Report on Business Processes and Systemsof LIDL UK

Table of Contents
1 Overview of LIDL UK 3
2 Problem Identification with the help of Soft System Methodology 3
3 Click and Brick Retail Model 4
4 Issue of the existing models and solutions 5
5 Customers experience of digital marketplace of LIDI 5
6 Innovative ways to serve customers in a better way 6
7 Unique services of LIDI 6
8 Target customers of new business model 7
9 Comparison on the basis of costs 8
10 References 9

 
1 Overview of LIDL UK
Lidl is a German retail company. It is a global company that has a number of independent companies nearly all over Europe. This company owns over 6000 retail stores, out of which, 3000 are in Germany. This makes Germany Lidl’s largest national market. As there is an ever-increasing rise in the number of discounters, this has forced the big four retail stores to adjust as per their offerings and transform how they work as retailers. As per Financial Times (2019), nearly half of UK households visit Lidl every month for buying groceries, as it opens stores in exclusive areas to appeal to wealthy shoppers, with discounted products. In 2019, Lidl contributed 11 percent to the UK’s grocery market sales, as compared to 8 percent the last year. As said by the head of retailer Mike Watkins, discounters like Lidl attract new consumers by multiple outlets and through the use of ads that communicate not just the quality to the consumers but freshness too. Moreover, Lidl makes use of its low pricing strategy to bring new customers to the door (Rice, 2019).

