Schwarz (Lidl and Kaufland)

Sector: Food and mass retailers Countries of operation: Lidl: 32 countries (including primary markets in Bulgaria, the Czech Republic, Germany, the UK and the US); Kaufland: eight countries (including primary markets in Bulgaria, the Czech Republic and Germany) Key product categories: Food and beverages, health and beauty, home and garden Annual Metrics [caption id="attachment_138936" align="aligncenter" width="700"] Fiscal year ends on February 28 or 29 of the same calendar year.[/caption]   Summary Schwarz is a privately-owned Germany-based retailer that operates discount supermarket chain Lidl and discount hypermarket chain Kaufland. The company was founded in 1933 and is headquartered in Neckarsulm, Baden-Württemberg. As of October 2021, Lidl operates more than 11,200 stores in 32 countries across Europe and the US, while Kaufland operates 1,300 stores in eight European countries: Bulgaria, Croatia, the Czech Republic, Germany, Poland, the Republic of Moldova, Romania and Slovakia. Store Count in Selected Major Markets, as of March 2021

	Lidl	Kaufland
Germany	3,200	680
Czech Republic	260	130
Bulgaria	104	60
UK	800	N/A
US	125	N/A

  Company Analysis Coresight Research insight on Lidl: Lidl is a leader in the discount sector. The company pioneered the softening of the “hard discount” model, which both Aldi Süd and Aldi Nord have followed. This softening involves adding more major brands to its product assortment, introducing premium lines and selectively flexing its formats and offerings for different markets. This has resulted in a strong performance internationally—even if Lidl’s US expansion has been haphazard. However, grocery e-commerce remains a weak spot for Lidl. The high cost of picking, packing and delivering fresh foods makes the service incompatible with the company’s business model, which is reliant on low prices and minimal service. Lidl has, nevertheless, incrementally moved into e-commerce from 2016 onward, largely in nonfood categories, such as home and garden and sports equipment, stopping short of launching a full-blown online grocery delivery service. Lidl has launched e-commerce initiatives at selected regions but we have yet to see how—if at all—a no-frills discount retailer can square with a full, cost-intensive e-commerce service.

Tailwinds	Headwinds
A post-crisis trading decline may support growth at discount formats. Lidl US, under the leadership of Johannes Fieber, appears to be getting back on track after facing initial hiccups in the country. The company’s track record of flexing formats for international markets is an underlying strength.	A greater focus on store expansion and price cuts is weighing on its margins. The company is underexposed to high-growth e-commerce. There is heightened competition from rival discounters, such as Aldi and Grocery Outlet in the US.

  Strategy (Lidl) Lidl’s strategy aims to provide customers with a hassle-free shopping experience, offering quality products at low prices. We identify the following key areas: 1. Curate product assortment

• Offer curated assortments in every product category to make shopping less complex.
• Change product assortment on a specific day (on Wednesdays in the US and on Thursdays and Sundays in the UK), including gardening supplies, home decor, kitchen gadgets, power tools, small appliances and toys.

2. Save costs and grow efficiency

• Focus on private-label assortment to keep costs low. Around 80% of Lidl US stock is made up of private-label brands, for example.
• Source locally by partnering with domestic producers where possible. Lidl UK sources approximately two-thirds of products from British suppliers, for example.
• Increase supply chain efficiency. For example, use shelf-ready packaging in stores where possible.

Company Developments (Lidl)

