 to 8 household companies occupying the main market share in a city.

In addition, the Korea Enterprise Evaluation Institute conducted a brand big data evaluation analysis
on domestic listed household goods companies. From August 27, 2021, to September 27, 2021, the
brand data of 33 million listed household goods companies was analyzed. Compared with the 36
million brands of household products listed in August this year, this represents a decrease of 9.13%.
Also, brand consumption decreased by 11.30%, brand hot spots by 18.94%, brand communication by

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16.05% and brand diffusion by 12.96%, while brand market and brand contribution increased by 4.61
and 73.40% respectively.

According to Jamie Rosenberg, a Global Household & Personal Care analyst, COVID19 is having a
determinedly diverse impact on different categories of products. In specific, the pandemic is raising
the status of household cleaning items which play a fundamental role to public wellbeing. The main
players of the global household cleaning products market are Procter and SC Johnson and Son,
Henkel who currently hold a share over 55%. North America, Europe and Asia-Pacific are important
niches, covering a share of approximately 80%. Dishwashing items and surface cleaners are main
types, which occupy over 60% shares.

Offline Sales is one of the main distribution channels with around 60% shares. Furthermore, the
worldwide Household cleaning products market was estimated at USD 33,250 million in 2021 and it
is expected to reach USD 44,340 million by the end of 2027, developing at a CAGR1 of 4.2% amid
2021-2027.

3. Lidl Stiftung & Co. KG

Lidl is a German retailer supermarket chain that owns over 11,000 stores across Europe and the
United States (Figure 1). It is present in almost every European country, and it is known for its low
prices and local products. Its revenues amount to € 57 billion and employs more than 315,000 people.

Lidl commercializes food supplies, beverages, household essentials, and health and beauty products,
among others. Most of its stores incorporate a bakery, and a section where special temporary products
are sold.

The supermarket chain belongs to the Schwarz Group, the largest European retailer and the
fourth-largest retailer in the world by revenue, which also operates the hypermarket chain Kaufland.

Lidl’s principles are clear: customer satisfaction is its highest priority, low prices determine its
position in the market, and it describes itself as an economically, socially and environmentally
responsible company.

The company has always been a first mover regarding sustainability issues. It has several initiatives
aimed at reducing their environmental impact and creating an additional value for society. Some of
them concern energy efficiency programs, waste treatment, sustainable logistics and plastic reduction.
This will be explained more in detail in the following sections of this report.

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Compound Annual Growth Rate : A measure of an investment's annual growth rate over time. It often used to
compare the past performance of investments or to project their expected future return. (CFI, n.d.)

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 4. Competition strategy and placement

Lidl chooses the strategy of greenfield investment (creating investment). Buy land in remote or
low-cost areas in order to achieve the lowest prices and the highest returns. The greenfield investment
strategy helps the company to integrate into the local culture. By providing jobs to local people,
companies can receive tax subsidies from the relevant countries. Hiring locals is of great benefit
because they can help companies better understand the local culture, which in turn helps companies
adjust and modify products and strategies according to cultural differences. Due to the implementation
of this strategy, Lidl can better adapt to foreign markets and help enterprises to better understand the
market through customer preferences, tastes and other aspects.

Lidl implements the internationalization strategy of "rapid entry and strong promotion". Lidl moves
quickly to occupy foreign markets. Lidl dares to develop new areas and keep trying, such as Lidl's
entry into the Polish and Norwegian markets. When it entered Poland in 2007, Lidl had a head start,
reaping huge profits ahead of its rival Aldi. This is because when Lidl first entered the Polish market,
there were no competitors, so Lidl was able to start from scratch, offering new products to Polish
customers and attracting them.

Lidl adopts a "soft" discount marketing strategy, that is, selling a wide variety of brand goods and
ordinary goods at low prices. The products sold by Lidl include unbranded goods, imported brands
and private brands. Lidl focuses on selling unbranded goods, thus attracting more consumers who
prefer cheap branded goods. The quality of Lidl's mainstream private brand products is comparable to
or even better than that of international brands, but the price is lower. Lidl keeps prices low in a
variety of ways. Because it mainly sells its own brand, the manufacturing cost is lower. The product
SKU seldom sells a lot, and the order quantity of a single product is too large, so it has super
purchasing power. Lidl stores are very rich in wine products, which operate up to 120 varieties. Lidl
specifically hired wine guru Adam Lapierre as a wine buyer for American companies. Lidl has won
many wine awards in the United States. Lidl ranked first among all retail exhibitors at the
International Wine Competition in Los Angeles in 2020, winning a total of 101 medals, including 16
gold medals and 5 Best Product medals. Lidl's Sweet Red Wine series, which won the best product
medal, sells for only $2.89 per bottle. In terms of wine alone, with the large number of stores around
the world, Lidl has "incredible purchasing power".