2 Problem Identification with the help of Soft System Methodologyof LIDL UK
Lidl uses as low cost or a discounted business model. According to futurealarm (2019), such a business model suggests that a strategic alignment lies at the center of its business success. At the moment, Lidl follows a discount model that is under pressure. The company faces a future where its biggest rivals are ready to compromise over their profit margins for maintaining its market share. However, the evidence suggests that the discounters usually have less to offer to their consumers, given how low they charge (Lek, 2019). Lidl must become unpredictable and innovative to out-compete its customers, which is less likely in the business model that it currently follows. Lidl must make a big move which can help the company to eliminate a number of restrictions it is facing, by focusing on a deterrent strategy against its customers. Ladd (2019) explains that the current business model of Lidl sells as many products as it can, in the shortest span of time. Making sure that the stock levels are maintained is highly important. Over the years, this retail company has made a huge success with its low-cost business model that aims to offer top quality products at low prices. This strategy allows Lidl to undercut its rivals. This strategy has also allowed Lidl to disrupt markets by taking market shares from other well-established grocery stores. A recent study by Catalina, a digital marketing company has identified that even though Lidl offers low prices to attract shoppers, they return back to their usual shopping behavior in just a few months. Moreover, Lidl has worked hard to build consistent traffic to its stores as many stores are situated in areas that are outside the locations of traditional grocery. Nevertheless, the store has been criticized for selecting poor store locations. As per Ladd (2019), the company’s strategy has been focused on building as many stores as possible for business growth, yet, it is important for the company to focus on its distribution, pricing, and operations, as well as a revamped business model
3 Click and Brick Retail Modelof LIDL UK
Due to the changing needs of the market and increased competition in the market, Lidl has decided to switch from its low-cost business model as it has failed in maintaining the customers and has been resulting in customers’ lost. The new business model appropriate for the business is hybrid or clicks and brick retail model. The idea behind this model is to come up with the facility of providing the whole physical store on the website that is likely to change the journey of the customer and the retail world as well.
The new model is likely to bring the whole store on the website which shows the integration of e-commerce and network of physical retail units. It offers the customers an opportunity to get the products from the nearest physical store ordered on the website of the company. The installation of digital tools is required to integrate website and physical stores i.e. applications, smart devices, etc. that would help the potential customers in viewing the complete profile of the products of Lidl and then would help them in buying the products not even in the inventory currently (Falcone, 2017).
4 Issue of the existing models and solutionsof LIDL UK
The existing low-cost model of Lidl was appropriate for the business but with the increase in online stores, the market share of the retail stores has been lost. There are multiple giant grocery stores that have been providing online business as well and also on discounted prices. The biggest issue here is reducing market share. Moreover, another issue with the physical store is that the customer may not have enough time to go through all the products in a limited time while the complete products’ profile can be checked from the website at different times (Metcalf, 2019).
The appropriate solution trending currently is the implementation of hybrid facilities that allows businesses to integrate their physical location stores to internet websites. Through the implementation of this model, it would be possible for Lidl to reach more customers that are not able to visit the physical store due to being far away. Moreover, it would be possible through the hybrid facilities to facilitate a large number of inventories that are not possible physically because purchasing the large inventories result in a loss in the business of perishable items that are the greater part of the retail store (Levary and Mathieu, 2000).
5 Customers experience of the digital marketplace of LIDI
LIDI must adopt helpful and savvy digital and e-commerce stores (Lad.2019). Most of the potential customers experienced the LIDI online store and instore the busiest place. Customer digital experience can be improved by maturing the strategies of the company. On the other hand, LIDI portrays simplicity in the instore structure to make it cost-effective for its customers. LIDI in stores enhances the emotional connection of customers with the salespersons of the retail outlets. They serve them with simple and easy operations which ultimately connects their customers personally. The discounts offered on the store also makes the customers experience more enjoyable. LIDI needs to overthink on digital market experience. They need to make the online channels seamless and flexible for all the customers, the information provided on the sites must be reachable to the target market. Digital and e-commerce are the areas where LIDI can enhance the customer experience through target owned and by fulfilling online orders (Lad, 2019). One more area in improving the digital market experience by LIDI is by improving customer care centers.
6 Innovative ways to serve customers in a better wayof LIDL UK
Being innovative is currently the most element of success for businesses. From innovation here means the adoption of all innovative technology used by other businesses in the same industry and that have become necessary for the businesses to be adopted in order to retain market share and to be successful (Inc. 2010). The important and most prevailing innovative idea compared to current low-cost business operations is to implement the system of hybrid facilities that would assist in increasing the market share of Lidl. Another problem of Lidl discussed in this report is its number of stores and their location.
To solve this problem, another solution to serve more customers in a better way is to open more retail stores and the important thing to consider is to decide the efficient location for the store that can get more inward of customers. Increasing the store at locations will make it very accessible for customers (Inc. 2010). Another efficient wat to increase the satisfaction of customers is to provide surprises to the customers that can either be in the form of discounts, free supplies on purchasing the items more than a specified limit, or some kind of lucky draw (Byte Gain, 2018).
7 Unique services of LIDI
LIDI is offering its products on a lower price strategy. Its mission is to provide products to its customers on as many locations as they can and at low prices compared to its competitors. They have developed multiple stores in Europe. And now their main target in the United States is to expand its stores on multiple locations. This strategy will help the number of customers to know about the LIDI stores. In addition to that opening discount stores on various locations will benefit LIDI in saturating different states, inan efficient and cost-effective manner (Lad.2019). Moreover, the changing model of LIDI in the UK will help them to acknowledge among different customers. One unique strategy which LIDI launched was an online selling store named Margot. It is known as a chat board for all digital marketers. It’s one of the unique strategies for selling wine online. Buying wine can be a difficult task for most of the customers but this model has enabled the customers to select the perfect wine for their dinner at affordable prices. Furthermore, this chat board also helps in enhancing the knowledge of its customers (Europe, 2019). One more advantage of the LIDI strategy is that it is more innovative than the Aldi strategy of instore and online stores. And this can also help in gaining more customers.
8 Target customers of the new business model
Simplicity lies in the operations of LIDI. They have adopted a simple way of providing value to their customers. Their main objective is to become cost-effective with simple operations and simple designs in stores (LIDI, 2019). They have not spent heavy amounts on floorings, shelves, and displays of different products. They provide value to their customers by providing discounts on different products. According to the head of European research (Elfers, 2004), the discount model bears less risk and promises more profit in the longer run. Hence it is evident that LIDI targets customers with the middle and lower class more. The discount prices are also provided on digital sites. They enable their customers to think and attach their personal requirements digitally. The distribution, the supply chain is also maintained on the online grocery store. They want customers from all walks of lifeto enjoy bigger discounts and lower prices. Consequently, LIDI was able to grab a major share of the market in the UK. Sales of the discount retail market were raised to 7.7% in 2018. And they were successful to attract 500,000 more customers and grabbed a 5.9% share in the UK retail market. (Makortoff).
9 Comparison on the basis of costsof LIDL UK
The implementation of a hybrid model will need one-time spending that would be needed for the development of an online website and its full integration with the physical stores of Lidl. The estimated cost of the hybrid model has estimated to be around £ 250000. Compared to the implementation of the hybrid model, the other available option is opening more physical stores. The opening of physical stores will have more cost as it requires the costs related to the acquisition of physical place and the setting to the whole setup. Each of the store opened is likely to cost almost £ 20000 and the required number of stores are 20 that would cost a total of £ 400000. The estimated cost of adopting the ways to make customers satisfied is estimated to be around £ 50000 but it is an old method and is not much recommended to be used as satisfaction obtained is likely to be temporary. Based on the costs of all possible solutions and their efficiency, the recommended solution to be used is the implementation of the Hybrid business model.

