We've retained Confession and Absolution the same as Rome, though one will not find "confessionals" in our churches, but private confession is available upon request. It's actually a somewhat complicated topic as to whether it is a Sacrament; we would say it is indeed sacramental, but there is no clear position within Lutheranism as to whether it is a Sacrament proper, you'll find some who say it is, some who say it [probably] isn't, with most likely somewhere in-between. This goes back to the fact that the definition of a Sacrament in Lutheran theology is taken, basically, verbatim from St. Augustine who says that God's word is connected to an element, and that makes it a Sacrament: Sacraments therefore are God's Word in connection to a material element, for Baptism and the Eucharist that's pretty easy, with Absolution it's a bit fuzzier. Does the pastoral declaration, "Your sins are forgiven you" constitute an element?
But for all intents and purposes, the answer to your question is yes.
Public and private confession is available in the Church because the words of absolution are gracious gospel for us, but these aren't intended to be instead of personal and regular confession of sins in our prayer life, "directly to the Lord" as you put it. Rather, since Christ gave the office of the keys to the Church--"Whoever's sins you forgive are forgiven them"--these exist for the good and benefit of Christ's Faithful that we might hear the words of our forgiveness and be comforted by them.
One thing you'll note in Lutheran theology is a lack of "progressive sanctification", a belief that we can essentially get better in this life. For example from a Lutheran position there really is no such thing as sinning less in this life; one might commit certain sins less, but the intrinsic reality of our sinning doesn't lessen as we go through this life and there is no point at which we will have overcome sin--not on this side of the Eschaton at least. The reality of our fallen condition is that, as long as we dwell in these mortal bodies of sin, stained by original sin, there is no upward ascent to glory--which is why we look forward to the resurrection of the body, this body of death is perishing, corruptible, and life in this present now is a life stained and corrupted by sin and death--and it will be that way until the Day God changes that, at Christ's coming on the last day. So that this age is not the place where justice dwells, but we look to the new heavens and the new earth, that coming future age where justice does dwell.
So the role of repentance isn't about "personal holiness" if one wants to put it that way, repentance is simply what happens when the person of faith, encountering God's Law, is struck by the terror of God's Law and confesses that he/she is indeed a sinner. There is, therefore, for the sinner the gracious word of the Gospel, that we are forgiven in Christ Jesus of all our sins, and that our hope and trust is in Him, in both this life and the next. Repentance, therefore, is simply what being a Christian--being simul iustus et peccator, both saint and sinner--looks like in this life.