5. Legal Requirements

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When the Schwarz Group, to which Lidl belongs, works with its partners, they are aware of the
importance of social and environmental sustainability.

With regard to environmental protection, Schwarz Group business partners shall comply with
applicable environmental laws and requirements, including legal requirements relating to waste
disposal, emissions, water protection and hazardous substances. The Schwarz Group emphasizes that
its partners should avoid or at least minimize environmental pollution to the extent reasonably
possible. They have been working hard on this as well.

In January 2018, the European commission adopted the European Plastics Strategy. This strategy is
part of the European's Circular Economy Action Plan, which aims to change the way plastic products
are designed, produced, used and recycled in the European Union, thereby reducing the environmental
harm caused by marine litter, greenhouse gas emissions and more.

To show its support for this strategy, Lidl intends to reduce its overall plastic consumption by at least
20% by 2025. Lidl says it will achieve this strategy through a variety of measures, including private
label product packaging and secondary packaging related measures. To ensure that alternatives to
plastics do not have additional negative impacts, Lidl has committed to using only certified and
reliably sourced paper pulp and fiber.

Until July 29, 2021, Lidl Great Britain announced that it has removed over 1 billion pieces of plastic
from stores across the UK. They have also committed that they will remove 1.5 billion pieces of
plastic by the end of 2021. And since 2020, Lidl has prevented the equivalent of 10 million water
bottles from entering the ocean through the use of Ocean-bound plastic packaging, all in support of
the European Plastics Strategy. Following the success of this initiative, Lidl is expanding the use of its
packaging innovations to prevent plastics collected from developing countries from entering the
oceans.

Secondly, aware of global warming and its effects, Lidl also follows the Paris climate agreement,
which is a legally binding international treaty on climate change. Lidl has developed a climate
strategy with the aim of contributing to the Paris climate agreement and reducing the environmental
impact of their products. Since degradable plastics are one of the causes of greenhouse gases, Lidl is
also reducing greenhouse gas emissions by reducing the amount of plastics used.

As well as what is mentioned above, Lidl will reduce its plastic consumption by at least 20% and offer
100% recyclable packaging for its own brand products by 2025, and also ensure that 25% of its
product packaging contains recycled plastic, they are also using compostable bags instead of plastic
bags, and with this initiative alone, they have avoided over 750 tons of Carbon dioxide emissions,

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which is a very large number, equivalent to the electricity consumption of over a hundred households
a year.

Overall, we can conclude that Lidl not only complies with the legal binding requirements regarding
environmental issues, but it also goes beyond them and takes additional actions to contribute to a
cleaner and more sustainable world. Specific objectives and several actions will be analyzed in the
following lines.

6. Lidl’s Current Environmental Strategies

The Irish branch of Lidl has presented a plan for making the company more environmentally friendly,
which covers nine areas; carbon reduction, energy efficiency, renewable energy programme,
biodiversity, transport, recycling and waste management, food waste, water, and plastic. It is natural to
assume that what applies for Ireland, would also apply for Lidl’s branches in other countries.

In 2018, Lidl conducted a carbon footprint analysis, where they found that most of their carbon
emissions were found in their operations and supply chain, which is why they focused on reducing
carbon emissions in areas within their direct control, which included sending zero waste to landfills,
and moving to green electricity.

In 2018, Lidl switched to using only renewable energy in their stores. In addition, they are adding
solar panels to all new supermarkets where it would be possible, and are also in the process of adding
electronic car fast-charging docks.

A part of Lidl’s business model is also to keep the selection of products relatively low, in comparison
to other supermarket retailers. This is to reduce the size of the store warehouses and stores, in order
not to waste space. In addition, Lidl stocks all their products in their shops still in the cardboard boxes
that the products came in.

In addition, Lidl recently introduced recycling stations into their stores, which include three bins; one
for cardboard and paper, one for plastics, and one for other recyclables. Lidl’s aim here is to reduce
the amount of packaging that customers take home, in a bid to support the customer’s journey in
lowering waste, especially plastic, together with Lidl also reducing their plastic usage. Lidl also says
that they are working closely together with packaging and waste experts to make sure that they are as
efficient as possible. This made it possible for Lidl to claim that they now have zero waste going to
landfills, as they recycle everything instead. Much of Lidl’s waste is cardboard, which they recycle
into paper and packaging.