Date	Development
November 26, 2021	Lidl UK announces that its current CEO Christian Härtnagel will become CEO of Lidl Germany, effective March 1, 2022. Lidl UK’s Deputy CEO Ryan McDonnell has been appointed as the new CEO of the UK unit, effective February 1, 2022.
October 21, 2021	Schwarz Group appoints Gerd Chrzanowski as CEO, effective December 1, 2021.
August 24, 2021	Lidl UK announces a trial of Eco-Score labelling for over 50 of its private-label products at 105 Scottish stores. Eco-Score grades products on their sustainability credentials, such as production methods and packaging, helping customers better understand a product’s environmental impact.
July 6, 2021	Schwarz Group announces that Klaus Gehrig has stepped down as CEO. Dieter Schwarz will assume the role until Gerd Chrzanowski, currently CEO of Lidl’s international business, takes over the position.
March 30, 2021	Lidl US partners with the non-profit organization Healthy Kids Running Series to become an official East Coast sponsor in the 2021 spring and fall racing seasons.
December 4, 2020	Lidl UK announces that it will refund over £100 million in business rates relief it received from the UK Government and the devolved administrations in response to the pandemic.
August 25, 2020	Lidl US announces plans to add 50 new stores by the end of 2021, bringing its store count in the country above 150.
May 27, 2020	Lidl US marks the opening of its 100th store, in Suwanee, Georgia.
May 26, 2020	Lidl Poland trials a click-and-collect service at select stores in the country.
March 31, 2020	Lidl US opens a new distribution center in Cecil County, Maryland, which will act as a cornerstone for Lidl’s regional store network, supplying products to stores in five US states.
March 19, 2020	Lidl UK announces plans to recruit for 2,500 jobs in its stores, providing temporary employment paid at the Living Wage Foundation’s recommended rate for those seeking work amid the pandemic.
February 20, 2020	Lidl UK reaches its 800th UK store milestone, after opening 50 new stores in the past 12 months.
October 18, 2019	Lidl Belgium announces plans to test an in-store pickup service for online orders in its Destelbergen outlet. The service will enable customers to pick up orders placed online for a fee of The company plans to extend the trial to its Saint-Denis-Westrem store from November 2019.
October 16, 2019	Lidl UK announces plans to invest ($21.1 billion) in its British supply chain over the next five years. This investment will enable and support its British suppliers to expand their businesses. The company also announces its commitment to increase sales of British-sourced fresh meat, poultry and fresh produce by over 10% over the next 12 months.
October 15, 2019	Lidl US announces plans to open a second wave of stores across Long Island by summer 2020. The locations are East Meadow, Lake Grove, Oakdale, Patchogue. This will bring the total number of Lidl stores in the region to eight, including stores in Babylon, Center Moriches, Huntington and Plainview, which will open in early 2020.
October 8, 2019	Lidl UK advertises for a new digital project manager who will be responsible for “driving online sales,” leading to speculation that it is looking to launch a new online grocery service.
October 3, 2019	Lidl launches an online service in Slovakia. The company plans to sell consumer goods and is not currently planning to sell food online.

  Company Developments (Kaufland)

Date	Development
March 26, 2021	Kaufland Germany announces that it is expanding Nutri-Score labelling to all its private-label brands by 2023.
February 25, 2021	Kaufland Poland opens a new supermarket in Zielona Góra that features new attractions such as self-service checkouts, digital information screens and deposit lockers.
January 21, 2021	Kaufland Slovakia announces ambitious sustainability goals in 2021, including reducing plastic consumption, expanding its healthy foods product range and reducing sugar, salt and fat in its private-label food items.
November 16, 2020	Kaufland Romania announces that it will offer its employees gift vouchers worth a total of €1 million.
June 18, 2020	Kaufland Germany lowers prices across all of its products from July to reflect the German government’s announced reduction in VAT as part of its economic stimulus package.
June 18, 2020	Kaufland Czech Republic partners with Kosik Online Shop to offer home delivery for fresh foods.
May 27, 2020	Kaufland Poland starts a click-and-collect pilot project in three P.
April 29, 2020	Kaufland Bulgaria partners with over 30 domestic producers to upgrade its private-label portfolio.
January 22, 2020	Kaufland announces plans to withdraw from the Australian market to focus on its core European markets.

  Management Team

• Gerd Chrzanowski—CEO
• Andreas Strähle—Managing Director of Schwarz KG
• Christian Müller—Chief Information Officer of Schwarz IT
• Melanie Köhler—Chairman of Schwarz Dienstleistungen

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Source: Company reports