The threat of product or service substitution.Lidl must look into what is happening with companies like Aldi, Netto, etc. Therefore, if the German brand wants to establish a better strategy, it must know how its competitors operate and everything that interfere within the company, whether in a good or bad way. PORTER'S 5 forces of LIDL Competitive rivalry Competition in this case is about the companies that operate in the same sector with Lidl. In the following lines, we will see what the 5 forces of Porter look like when analyzed based on the Lidl's reality. Suppliers can lose their partnerships with companies that were dealing with them to only benefit from the image and influence of Lidl. Therefore, their power of negotiation is slow compared to Lidl's. In fact, suppliers that provide their goods to Lidl can also benefit from the reputation and influence of Lidl in the business arena. Another aspect to mention is the fact that Lidl is a big brand in its sector and partnering with such a company can be beneficial for the suppliers. Clients are getting health conscious by the day, reason why, it is indispensable for every company in general and Lidl in particular to work on the client's satisfaction.
Products distributed by Lidl is of good quality, the reason why the company has acquired a good reputation over the years.
» If the brand is what it is today, it is because the negotiation power of buyers has been reduced over the years. When reverse is the case, the industry is very profitable with a weak competitiveness. Thus, even the profitability of Lidl for example, will reduce. The brand must have stores, suppliers and enough stock that will enable the company to satisfy the customers. » The threat of new entrants is weak in a way that becoming an actor of this industry is very complex. These new companies always come up with new strategies such as price's reductions, etc. « If the new entrants are very strong in the research and development department, the threat will be stronger. If they fail to do so, not only the market shares will be shared, but also the industry's profitability. The latest usually look for good quality products with affordable prices. » In other words, this is the negotiation power detained by the clients. If they do not buy, there is no need of producing. They determine whether the company will make profits or not. In fact, « The users, consumers or buyers are the clients that purchase the brand's products. Buyer power They are the consumers of Lidl's products. But, if there is only one, the company will abide by the rules of that one and only provider, which reduces considerably its power of negotiation.
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