Content area
Full Text
In the cold, hard business world of the twenty-first century there are several markets where the competitors are allowed to throw around comments to shareholders about the "cut-throat" competition, the "toughness" of competition, or even the "white heat" of competition. Retail is decidedly one of these markets, however while these mitigations may have some truth in the USA, UK or Germany, there are still some countries where the idea of a wholly new foreign entrant successfully arriving into a new market is not pure fancy.
If such a new arrival does appear, how do they gain footholds? Competition over Veblen goods that open up a new luxury niche, or a particularly well-marketed product may have some legs, but in retail it will be purely down to price. A market that has grown out of destructive price competition, or has never witnessed such wars, may be ripe for invasion by a foreign power, and this is what happened when German retailer Lidl eyed up the small North European country of Finland. Unlike European neighbors such as the UK or France, there were relatively few mass market operations and nobody like Tesco hoovering up independent and weak multiples' shares. This was a market where Lidl had the potential to be far more than a niche discounter, as it is in some other markets in Europe.
Reality check
The supermarket retail sector was relatively simple in Finland before the entry of Lidl in 2002, with a few chain competitors and local independent competition. However, in reality no retail market is really straightforward, and there are several dimensions that need to be considered when sizing up such a market,...