Grocer’s Nags Head site plan to expire in October
In the fall of 2017, the Nags Head Commissioners culminated a lengthy permitting process by approving Lidl’s plan for a 36,000-square-foot store on the property that had housed Mike Kelly’s iconic Outer Banks Restaurant & Tavern. That came about a year after Kelly first announced his intention to sell the restaurant.
But, as the fall of 2018 looms, that Nags Head property remains untouched and there is silence and speculation about the German grocer’s plans. Industry analysts point to problems with Lidl’s U.S. operation, a retooling of their corporate strategy and questions about their commitment to markets like the Outer Banks.
Meanwhile, the town of Nags Head has received no word from the company, and a deadline of sorts looms as its site plan is set to expire on Oct. 4.
“We’ve heard nothing from them,” said Town Manager Cliff Ogburn, adding that the only communication from Lidl came about a month after site plan approval, when Lidl representatives called to inquire about trash receptacles at the site.
Ogburn noted that, if Lidl’s site plan were to expire, the grocer would have to re-apply and go through the entire site plan process again. Whether there were changes in Lidl’s plans would determine how easily the process would proceed a second time.
“If it came back as is, it would probably be approved,” said Ogburn. But he noted that, after the 2017 municipal elections, there are now three new town commissioners who would be reviewing the plan for a first time.
When contacted by the Sentinel regarding an update on the project, Lidl US, LLC Public Relations Specialist Chandler Ebeier offered a statement that did little to clear up the mystery.
“We are looking at a number of sites in North Carolina for future stores, but it is too early at this stage to address each individual site,” it stated. “As we have more to share in Eastern North Carolina, we will be in touch.”
Lidl opened its first store in Germany in 1973 and now has 10,000 stores in 27 countries. It opened in the United States in 2017 and has store locations in Virginia, including Chesapeake and Norfolk, as well as locations in North Carolina, including Rocky Mount and Winston-Salem.
News reports in recent months, however, suggest that, after big plans to expand in the United States last year, Lidl has fallen short of its anticipated U.S. launches.
In a story he wrote for the July 9 issue of Forbes Magazine, strategy and supply chain consultant Brittain Ladd reported that the discount grocery chain anticipated 100 U.S. store openings by the summer of 2018, but had only opened 53 as of July.
In an interview with the Sentinel, Ladd said that, “Most Americans have no idea who Lidl is. They are an in-between. They are not Trader Joe’s, they are not an Aldi, they are not a Whole Foods.”
As far as location selection, Ladd said that launching the stores in Texas and branching out to the central United States would have made more sense than zeroing in on the East Coast, as Lidl has done.
“The areas that were selected simply don’t make sense for Lidl,” Ladd asserted. “I don’t know if the [Nags Head] property will be developed. The location should never have been selected to begin with. It doesn’t fit the location…the odds are it will not be developed…And if it does, they will have nowhere near the estimated sales at that location that they predicted.”
Danielle Dolinsky is an analyst with the Boston-based PlanetRetail RNG, a global intelligence and advisory board focused on retail. She speculated that Lidl’s silence in Nags Head is related to its change in business strategy over the past few months.
Lidl, she said, announced last December that it was interested in leasing sites for its U.S. stores, a strategy that she said differed from its original approach of buying sites and building up stand-alone stores.
“Lidl has likely reviewed which sites it was seeking approval on and comparing notes with which sites it’s looking to lease and making decisions from there. So my guess is that this is likely a consequence of Lidl adjusting its U.S. strategy and abandoning investments it doesn’t think are high-return or in line with this new strategy.”
Phil Lempert, a consumer behavior and marketing trends expert known as The Supermarket Guru, said he wasn’t surprised by the lack of movement at the Nags Head site.
“There have been a lot of corporate changes on the U.S. side of Lidl and they are heading back to the drawing board to see what they can do,” he said. Lempert added that Lidl is finding that the stores they built in the U.S. are a little too big, and they are now in the planning process, focusing on smaller, fresh-food oriented shops.
“In Europe,” Lampert noted, “they were neck and neck with [the grocery chain] Aldi. They thought here, all they had to do was show up. But it turned out to be very different.”
One observer who thinks Lidl will eventually set up shop on the Outer Banks is the man who sold them the property.
“From what I understand, Lidl is going through a reorganization,” said Mike Kelly. “Maybe they aren’t using the property today or tomorrow, but I’m sure it’s on their medium range agenda to reorganize and have a store on the Outer Banks.”