Lidl is preparing to close at least five supermarkets in the United States later this month, according to local media reports.
All of the stores are reportedly set to cease operations on July 16 due to underperformance. The company will shut down locations in Thomasville, North Carolina; Florence, South Carolina; Charlottesville and Richmond, Virginia; and Howell, New Jersey, according to the reports.
Even as it gets ready to close the stores, however, the German supermarket chain is ramping up operations at two recently opened stores. Those stores, in Washington, D.C., and Greensboro, North Carolina, both held grand openings on June 28, according to the retailer’s website.
Lidl is also planning to build a 33,000-square-foot location at a mixed-use property in the Crown Heights neighborhood of the New York City borough of Brooklyn, according to a Monday press release.
“We’re confident that Lidl will be a welcome addition to the neighborhood and we’re now engaged in preliminary discussions with other national retailers about leasing opportunities at this property,” Jack Gold, co-founder and chief operating officer of Seventh Street Development Group, which is developing the complex, said in a statement.
The store closures follow Lidl’s decision in February to lay off about 200 corporate employees, mainly at the company’s U.S. headquarters in Arlington, Virginia.
Analysts have noted that while Lidl has built a strong brand in Europe, the retailer faces a tough road in the U.S., where it has been trying to gain traction since opening its first stores in the country in 2017. A key challenge for Lidl is that the company has only been operating in the U.S. for several years, meaning that shoppers are often unfamiliar with the brand, Sebastian Rennack, a retail analyst who runs Aletos Advisory in Germany, said in February.
Lidl is also looking to stand out in the U.S. against fellow German supermarket company Aldi, which has much deeper roots in this country, having operated in the U.S. since 1976. While Lidl has fewer than 200 U.S. locations, Aldi is planning to debut 120 locations in the U.S. in 2023 alone and is on track to have more than 2,400 stores nationwide by the end of the year.
Recent investments suggest that Lidl is committed to building its U.S. presence, Michael Infranco, assistant vice president with RetailStat, said. Earlier this year, the retailer paid about $145 million for a Philadelphia-area site that will serve as a new distribution center.
But the closures indicate Lidl is working to refine its site selection process as it establishes its U.S. business, he said.
“They’re probably refining [and] clearing out some of the mistakes they made,” Infranco said. “It’s [doing] a little self-reflection and saying before we start putting up buildings, let’s assess what we have.”