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When it comes to reducing plastic, Lidl have made ambitious commitments that they want to strive
for in the next coming years. In addition, Lidl has stopped selling a variety of single-use plastic items,
such as disposable plastic cups, straws, glasses, cutlery, and plates, and instead Lidl has replaced those
items with alternatives made from paper, wood, or other biodegradable materials. As for cosmetics
and household cleaning products, such as body scrubs, shower gels, and toothpaste, Lidl has banned
the use of microbeads in those products.

One of its most famous programs is “REset Plastic”, an international strategy focused on plastic
management which includes ways to reduce and eliminate plastics while researching for alternative
materials. REset Plastic has five main fields of action:

● REducing: trying to avoid using plastics whenever it is possible and sustainable

● REdesigning: designing recyclable products and packaging which incentivize a real circular
economy
● REcycling: by collecting, classifying and recycling plastics
● REmoving: by contributing to the elimination of plastic waste from the environment
● REsearching: investing in R&D to promote innovative solutions

Lidl also has a well-defined schedule and clear objectives regarding this issue:

○ They plan to reduce their plastic usage by 20% before 2025

○ 100% of Lidl’s own brand products2 will be recyclable by 2025
○ Lidl’s own brand products will use at least 25% of recycled materials in the
packaging

7. Criticism

In spite of the efforts and actions Lidl is taking regarding the plastic issue, it may be seen for some
consumers as “green-washing” or just as a “strict early compliance” with the new upcoming European
regulations for the following years.

Recently, a BBC news article said that despite Lidl's programs to reduce plastic consumption, such as
REset Plastic, a survey by a consumer group found that Lidl had the lowest percentage of easily
recyclable packaging among 27 private label items in 10 major supermarkets. The survey also found
"huge inconsistencies" in the labeling of Lidl's recyclable packaging. For example, some items were
not labeled, while some items with non-recyclable labels could actually be recycled. The report says
that some labels are even visible only after the package is removed, which is bad for consumers who

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90% of Lidl’s products are own-branded

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want to buy environmentally friendly items, because they need to see if the product is environmentally
friendly before they buy it.

Therefore, we propose a new strategy for the company in order to (1) truly continue reducing plastic
waste, especially among household products, and (2) to benefit from this action economically and
reputationally, while (3) avoiding “green-washing” criticism.

8. New Proposed Strategy

Lidl's strategy is centered on building long-term relationships by engaging leaders, adopting
continuous and transparent two-way communication, and prioritizing environmental issues while
positively contributing to corporate goals. The understanding of global and local sustainability issues
that may affect the organization should focus on next achieving priority issues that need to be
managed.

The company could make environmentally responsible marketing initiatives a part of its brand as Lidl
has the resources and ability to run adverts. Adverts raise awareness about environmental issues.
Perhaps not all customers are aware of the company's efforts to reduce plastic use and carbon
emissions. Therefore, Lidl’s efforts may only contribute to the environment but not to its reputation.
Ads have an important impact on customer behavior and awareness. Every time more and more,
consumers check whether a company is working on any social responsibility projects and if they make
any official declarations in response to global events. If Lidl's sustainability advertising catches
people's attention, they'll remember them when they have to choose between Lidl and another brand.

It is worth mentioning that Lidl is one of the founding members of the WRAP Plastics Pact, which is a
collaborative initiative that brings retailers and manufacturers together with the United Kingdom
government and non-governmental organizations to set industry-wide targets and identify shared
solutions. The company is collaborating with other Plastics Pact members to share ideas for
decreasing plastic, increasing recycling, and accelerating the transition to a circular economy. It is
essential to continue to find new solutions to deal with environmental problems. For instance, in its
premium tomato collection, Lidl switched from plastic trays to cardboard trays, and from polystyrene
pizza bases to cardboard pizza bases. ​Lidl can reduce plastic by replacing them with carbon and
sugarcane by following companies such as Kellogg's and Pangea. Kellogg's is one of the food
companies with the smallest plastic footprint; it presently uses recycled cardboard and recycles 76
percent of its packaging. By the year 2025, the company hopes to have made all of its packaging
recyclable or biodegradable. On the other hand, Pangea is dedicated to ensuring the beauty industry's
long-term viability. They use sugarcane bio-resin in their packaging, and they are the first company in
the world to use this alternative material. This change eliminates the need for raw materials that are

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recyclable, compostable and have a low carbon footprint. Also, bubble wrap packaging, which
protects fragile objects during shipping and is composed of plastic, is not the most environmentally
friendly material. One of these is a corrugated cardboard wrap that has been upcycled, producing a
concertina-like effect, and to prevent vibration in the same way as the bubble wrap. Post-consumer,
cardboard waste may not be discarded or recycled, but it can be used as a buffer material to gain a
second life.

