Lidl

History

In 1930, Josef Schwarz became a partner in Südfrüchte Großhandel Lidl & Co., a fruit wholesaler, and he developed the company into a general food wholesaler. As a result of the war, the company was destroyed in 1944, and a 10-year reconstruction period soon started.

In 1977, under his son Dieter Schwarz, the Schwarz-Gruppe began to focus on discount markets, larger supermarkets, and cash and carry wholesale markets. He did not want to use the name Schwarz-Markt (Schwarzmarkt means "black market") and rather use the name of Josef Schwarz's former business partner, A. Lidl, but legal reasons prevented him from taking over the name for his discount stores. When he discovered a newspaper article about the painter and retired schoolteacher Ludwig Lidl, he bought the rights to the name from him for 1,000 German marks.

Lidl is part of the Schwarz Group, the fifth-largest retailer in the world with sales of $82.4 billion (2011).

The first Lidl discount store was opened in 1973, copying the Aldi concept. Schwarz rigorously removed merchandise that did not sell from the shelves, and cut costs by keeping the size of the retail outlets as small as possible. By 1977, the Lidl chain comprised 33 discount stores.

Since launching in the United Kingdom in September 1994, Lidl has grown consistently, and today has over 590 stores. While it is still a small player in the United Kingdom, with a grocery market share of less than 5%, its importance, along with that of continental, no-frills competitor Aldi is growing, with half of shoppers in the United Kingdom visiting Aldi or Lidl over Christmas.

Sven Seidel was appointed CEO of the company in March 2014 after the previous CEO Karl-Heinz Holland stepped down. Holland had served as chief executive since 2008 but left due to undisclosed "unbridgeable" differences over future strategy. Seidel stepped down from his position in February 2017 after Manager Magazin reported he had fallen out of favour with Klaus Gehrig, who has headed the Schwarz Group since 2004. Seidel was succeeded as CEO by Dane Jesper Hojer, previously head of Lidl's international buying operation.

In June 2015, the company announced it would establish a United States headquarters in Arlington, Virginia. United States stores are set to open first US 20 US stores summer of 2017 throughout VA, NC, and SC with a total of 100 stores by close of 2017. Lidl is focusing on locations in East Coast states between Pennsylvania and Georgia. However issues may arise due to the unrelated chain of stores also known as Lidl in the United States

Other services

In October 2009, Lidl Movies was launched in the United Kingdom, undercutting Tesco DVD Rental, which had previously been the United Kingdom's cheapest online rental service for DVDs. The service was powered by OutNow DVD Rental. OutNow went into liquidation in October 2011, taking Lidl Movies with it.

In January 2012, Lidl launched bakeries in their stores across Europe. They consist of a small baking area with a number of ovens, together with an area where bread and pastries, such as croissants, are displayed for sale.

In August 2013, Lidl UK also launched an online photo service, which prints photos and photo gifts at discounted prices.

Approach to retailing

Like fellow German supermarket Aldi, Lidl has a no-frills approach of displaying most of its products in their original delivery cartons, allowing the customers to take the product directly from the carton. When the carton is empty, it is simply replaced with a full one. Staffing is minimal, so that a profit can still be made even though the prices are low.

Together with Aldi, Lidl has carved out its own niche with this approach. In contrast to Aldi, there are generally more branded products on offer and while Lidl imports many low-priced gourmet foods from Europe, it also sources many local products from the country where the store is located. Like Aldi, Lidl has special weekly offers, and its stock of non-food items often changes with time. In contrast to Aldi, Lidl advertises extensively in its homeland of Germany.

The Lidl operation in the United Kingdom took a different approach than the head office, with focus on marketing and public relations, and providing employee benefits not required by law including paying the independently verified living wage and offering a staff discount. Upmarket products were introduced, especially in the lead up to Christmas. This required significant investment in marketing to produce dramatic sales growth, but had an effect on Lidl’s logistical operation and pressure on profits. Ronny Gottschlich, who ran the store chain in the United Kingdom for the six years to 2016, was responsible for this approach.

It led to friction with head office, due to the cost involved, and in September 2016, Gottschlich unexpectedly left, and was replaced by the Austrian sales and operations director, German national Christian Härtnagel. Lidl continued to have ambitious investment plans in the United Kingdom, potentially ultimately doubling the number of stores to 1,500. In the financial year of 2015, Lidl Great Britain's revenue from its stores of over 630 throughout Britain was £4.7 billion.

Criticism

Trade unions in Germany and other countries have repeatedly criticised Lidl for mistreatment of workers, breach of European directives on working time, and other abuses. These have been published in the Black Book on the Schwarz Retail Company published in Germany and now also available in English.

The Times notes that Lidl managers work excessive hours and are obliged to sign out of the Working Time Directive when starting with the company, while The Guardian reported other allegations in the United Kingdom and abroad. Hidden cameras were said to have been found in one store in Wasbek, north Germany, to monitor its workforce and make notes on employee behaviour, focusing on attempting to sack female workers who might become pregnant or to force staff at warehouses to do "piece-rate" work.

In July 2003, a judge in Savona, Italy, sentenced Lidl for antiunion policies, a crime in Italy. Lidl has been criticised in both the United Kingdom and Ireland for not allowing workers to join unions.

In November 2014, Lidl UK staff were forbidden to speak any language other than English, not even Welsh (a language used in Wales). The Welsh Language Society (Cymdeithas yr Iaith) said the policy was "appalling". Cymdeithas yr Iaith's chairman, Jamie Bevan, said that "since the Welsh language bill was passed four years ago, it is illegal to stop staff from speaking to customers in Welsh".

The 'English only' rule provoked protests from the Polish community in Kirkcaldy. The incident was broadly commented on in the press and the policy was ridiculed. Poles complained that they were discriminated against, as they could no longer be served in their native language. One of the Polish protesters, speaking with The Scotsman, said: "I cannot imagine an opposite situation, where a British worker is not allowed to speak to a British customer in the English language anywhere in Europe". Eventually, the policy was withdrawn.

Operations

Lidl stores are in each member state of the European Union, excluding Latvia and Estonia, and in Switzerland. Confirmation of expansion into the United States has been confirmed as of 15 February 2017 with plans for up to 100 stores on the country's East Coast. However issues may arise in North Carolina Virginia and South Carolina due to the unrelated chain of stores also called Lidl

Australian markets are pending; announcements expected early 2017.