 
10 References of Business Processes and Systems of LIDL UK
Byte Gain, (2018). 7 Innovative Customer ServiceIdeas To Try Out. [online] Bytegain. Available at: [Accessed 10 Dec. 2019].
Falcone. G, (2017). The new normal in the retail world: the hybrid model of clicks and bricks. [online] Linkedin. Available at: [Accessed 10 Dec. 2019].
Futurelearn (2018). Why are Aldi and Lidl currently so successful?. [online] FutureLearn. Available at: https://www.futurelearn.com/courses/supply-chains/0/steps/23702 [Accessed 2 Dec. 2019].
Hanbury, M. (2017). A German grocery chain that's coming to America is already dominating Walmart on prices — here's why it's so cheap. [online] Business Insider. Available at: https://www.businessinsider.com/how-lidl-keeps-its-prices-down-2017-6#1-most-of-its-products-are-private-label-brands-1 [Accessed 2 Dec. 2019].
Inc., (2019). 10 Ways to Support Your Best Customers. [online] Inc. Available at: [Accessed 10 Dec. 2019].
Lad, B. (2019). Lidl USA: What Went Wrong And What It Can Do To Recover. [online] Forbes.com. Available at: https://www.forbes.com/sites/brittainladd/2018/07/08/lidl-usa-what-went-wrong-and-what-it-can-do-to-recover/#7cf45e9829c8 [Accessed 10 Dec. 2019].
Ladd, B. (2019). Lidl USA: What Went Wrong And What It Can Do To Recover. [online] Forbes.com. Available at: https://www.forbes.com/sites/brittainladd/2018/07/08/lidl-usa-what-went-wrong-and-what-it-can-do-to-recover/#13d3a5a529c8 [Accessed 2 Dec. 2019].
Lek (2019). Beating Back Hard Discounters Update: Have the UK’s Big Four Supermarkets Done Enough?. [online] Lek.com. Available at: https://www.lek.com/sites/default/files/insights/pdf-attachments/1808_UK_Hard_Discounters_Supermarket_Competitive_Landscape_Strategy_LEK_Executive_Insights.pdf [Accessed 10 Dec. 2019].
Levary. R and Mathieu. R, (2019). Hybrid Retail: Integrating E-Commerce and Physical Stores. [online] Linkedin. Available at: [Accessed 10 Dec. 2019].
LIDI (2019). Lidl: The Hard Discounter|Business Strategy|Case Study|Case Studies. [online] Icmrindia.org. Available at: https://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/Lidl-The%20Hard%20Discounter-Business%20Strategy%20Case%20Study.htm#Challenges_Ahead [Accessed 10 Dec. 2019].
Makortoff, K. (2019). Lidl attains its biggest UK grocery market share at 5.9%. [online] the Guardian. Available at: https://www.theguardian.com/business/2019/aug/20/lidl-attains-biggest-uk-market-share [Accessed 10 Dec. 2019].
Metcalf. T, (2019). Three Problems That Brick-and-Mortar Organizations Face. [online] Chron. Available at: [Accessed 10 Dec. 2019].
Rice, X. (2019). The Aldi effect: how one discount supermarket transformed the way Britain shops. [online] the Guardian. Available at: https://www.theguardian.com/business/2019/mar/05/long-read-aldi-discount-supermarket-changed-britain-shopping [Accessed 10 Dec. 2019].
The Financial Times (2019). Nearly half of UK shoppers go to Aldi or Lidl each month | Financial Times. [online] Ft.com. Available at: https://www.ft.com/content/2b7f33e2-6142-11e5-9846-de406ccb37f2 [Accessed 10 Dec. 2019].