Adopting the experience and ideas of other companies within the framework of Wrap Plastics Pact
and putting forward original ideas may contribute to Lidl's "A Better Tomorrow" sustainability
program and will provide significant social, economic and environmental impact.

9. New event/strategy

Lidl has a well constructed strategy around the limitation of plastic waste. The quantity of Lidl’s
owned brands, 90% of the products they present to consumers, permit more flexibility in the setting of
new strategies. W5, for example, is their owned brand which consists among others in various
detergent and cleaning products. Even though this product line is not the main part of Lidl’s activity, it
would be interesting for them to develop this aspect for different reasons.

First, Lidl is already well-known for their owned brand, especially in the food supplying and
cosmetics: concretely, they are for the years 2018-2019 elected as the best supermarket chain in
France for the 7th year in a row. Even though they don’t offer a large variety of household and
cleaning products, Lidl tries to focus on the quality of those products, notably by developing W5 Eco
since 2012, being their products certified with the European Ecolabel. Therefore, developing this
particular brand could increase Lidl recognition for their eco-friendly actions in a different dimension.
Secondly, Lidl is implanted in a large geographical area, with 30 countries and more than 11,000
stores. This would allow a more impactful action in the sense that consumers could still find this
initiative easily wherever they are if they are used to buying Lidl products, especially in Europe where
it is more developed, and could actually consume the brand even in another context than their daily
lives.

Regarding the food products, and especially nuts and other dried products, bulk products bought
according to a price fixed for the weight are quite common now. Lidl has in fact developed a similar
selling process, where some shelves are proposing craft bags and allowing consumers to buy as much
as they want for a selection of products (figure 2). This allows consumers to buy freely regarding the
quantity without using pre-packaged products, therefore reducing the plastic waste implied by the
purchase of bottled products. On the consumers’ side, they participate in an eco-friendly event,

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showing their values, while obtaining an economic advantage and being able to buy products in a
convenient and personalized way since they choose the exact quantity they want. Making consumers
part of the action may tie them closer with the brand and create a more positive evaluation of it.

On the basis of this operation, we can imagine developing similar stations adapted to household
products such as laundry detergent or cleaning products. This could take the form of liquid dispensers,
allowing consumers to fill or refill the container of their choice without constraints regarding the
quantity of product. Consequently, a lot of single packages could be avoided and plastic bottles could
thus be suppressed. Moreover, the general container used in the station might be made in a reusable or
recyclable material, such as what was done by LG Household and Healthcare, who developed a new
material by upcycling coffee grounds to create containers. By doing so, Lidl could valorize their brand
W5 as well as expand W5 Eco product line, adding the ecological aspect of the product itself to the
limitation of plastic waste. On the other hand, this could have a positive long-term impact on Lidl.
Consumers would find an economic interest in this environmental demarche and if finding those
stations is easy, they could start to use them consistently because of the double advantage for them.
Therefore, Lidl household brand would develop a more exclusive customer base and take a step over
its competitors. Since they would be one of the first to propose such an initiative, especially as a retail
company, customers actively wanting to keep on using refill stations would have no other choice than
consuming their brands. Even though some similar services exist in specialized brands especially, the
presence of those free-package stations inside general supermarkets would allow preferential access
and save time for consumers doing their usual grocery shopping.

This could also allow a new market segmentation regarding the age and the social class. Usually,
households’ products such as laundry detergents, cleaning detergents and others are designed to be
sold to adults, parents, often aged more than 30 years old. Moreover, talking about eco-friendly
products or initiatives, those are always designed for the upper-middle class, as the price might be
higher than for usual products. Proposing those products in this form could attract younger persons,
like students, who are interested in making an effort regarding environmental issues but don’t always
have the time or the financial capacity to do so. It would also be convenient for them as they don’t
necessarily need a big quantity of products since they usually have a smaller living place and are
living alone.

On the communication aspect, it is interesting to do an analysis based on the AIDMA model. The first
step consists in catching the consumers’ attention. To do so, the brand could in the first place advertise
the presence of household products refill stations externally from the store, with tools such as public
display in the streets or televised ads. On the inside of stores, they could focus on creating visually
attractive stations, for example painted with earth-related colors and patterns. This could attract
consumers passing in front, who are not aware of this operation, who would be curious and look more

