Trademark Watch: Kroger Sues Lidl Over Private Label

The incursion on American supermarkets by German grocery retailers is getting more serious, so Kroger is bringing out a new weapon: a trademark-infringement lawsuit.

The iconic Cincinnati-based chain has sued Lidl, the latest European grocery brand to launch in the US, alleging that Lidl USA’s “Preferred Selection” private label in-house brand (above) is too similar to Kroger’s “Private Selection” name and logo (below) that has been emblazoned on thousands of Kroger private-label products for more than 16 years.

In addition to similar names in Private Selection and Preferred Selection, both logos’ word marks are all-caps with a scroll motif visible above and below the name for an old-fashioned effect. Kroger’s suit—filed June 30, two weeks after Lidl’s US launch—at least partially reflects three growing realities in the hyper-competitive US grocery market.

First, the Germans are coming—and coming. Aldi led the way by opening about 1,600 stores across the US in recent years, relying on its formula of curated selections, private labels, fresh produce and lots of natural and organic goods. Aldi is planning another 900 US stores, just as Lidl is opening its first 100 stores in the US, most of them on the East Coast.

In contrast to UK-based Tesco, whose foray into the US food business with small-format stores under the Fresh & Easy sub-brand was a failure, Lidl and Aldi seem to have a good handle on what appeals to American shoppers. And, of course, both chains already have made great inroads in the UK.

Second, Kroger’s suit reflects the growing importance of private-label, store-owned brands. Once the preference mainly of price-sensitive, discount-seeking shoppers, store labels have emerged as favorites of the millennial generation for additional reasons, including higher quality. For example, another Kroger private-label brand, Simple Truth, offers one of America’s largest selections of organic products.

Kroger claims Lidl is trying to undermine its Private Selection business by “causing confusion” between each chain’s store brand. The plaintiff also alleges that Lidl’s new in-house label “dilutes” Kroger’s store brand.

Introduced on October 1, 2000, Kroger’s Private Selection was an immediate hit and now accounts for more than $20 billion in annual sales and includes a wide range of items form smoked salmon to arranged flowers.

Lidl countered by saying that it is “very proud of our Preferred Selection range,” calling it “a unique specialty brand,” the Chicago Tribune said.

And third, Kroger’s jitteriness about the private label of Lidl, a grocery retailer that has barely launched in America, underscores the heated competition that already has swept over the industry, of which Aldi is only one part.

Kroger, Walmart, Target and other established supermarket players are facing intense price competition because of the growth of e-commerce and, specifically, because Amazon has burgeoned in the grocery space—and now Amazon has bought Whole Foods Markets.

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