Reinis Vaivods, Prudentia financial analyst

When and whether Lidl will be part of Latvia`s most valuable enterprises TOP101 list?

For the last 5 years, you could always count on seeing the 4 major food retailers in Latvia’s TOP101 most valuable enterprise list - Rimi, Maxima, top! (represented by the Firma Madara 89) and Mego. During this period, each retailer has increased its value approximately twofold. Although it is very likely that we cannot rely on seeing this sort of growth in the next five years, thanks to a new competitor entering market - Lidl.

The effect of Lidl entering the market can be clearly seen in Lithuania, where the German retailer entered in 2016, opening its first 15 stores, but now Lidl stores can be found in more than 50 locations. The German retail chain needed only 4 years to achieve an approximate market share of 10% and to become the 4th largest food retailer in Lithuania in 2019.

The example of Lithuania certainly shows the aggressiveness with which Lidl is willing to enter new markets with. It is likely that other retailers in both Latvia and Estonia are expecting a similar entry strategy from Lidl. The question remains - which local retailers will be the ones to lose their market share in the light of a new competitive environment. Both Rimi and Maxima have already experienced the entry of this new competitor in Lithuania, so these companies can prepare for the upcoming changes with some experience, however smaller retailers are faced with a unique situation.

One thing is certain - Lidl’s entry in Latvia and Estonia will bring adjustments in the market share, which has been largely unchanged in recent years. With this increase in competition the role of the consumer will become more vital, product pricing and discount policies will be in greater focus, and (in general) retailers will be forced to invest rather than delay improvements in the customers shopping experience.

Whether Latvia’s biggest food retailers (Rimi, Maxima, top!, and Mego) are successful in adapting to this new market environment, will likely be seen in Latvia’s TOP101 most valuable enterprise list in the years to come.