Identifying Problem through Soft Systems Methodology
Part 2

Table of Contents
Rich Picture 3
Identification of Problem 3
Problems with Existing Model 4
Solutions to the problem 5
CATWOE 5
As-Is Process Plan 6
To Be Process Plan 7
Summary 8
References 9

11

12 Rich Picture

12.1 Identification of Problem
This particular problem is related to the model that is adopted by well-known retailing stores that have used numerous models to run out their functions. Lidl uses as low cost or a discounted business model such a business model suggests that a strategic alignment lies at the center of its business success. At the moment, Lidl follows a discount model that is under pressure. The company faces a future where its biggest rivals are ready to compromise over their profit margins for maintaining its market share.
In order to move from the discounted business model, Lidl has used the particular rich diagram that can offer the accurate and exclusive solutions to solve the identified problems of the Lidl It is the one of the most important for retail organization top found out its problems and offer the very good and extensive solutions that can perform its model in a good way. The needs & preferences of the market have changed, and there is an increase in competition in the market, Lidl has decided to change from its low-cost business model as it has failed in maintaining the customer loyalty and has been resulting in customers’ lost.
According to the various well-known authors, the Hybrid model is a good option that can be utilized to explore the aspects or concepts of the rich diagram, and it is a good strategy that can easily overcome potential problems that can occur in the particular business model. The new business model that is appropriate for the business is hybrid or clicks and brick retail model. The idea behind this model is to come up with the facility of providing the whole physical store on the website that is likely to change the journey of the customer and the retail world as well (Brown & Bessant, 2013).
12.2 Problems with Existing Model
The existing low-cost model of Lidl was appropriate for the business, but with the increase in online stores, the market share of the retail stores has been lost. There are multiple giant grocery stores that have been providing online business as well and also on discounted prices. The biggest issue here is reducing market share. Moreover, another issue with the physical store is that the customer may not have enough time to go through all the products in a limited time.
12.3 Solutions to the problem
The solutions to the problem are necessary to cope with the performance of the business in a good way. Due to these entire problems, Lidel has decided to change its model in order to perform in the market in good ways. It decided to adopt the model to run its business efficiently. The appropriate solution trending currently is the implementation of hybrid facilities for the particular rich diagram format that allows businesses to integrate their physical location stores to internet websites. Through the implementation of this model, it would be possible for Lidl to reach more customers that are not able to visit the physical store due to being far away (Griffin, 2012).
Root Definitionof Business Processes and Systems of LIDL UK
The root cause analysis has identified that the current strategy is the main problem. So Lidl is going to change its low-cost strategy to a hybrid strategy, which means that the business will create an online retail website. The website will work jointly with physical stores.
13 CATWOE
Customers The customers of the business are those who are looking for online retail services and unavailability of online store declining the number of customers
Actors The management of the business, which will include the employees and the top management, will be responsible for implementing the solution.
Transformation Process The sales of the corporation are affected by the issue along with market share
World View The issue will reduce the market share of the company, and the company will lose its competitive edge on the competitors
Owner The top management of the business will be the owner
Environmental Constraints The rapid change in technology might affect the implementation of the solution.

Customersof Business Processes and Systems of LIDL UK
The customers of the business are those who are looking for online retail services and unavailability of online stores declining the number of customers. The customers today do not have much time to go to the store to purchase the products.
Actors
The management of the business, which will include the employees and the top management, will be responsible for implementing the solution. The store management will change the strategy so that they can grab the market share.
Transformation Process
The sales of the corporation are affected by the issue along with market share. The change will bring lots of opportunities for the business.
World View
The issue will reduce the market share of the company, and the company will lose its competitive edge on its competitors. If the new strategy is not implemented, then the business might unable to sustain for a longer time period.
Owner
The top management of the business will be the owner of this strategy.
Environmental Constraints
The rapid change in technology might affect the implementation of the solution
14 As-Is Process Plan
Currently, Lidl is providing retail services through its physical stores. The customers who want to purchase any product will have to visit their physical store locations for purchasing the products. The customer will first walk in the store, review the product they want to purchase, then the customer will finally select the item and pay for the item. After making the payment, the customer will leave the physical store. Below is the As-Is process map of the Lidl retail store. As is process plan includes various activities that happen in the retail store. For instance, the below process map is describing the process plan when any customer is purchasing clothes from the retail store (Mahadevan, 2009).
As is process plan includes the retail procedure which occurs in the retail stores. Currently, the business is following the brick & Mortar model, which means that Lidl does not have any online presence. Customers walk into the stores and purchase the product they want to purchase. However, this model is not profitable for the organization because of the high amount of competition that exists in the market place. In order to compete with its competitors, the business has decided to shift from a low-cost model to a hybrid model, which will enhance the customers of the business (Kerzner, 2009).

