Consumers are the core of our business

The campaign "Best Price" ended at the end of October and lasted for two months. Before the start of the campaign, Serbian Prime Minister Miloš Vučević said that this action would save a household "between 8.000 and 25.000 dinars per month", and the prices of around 80 products were reduced. After the end of this promotion, on November 1st, the company "Lidl" announced price reductions throughout the month in all its stores for more than 50 items from the regular assortment.

photo: misha obradović

Data from the Republic Statistical Office (RZS) show that consumer prices in October 2024, compared to the same month of the previous year, increased by 4,5 percent. The prices of food and non-alcoholic beverages for the first ten months of this year, compared to the previous one, increased by 3,1 percent. We spoke with the general manager of the company, Dragan Čigoja, about what prices are like in Serbia and how "Lidl" forms them.

"It is definitely noticeable that changes are happening on the market, and that sometimes they happen almost on a daily basis, and from the first day we have positioned ourselves as a company that is ready to adapt to the dynamics dictated by the market and become and remain the first choice of consumers. The constant optimization of the process and the efficiency of the supply chain help us in this, so that despite the increase in the prices of raw materials and other operating costs, we would be able to offer consumers the best prices while maintaining a high level of service and quality," says Chigoja.

"WEATHER" How is it "Lidl" responded to high inflation in the previous three years? How well the prices adjust to the consumer's capabilities?

DEAR CHIGOYA: It was during the period when the economic changes began that we decided not to pass price increases on a 1-to-1 basis to consumers, but to consciously make choices that would be in the interest of customers in order to continue building the relationship of trust that we achieved when we came to the market. This is confirmed by the latest research, which shows that "Lidl" has the most favorable monthly consumer basket. (Source: Market research agency NMS Market Research. Analysis of the value of the weekly consumer basket of food and non-alcoholic beverages, 11-13.10 October 2024. The research is based on the average consumer basket defined by the Republic Institute of Statistics and contains a maximum of 73 products. The analysis was carried out in 5 retail chains: DIS, Idea, Lidl, Maxi, Roda in four cities in the Republic of Serbia.)

In addition, at the beginning of November, we announced price reductions for more than 50 items from the regular assortment. Among the mentioned items, there are also about 20 products from the segment of household chemicals and cosmetics whose prices have been permanently reduced since the beginning of November.

Aware of the fact that the prices of food products are perhaps the most important item in the household budget and extremely important for maintaining the standard of living of citizens, we decided to offer even more favorable prices for the regular assortment just before the holidays, in November and December, and thus show consumers that we are there for them in all market circumstances. This decision is not a response to current market trends and short-term type, but as I mentioned, a clear determination that consumers are the core of our business.

The company "Lidl", as part of the German Schwarz Group (Schwarz Group), is one of the leading food retail chains in Germany and Europe and operates in 32 countries worldwide. What are the differences in consumer habits outside of Europe?, and especially in Serbia?

Each market is a story characterized by a large number of factors - from specific local consumer habits, to the frequency of purchases, the standard of living of citizens, trust in trade chains and so on. Although it is one of the largest European retail chains, it is interesting for Lidl that we pay special attention to the needs of the local population in every country where the company operates. Thus, for example, in Serbia, shortly after arriving on the market, a whole line called "With love, domestic" was created, for which only local producers produce, and which include articles that are specific to the climate and have a traditional character.

Also, in addition to adjusting the assortment in this way, we are extremely proud of the fact that already now, after six years of business, we can boast of the information that we have more than 800 domestic products in the assortment. In this regard, I believe that as Lidl Serbia we have created an excellent balance between German quality and the needs of the local market, which is confirmed by the growing number of our consumers and their satisfaction, which is increasing day by day.

Consumers in Serbia often protest because abroad in "Lidl" they can find a product that is cheaper than in Serbia. Why is this happening?? Is there a difference in price formation between Serbia and other countries??

When it comes to price formation, it is influenced by numerous factors. In the previous period, major global market changes were noticeable, such as the increase in the price of raw materials or products, logistics and transport, but also local business conditions for us in Serbia - from negotiations with distributors, to costs of a local nature, such as, for example, the increase in the prices of analyzes about the safety and quality of products, whether it is about those performed at border crossings, or about the analyzes internally conducted by "Lidl" with its suppliers regarding the verification of standards.

The fact that we are not a country of the European Union plays a role in this process, and therefore we have additional costs of importing and customs clearance of certain groups of products, as well as additional import and other taxes that are introduced at the state level. There are certainly other operating costs on the rise, such as utility services, energy and so on. All these parameters affect the final formation of the price for consumers at the national level, but we as a company certainly try not to transfer the price increase of operating costs to consumers in full, which I believe is noticeable in our prices.

What we have been recognized for so far is that our pricing policy always benefits consumers and that we are also recognized in Serbia as a retail chain that truly offers the best price-quality ratio. As we like to say - in every business you have two roads. One is focused on short-term profit, to earn as much as possible in the shortest possible time. The second is to gradually build long-term profits, and that requires a sustainable business. We are definitely focused on long-term goals and the future, convinced that this way of doing business will preserve the trust we have been building with consumers for more than six years.

"Lidl" has been buying vegetables from a Turkish company for a long time, and the workers of the mentioned company made serious accusations a few months ago that they work under impossible conditions. How much do these situations affect business? How do you solve them??

Lidl, as an international company, takes great care of socially responsible business in all aspects that may be relevant to the industry. In our case, it is not only our sales facilities and our operations that have direct contact with consumers, but also the entire supply chain. The company has global standards and signs a Code of Conduct that obliges its associates, partners and suppliers to, among other things, treat employees fairly.

If it turns out that some of the agreed parameters of cooperation have been violated, we as a company react and thus send a message that it is extremely important for us to operate in accordance with the laws and principles of sustainability in various aspects. Hereby, we contribute to a fairer social order and a future in which fair treatment will be the default standard of business everywhere in the world.

Lidl Serbia received an award this year "Chosen store of the year". What kind of projects have you launched after that to further improve the offer to consumers?

The award for the "Chosen Store" is extremely important to us, not only because of the trust we had in the research methodology, but also because it is another confirmation that we are on the right track to continue building a relationship that already has extremely solid foundations. with the support of our customers.

In addition to the mentioned current activities in the field of lowering prices in our stores, last year, for example, we introduced electronic price tags in all our stores, which is a project that shows everything we talked about in this interview - Lidl's commitment to efficiency in processes, but also socially responsible business.

Digital prices significantly contribute to reducing the time spent by our sellers on placing paper labels, the number of errors during their placement is significantly lower, and consumers have an insight into the correct and current prices at all times.

On the other hand, digital prices directly contribute to saving about 21 tons of paper annually, which would be used to produce paper price tags. We also deal with numerous socially responsible projects, and during the summer we actively started the topic of healthy nutrition. "Food for a better tomorrow" is extremely important to us as a company because we recognize the impact we have in terms of people's diet and responsible behavior regarding the health of consumers and the planet. That's why, as part of its strategy, "Lidl" has committed itself to work dedicatedly to provide, with transparent communication, a wider range of offers of healthier and more sustainable products and facilitate responsible decision-making when purchasing.

We believe that these are just some of the topics and our activities that will further motivate consumers to be part of the "Lidl" story, to continue to build a better tomorrow together in every sense of the word.