Lidl Expanding To New York With Best Market Purchase

Lidl, which has struggled since it entered the U.S. 17 months ago, is expanding its footprint after announcing it has signed an agreement to acquire 27 Best Market stores in New York (26 stores – 24 of which are on Long Island) and New Jersey (Holmdel is its sole Garden State store). The Best Market store in Newington, CT is not part of the deal.

Lidl said it plans a step-by-step transition process that will begin next year and will involve the remodeling, reinvestment and reflagging of Best Market stores to converted Lidl stores. All Best Market employees will have guaranteed employment opportunities with Lidl following the transition. Team members will be welcomed into positions with Lidl that offer wages and benefits that are equal to or better than what they currently earn with Best Market. The terms of the acquisition agreement were not disclosed, and the deal is expected to close over the coming months.

“Best Market has played an enormously positive role in the area, and we look forward to working closely with Best Market employees to build on that success,” said Johannes Fieber, CEO of Lidl US. “We are excited to expand into many great communities on Long Island and across the New York City area and introduce more customers to our simple and efficient approach to grocery shopping, which will mean high quality and huge savings for more shoppers.”

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Fieber, a 10-year Lidl veteran, became U.S. CEO in May, replacing Brendan Proctor who led the company’s U.S. efforts when the company opened its first U.S. stores in June 2017.

“Today is a great day for Long Island, our Best Market team, and our valued customers in New Jersey and New York,” said Aviv Raitses, co-owner of Bethpage, NY-based Best Market. “Partnering with Lidl on this deal offers our employees a secure future with a growing grocer and continues the great tradition we started more than twenty years ago. We are delighted to be part of such a win-win and Best Market customers have something great to look forward to with Lidl.”

The acquisition also expands Lidl US’s Mid-Atlantic footprint with its entry into New York State. The highly successful German-based discounter, which operates more than 10,000 stores in Europe, has struggled in the U.S. where it currently operates 59 U.S. units that are located in Delaware, Georgia, Maryland, New Jersey, North Carolina, South Carolina and Virginia, with most of its stores in Virginia and the Carolinas. The discounter opened two New Jersey stores in the past month – Eatontown and Union – and has another two other Metro New York stores planned for Hazlet, NJ (opening on November 28) and Staten Island (opens next year).

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Lidl has spent billions on infrastructure since it first announced it would enter the United States in 2014. Until this acquisition, Lidl had purchased most of its real estate, built the stores and hired personnel to operate those stores. Additionally, it opened a well-staffed, large and modern U.S. headquarter complex in Arlington, VA as well as three new distribution centers.

In the early going, despite being extremely well capitalized, Lidl has been challenged to make a significant impression with U.S. consumers, who have sometimes found their shopping experiences to be less than rewarding, despite low prices. That it chose to build many of its locations near existing Aldi and Walmart stores hasn’t made the road less bumpy, either.

Best Market (Best Yet Market until 2012) began as a retail produce business by the Raitses family. The company opened its first Produce Warehouse in Lake Ronkonkoma, NY in 1994. In 2002, it changed its name to Best Yet Markets. Focusing primarily on the Long Island area, Best Market also began expanding west to New York City where it now operates a store in Manhattan (Harlem) and one in Queens (Astoria). It opened its Holmdel, NJ store in 2012 and its Newington, CT unit a year later.

The privately-held company took advantage of A&P’s bankruptcy and subsequent store auctions to acquire 10 stores – Pathmarks in East Rockaway, Islip, Shirley, West Babylon; Waldbaums in Commack, Merrick, Westhampton Beach, Great Neck, Selden; and a former Food Emporium on Greenwich Street in the Tribeca section of Manhattan which closed late last month.

In April 2018, Best Market opened a former King Kullen supermarket in Syosset, NY.

That Best Market has been sold is not a surprise to many trade observers. Multiple sources told us that the company was reportedly suffering from a significant cash flow shortage and had issued a prospectus several months ago exploring the sale option.

Some of those sources said, that despite the stores doing relatively well, Best Market’s financial challenges stemmed from its 2016 acquisition of the former Entenmann’s bakery which the company utilized as a secondary warehouse (C&S is the retailer’s primary grocery supplier) and food production facility. One source described the problems as being related to logistical efficiency.

Although some of Best Market’s stores are larger than the typical Lidl footprint (36,000 square feet with about 21,000 square feet of selling space), adapting the stores to fit Lidl’s prototype shouldn’t be a problem.

Citi Bank served as a financial advisor to Lidl and PJ Solomon served as a financial advisor to Best Market.