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carefully to those stations. This is in fact the second step, interest. At least for the launch of those
stations, special agents might be required on site in order to explain the goal of those stations, and to
explain how it would be interesting for both the consumer and the environment’s interests. This could
increase the desire of consumers to use these stations in order to benefit their interests while acting for
the reduction of plastic waste, creating desire being the third step of AIDMA model of
communication. They could also explain how to use those stations. To effectively activate consumers'
memory about those products, which consist in the fourth step, the agent could offer a free recipient to
consumers buying for the first time at the station, which could have a positive effect on consumers in
multiple ways. This could at first increase the sympathy for the brand, and thus increase the affective
evaluation of consumers toward the brand. In addition, the cost for such a big company as Lidl of
giving a free recipient is minimal. This could also lead to action, there buying household products at
the refill station and potentially to create a consumption habit of this brand in consumers who tried
one. This action step is the last goal aimed by the AIDMA model of communication. This shows that
with successful communication for a new event attractive on both economic and environmental
aspects, there is a possibility of creating a long-term way of vending which could increase the benefits
for the company while working toward an effective reduction of plastic waste. The implementation of
such an initiative in time would also avoid the “green washing effect” which can be associated with
temporary events.

10. Conclusion
Nowadays, even though we are trying to reduce plastic consumption, huge amounts of plastic waste
are still produced every year. Among the many industries that generate it, the household products
sector plays an important role.

This report begins with an introduction to the household products industry and takes Lidl, an
international chain in the household products industry, as an example. We analyzed Lidl's competition
and placement, legal requirements and current environmental strategies.

Then, we proposed a new strategy both environmentally and economically suitable, which can
complement their current plans.

Lidl is working hard to find solutions to make their products more environmentally friendly, yet, they
are still limited. Thus, we built on their program by proposing that Lidl could allow consumers to fill
containers of their choice, which would need to be made of recyclable materials. Secondly, Lidl could
also design strategies based on the AIDMA model, which would have multiple benefits. All these
actions can be supported and complemented by an advertising campaign to raise awareness of Lidl's
environmentally friendly actions, which are usually unperceived by an important part of consumers.

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 ➢ Bibliography and References

Lidl’s official website

Spanish Lidl’s webpage
https://www.wikipedia.org
Compliance . (n.d.). Retrieved from https://www.lidl.com/compliance.

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Compliance . (n.d.). Retrieved from https://lidl.asia/compliance.
By 2025, Lidl will significantly reduce plastic packaging by at least 20% . (2018). Retrieved from
https://www.plasticportal.eu/en/by-2025-lidl-will-significantly-reduce-plastic-packaging-by-at-least-2
0/c/4925/.
Lidl removes over one billion pieces of plastic from stores as part of its strategy to eliminate plastic
waste across Great Britain . (2021). Retrieved from
https://technology.risiinfo.com/environment/europe/lidl-removes-over-one-billion-pieces-plastic-store
s-part-its-strategy-eliminate-plastic-waste-across-great-britain.
Plastics strategy . (n.d.). Retrieved from
https://ec.europa.eu/environment/strategy/plastics-strategy_en.
Target 13. Lidl will reduce greenhouse gas emissions by 80% in Spain before 2030 . (2021). Retrieved
from
https://www.sundayvision.co.ug/target-13-lidl-will-reduce-greenhouse-gas-emissions-by-80-in-spain-
before-2030/.
​Schwarz Group Business Partner Code of Conduct . (n.d.). Retrieved from
https://www.lidl.com/code-of-conduct.
Protecting the Environment . (n.d.). Retrieved from
https://www.abettertomorrow-lidl.ie/environment/#carbon-footprinting.
More Information about Recycling . (n.d.). Retrieved from
https://www.abettertomorrow-lidl.ie/more-information-about-recycling/.
Our Approach to Plastic . (n.d.). Retrieved from
https://www.abettertomorrow-lidl.ie/our-approach-to-plastic/.
A German grocery chain that's coming to America is already dominating Walmart on prices — here's
why it's so cheap . (2017). Retrieved from
https://www.businessinsider.com/how-lidl-keeps-its-prices-down-2017-6.
Top 10 Companies Using Sustainable Packaging . (2021).
https://sustainabilitymag.com/top10/top-10-companies-using-sustainable-packaging.
THE GOOD FOOD REPORT, . (2021). Retrieved from
https://corporate.lidl.co.uk/sustainability/sustainability-reports.
Plastic Garbage Project. Retrieved from
Plastic in the daily life — Plastic Garbage Project
Lidl bottom of recyclable packaging survey, says Which? . (2018). Retrieved from
https://www.bbc.com/news/uk-44880912.
What is CAGR? . (n.d.). Retrieved from
https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-cagr/.

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Figure 1: Lidl’s countries of operation excluding the US. Lidl’s official website

Figure 2 : Lidl’s existing bulk selling for food products.

https://www.toute-la-franchise.com/news-413132-lidl-vrac.html

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