15 To Be Process Plan
As the low-cost model is no longer effective for the business, it has been decided by the management to change its business model to the hybrid model. It means that the business will create its online store as well so that the customers who cannot visit the physical store can purchase the products online without any difficulty. The online retail website will be created through which the customers can purchase the products online. Below is the process map of a retail website, which is depicting how the customers will purchase the products online. The current strategy will allow the business to increase its market share (Mahadevan, 2009).

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17 Summary
As the low-cost model is no longer effective for the business, it has been decided by the management to change its business model to the hybrid model. It means that the business will create its online store as well so that the customers who cannot visit the physical store can purchase the products online without any difficulty.

18 References
Brown, S. & Bessant, J., 2013. Strategic Operations Management. s.l.:Routledge.
Griffin, R. W., 2012. Management. s.l.:Cengage Learning.
Kerzner, H., 2009. Project Management: A Systems Approach to Planning, Scheduling, and Controlling. 10 ed. s.l.:John Wiley & Sons.
Mahadevan, B., 2009. Operation Management: Theory and Practice. s.l.:Pearson Education India.
Morris, P. & Pinto, J. K., eds., 2010. The Wiley Guide to Project Organization and Project Management Competencies. s.l.:John Wiley & Sons.

Effective Implementation of New Process
Part 3

Table of contents
Resources & Costs Required For Implementing the Process 2
ADKAR Model 3
Awareness 3
Desire 4
Knowledge 4
Ability 4
Reinforcement 5
Balance Scorecard 5
Summary 6
References 7

Effective Implementation of New Process
19 Resources & Costs Required For Implementing the Process
Lidl Rate
Tax rate 30%
The required rate of return 10%

Initial Investment in Web Site YEAR 1 2 3
Software £ 17,000.00
Hardware £ 28,000.00
Development £ 170,000.00
Total Initial Investments £ 215,000.00

Benefits from Web Site YEAR £ 1.00 £ 2.00 £ 3.00
Travel costs £ 28,000.00 £ 30,800.00 £ 33,880.00
customer service costs £ 70,000.00 £ 77,000.00 £ 84,700.00
Incremental sales resulting from increased sales £ 28,000.00 £ 30,800.00 £ 33,880.00
Incremental sales resulting from enhanced promotions £ 28,000.00 £ 30,800.00 £ 33,880.00
sales £ 17,000.00 £ 18,700.00 £ 20,570.00
Total Benefits £171,000.00 £188,100.00 £206,910.00

Costs of website YEAR £ 1.00 £ 2.00 £ 3.00
Project management, customer support £ 35,000.00 £ 38,500.00 £ 42,350.00
Online advertising, search-engine registration £ 10,000.00 £ 11,000.00 £ 12,100.00
Maintenance £ 15,000.00 £ 16,500.00 £ 18,150.00
Depreciation on capital expenditures £ 71,666.67 £ 78,833.33 £ 86,716.67
Cost of sales £ 7,500.00 £ 8,250.00 £ 9,075.00
Total Costs £139,166.67 £153,083.33 £168,391.67

Totals YEAR £ 1.00 £ 2.00 £ 3.00
Value after tax -£ 1.00 -£ 2.00 -£ 3.00
Tax -£ 0.10 -£ 0.20 -£ 0.30
Net Benefits (Costs) £ 31,833.33 £ 35,016.67 £ 38,518.33
Depreciation added back £ 7,500.00 £ 8,250.00 £ 9,075.00
Cumulative cash flow £ - £ 7,500.00 £ 15,750.00 £ 24,825.00
Cash flow -£ 215,000.00 £ 15,000.00 £ 24,000.00 £ 33,900.00

