TALLINN-RIGA - Conflicting stories have emerged on the long-term intentions of Germany's Lidl, one of Europe's largest retail grocery chains, with a report from Latvia suggesting that the company might have given up on the region.
The daily Diena reported that several anonymous sources that are directly or indirectly related to Lidl said the retailer had announced termination of employment relations with part of its employees and was looking for buyers for land that the German company had already purchased in the Baltics. The decision was reportedly made recently.
Lidl Latvija representatives refused to comment on the alleged change of plans. Likewise, the local governments in the areas where Lidl had planned to build its stores had no information about the German company having changed its mind.
The news of the chain's possible withdrawal comes as an unwelcome surprise for many Baltic consumers and product distributors, who have been hoping that the entrance of a third grocery chain would bring down prices and even out rules of the game. Currently two operators, Lithuania's VP Market and the Rimi Baltic Group, which is owned by Nordic investors (Kesko Food and ICA Baltic) run the market.
Diena quoted unofficial sources as saying that a couple of weeks ago Lidl management in Lithuania had informed its staff about intentions to cease start-up operations in the Baltics and terminate their employment. Only project managers charged with settling land ownership issues would remain employed until the fall.
Meanwhile, the Estonian business daily Aripaev reported that Lidl has continued buying properties in different cities this year, adding 11 shop sites to its domain. If in November Lidl had 17 plots for its future shops, then by now the chain's local subsidiary, Lidl Eesti, possesses 28 properties in Estonia according to data from the land registry, the daily wrote.
However, Lidl has not yet started building shops, and the acquired buildings and sites, many of which are located in the vicinity of its competitor Saastumarket, stand vacant.
Representatives of Lidl have informed several local self-governments that the chain intends to launch construction across Estonia at the same time but not before receiving building permits.
Obtaining such permission has, until now, taken years and could take even longer if land acquired by the discounter chain is zoned as residential land, which is unsuitable for business activities. Thus, before construction can go ahead, the plots have to be rezoned as business land.
The Foreign Ministry's 2004 survey of German direct investments shows that Lidl Eesti's German partner invested nearly 130 million kroons (8.3 million euros) in Estonia.
The owner of the Lidl chain, Schwarz Gruppe, is the seventh-largest retail concern in Europe.