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Lidl | Schwarz Gruppe (Germany)

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Lidl claims to be Europe's largest chain of discount superstores, now with more than 10,000 outlets across 27 countries, under the banner "Quality For Less". Although it specializes in groceries, it also offers a select range of other goods including clothing and home electrical products, sometimes as limited period promotional specials. Most goods are private label, and Lidl stocks a wider range of products than traditional rival Aldi, and offers a less stripped-down store environment. The main Lidl band is partnered by hypermarket brand Kaufland, now the leader in that segment in Germany. With combined revenues from these two businesses growing steadily, parent Schwarz Gruppe overtook Metro, Carrefour and Tesco to become Europe's biggest retailer in 2015.

Advertising

Who handles advertising? Click here for agency account assignments for Lidl from Adbrands.net. In Germany, Nielsen reported measured spend of €314m in 2017. In France, Lidl became the country's top-spending advertiser for the first time in 2017, with expenditure of just under €500m, according to Kantar (in Strategies).

Competitors

Lidl's main rivals in discount retail are Aldi, Netto (a division of Edeka) and Penny (owned by REWE). See Retailing Sector index for other companies

Brands & Activities

In its home market of Germany, Lidl is currently the #2 discount retailer (behind Aldi) with around 3,300 stores, but it has used this base as a platform to expand more aggressively than its rival into neighbouring countries. Among the most recent new markets are Denmark in 2005, Romania from 2007; and Switzerland in 2009. In early 2010, the group bought around 120 Plus stores in Bulgaria and Romania from German rival Tengelmann. The first stores opened in Lithuania in 2014, with Serbia planned for 2016. Lidl has been especially successful in France, where it now has more than 1,520 stores and around 5.6% overall market share in Mar 2018 (Kantar Worldpanel), more than double rival Aldi, which had 2.4%.

Other important markets include the UK, with around 635 stores by mid 2014, and 5.3% market share (Kantar Worldpanel, 12 weeks to Mar 2018). Italy, Spain and Poland all have more than 500 outlets, and Belgium 290 stores. In total, the group has around 10,000 stores spread across 27 European markets. Plans to move beyond Europe, and in particular into North America, have been repeatedly considered and postponed. In 2014, an earlier plan to launch in the US during 2015 was pushed back. That major step forwards finally materialised in summer 2017, with the opening of the group's 37 American stores over the space of just a couple of months.

Just as Wal-Mart has transformed the US retail sector since the 1990s, so the rapid expansion of Lidl and rival Aldi has entirely altered the structure of retailing in Germany and other European markets. A key tactic has been to offer larger quantities of a much smaller range of products than traditional rivals, even than Wal-Mart's European subsidiaries, allowing the hard discounters to wield far greater buying power, and then pass those savings on to customers in the form of rock bottom prices.

Lidl now offers around 1,600 product lines (more than Aldi, but well below the 20,000 or more offered by traditional supermarket retailers), and it is renowned for exerting considerable pressure on suppliers to reduce their prices. Despite its promise of top quality, Lidl has faced criticism, especially in Germany, over the quality of its goods, especially fruit and vegetables after it was revealed that some lines contained high levels of pesticide. As a result, the group introduced a QS quality assurance system in order to appease customer concerns. It also has repeated run-ins with labour unions over working conditions and low wages. The most recent row came when it was discovered that the group had employed a private detective agency to install surveillance systems in its German stores to spy on staff and reduce shop-lifting levels.

The business is privately owned by Dieter Schwarz, son of the group's founder and now one of Germany's wealthiest individuals. He also controls hypermarket chain Kaufland (around 1,150 stores, mostly in eastern Germany and eastern European countries), and discount superstore Megacent. Now aged in his mid-70s, his wealth was estimated at $18.7bn in 2016 by Forbes, although the businesses are legally controlled by a tax-exempt charitable foundation.

Financials

The group announced financial figures for the first time in 2010. For the year ending February 2016, group revenues reached €85.7bn, up 8% on the year before, and around 50% higher even than the Aldi group. Revenues from the main Lidl chain rose 9% to €64.4bn for ye 2016, including €20.8bn in Germany. Kaufland added a total of €21bn.

Background

The company was founded in the 1930s after Josef Schwarz became a partner in fruit wholesaler Lidl & Co. After World War II the company expanded into a wider range of foods as well as general goods, and changed its name to Lidl & Schwarz. It took its first steps into retailing in the early 1950s with a stake in grocery chain A&O, and opened cash and carry warehouse C+C Camp in 1962. By the early 1970s, Josef Schwarz's son Dieter had come to play an increasingly important role in the business, and he took over as chairman following his father's death in 1977.

Dieter Schwarz had already masterminded the launch of the group's first discount supermarkets in 1973. To avoid the negative connotations of being called Schwarz Markt, or "black market", Schwarz acquired rights to the Lidl name from the family of his father's original partner. The new store's positioning as a hard discounter was directly copied from rival Aldi, but Lidl set out to offer a wider range of goods, and later offered longer opening hours. The Kaufland hypermarket brand was introduced in 1984. During that decade, the group expanded nationally before venturing aggressively into the former East Germany, and then into other European markets. The company arrived in France in 1989, followed by Italy in 1990, and other countries, including the UK in 1994. Plans to open outlets in Canada as a first step into North America were cancelled in 2004.

Last full revision 22nd June 2016

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