In the above table, all the costs which will be incurred in the development of an online website are provided. From the above budget, the key expenses of creating the website can be known. The amounts which are included in the budget are based on estimations (Jonathan, 2010).
Change Management
20 ADKAR Model
20.1 Awareness
As Lidl is implementing a major change in the business, the first thing the business should do is to create awareness among its employees so that the employees can provide the best customer services to their customers. The management of the business should provide information to all the members of the organization. The management should tell why it is implementing the change and how the change will improve the sales & market share of the organization. When all the employees are going to be aware of the change, then the resistance to change will be reduced up to a lot of extents (Brown & Bessant, 2013).
20.2 Desire
The second step of change management is to create a desire for change in the staff members of the organization. It is important for the business to create a desire for change in the employees so that the change can be successfully implemented. The desire for change can be created by providing information, enhancing communication and telling the employees the importance of the change which the corporation is implementing in the organization. If the employees know the importance, then they won’t resist the change.
20.3 Knowledge
The change cannot be implemented if the business does not have knowledge about the change they are implementing. Lidl organization has realized that its current business strategy is heading nowhere, and the business is suffering loss from declining sales. The Hybrid business model will provide the opportunity to the organization to not only increase sales but also to capture significant market share. Furthermore, the profitability of the business will also increase as a result. It can be said that through this business model, the business will able to compete with its competitors efficiently.
20.4 Ability
In this phase, the organization should analyze whether it has the capability or resources to implement the change or not. The organization knows that it has to change its strategy. Otherwise, the business will unable to sustain in the long run. The business has the resources to create an online retail website from which it can maintain the needs & preferences of its customers efficiently. The organization has skillful employees and has the ability to implement the new strategy efficiently. The change will allow the organization to sustain for a longer time period in the market (Griffin, 2012).
20.5 Reinforcement
The last step in the change management process is to reinforce the change. It is the duty of the management to keep on reviewing the change which it has implemented. Lidl should keep on evaluating the change after implementation and create a report in which it will be identified whether the change has given the desired outcomes or not. If the change has given desired outcomes than it means that the change has been successfully implemented. If the change has not given desired outcomes than it means that change will have to be re-implemented so that desired outcomes can be achieved from the implemented change.
21 Balance Scorecard
Strategies
Goal Measure Target Step Taken
Customers Increase number of customers Provide an online sales platform 40% increase in customers Creating an online retail website
Financials Increase in Revenue Increase in profitability 40% increase in sales Change in business strategy
Market Share Increase market share Increase in revenue & Net profit 30% increase in Market Share Establish Hybrid strategy
Business Growth Expand existing business Increase in assets & liabilities 30% expansion in business Change in business strategy

The above balance scorecard will help the management of the business to evaluate the performance of the implemented strategy. Through this scorecard, the management can efficiently evaluate post-implementation performance (Mahadevan, 2009).The balanced scorecard framework focuses on 4 outlooks of the strategy which the organization has adopted. The 4 outlooks include customer, financial, internal control and growth of the organization. In the balanced scorecard, the words measure, initiatives, and objectives are often used. The objectives are basically the goals that the organization wants to achieve whereas the measures are ways through which those goals are going to b achieved. The initiatives are the steps that are taken by the organization to accomplish the goals. In the above scorecard, the measures, goals, and initiatives which Lidl will take to implement its new strategy are mentioned.

22 Summary
As Lidl is implementing a major change in the business, the first thing the business should do is to create awareness among its employees so that the employees can provide the best customer services to their customers. The management of the business should provide information to all the members of the organization. The organization knows that it has to change its strategy; otherwise, the business will unable to sustain in the long run. The business has the resources to create an online retail website from which it can maintain the needs & preferences of its customers efficiently. The organization has skillful employees and has the ability to implement the new strategy efficiently.
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24 References
Brown, S. & Bessant, J., 2013. Strategic Operations Management. s.l.:Routledge.
Griffin, R. W., 2012. Management. s.l.:Cengage Learning.
Jonathan, B., 2010. Financial Management. s.l.:Pearson Education India.
Mahadevan, B., 2009. Operation Management: Theory and Practice. s.l.:Pearson Education India.