FROM THE DESK OF DEBORAH WEINSWIG

CEO of Lidl-Owner Schwarz Group Departs After 17 Years

One of retail’s most powerful CEOs—Klaus Gehrig of Germany’s Schwarz Group, the owner of Lidl—abruptly resigned this week, handing the reigns back (on an interim basis) to the company’s 81-year-old owner Dieter Schwarz. CEO since 2004, Gehrig has taken Schwarz Group through a highly successful phase of global expansion.

Dieter Schwarz and Gehrig have built a tremendously successful global business, giving regional companies the freedom to soften and flex the “hard discount” model to support growth while rigorously maintaining and honing the underlying efficiencies—in supply chain, ranging and merchandising—that underpin its competitive advantage in price. At Lidl, shoppers worldwide have seen a selective, incremental softening of the traditional hard-discount format and an evolution of retail formats and propositions to cater to different markets and changing demands. That adaptation has included opening both larger supermarkets and new convenience-store formats, dipping its toes into e-commerce, and introducing more SKUs in selected markets.

This flexibility has been particularly evident in the US, where there has also been a recent change in management. In April, Lidl US announced that Michal Lagunionek, formerly head of the company’s Poland division, would replace Johannes Fieber as CEO from June. Lagunionek is Lidl US’s fourth CEO since the retailer opened its first stores in 2013. Lidl US has adapted its store formats, acquired a small chain (Best Market) and is now opening new stores at a steady pace: As of July 7, Lidl US has 158 stores, up 55% from July 2020.

Worldwide, we expect Schwarz Group’s winning strategy of adaptability and flexibility to be maintained. One issue that the company and its subsidiaries are still to fully grapple with is e-commerce, and whether no-frills, slim-margin discounting can be squared with the added costs associated with online grocery retail. We see the Covid-19 crisis as having brought about a permanent change in shopping habits among many consumers. For now, the distinct channels of store-only discounters and e-commerce seem able to coexist—but, in some markets, there is likely to come a point when shoppers’ expectation of digital conveniences begins to threaten sustained growth in discount formats.

What drove Gehrig’s departure after such a successful period? According to German trade publication Manager Magazin, citing internal company communications, Gehrig was unable to come to an agreement with Schwarz “on a matter that was very important to him,” which was reported to be related to personnel. Gerd Chrzanowski, current CEO of Lidl, is said to be the designated successor to Gehrig.

The Schwarz Group operates more than 12,500 stores across the Lidl and Kaufland banners. Since 2004, when Gehrig was appointed CEO of Schwarz, Lidl has entered the US and smaller markets including Bulgaria, Romania and Serbia, and entrenched its position in markets such as the UK. Kaufland, the discount-hypermarket sister chain of Lidl, has moved into Australia (and out again).

As of 2020, Schwarz is the world’s eighth-largest retailer by revenue, according to Euromonitor International (whose ranking includes marketplace companies such as Alibaba). In the year ended February 2020 (latest reported), the company announced that its total worldwide sales rose by 8.6% to €113.3 billion ($133.6 billion at the exchange rate at the time of writing).

• Keep an eye out for our forthcoming report on US grocery discounters, which covers Aldi, Lidl and Grocery Outlet.

US RETAIL AND TECH HEADLINES

Brookfield Properties Collaborates with Aria Networks To Offer AR-Powered Consumer Experiences

(July 6) Yahoo.com

• Brookfield Properties has partnered with Aria Networks, an integrated media technology company, to offer augmented reality (AR)-based immersive experiences at more than 100 shopping centers in 42 US states. Through their phones, customers can interact digitally with friends and family, and access in-store brand experiences, touch-free transactions and a virtual mall directory.   
• Under the terms of the partnership, Brookfield has granted Aria Networks exclusive virtual advertising rights in the common spaces of its malls nationwide. Aria Networks will provide endemic and non-endemic advertising, powered by its ARIA 360° AR platform.

Gopuff Opens Fourth Micro-Fulfillment Center in Seattle 

(July 6) BizJournals.com

• Grocery delivery company Gopuff has opened its fourth micro-fulfillment center in Columbia City, Seattle, following the opening of its West Woodland fulfillment center in April 2021.
• Gopuff now covers the majority of the Seattle area and advertises 30-minute home delivery. The company holds its own inventory of more than 2,500 products in its warehouse facilities, including cleaning supplies, groceries and over-the-counter medications.

Jeff Bezos Steps Down from Amazon CEO role

(July 6) CBSNews.com

• Jeff Bezos has officially stepped down as CEO of Amazon, effective July 5—precisely 27 years after he founded the company. Bezos’ decision to resign from the role was announced in February 2021.
• Andy Jassy, former head of Amazon’s cloud computing division Amazon Web Services, has succeeded Bezos, who will take up the role of Executive Chairman at Amazon. He will focus on developing new products and initiatives in this capacity.

Kroger Collaborates with Knapp To Automate and Expand Ohio Distribution Center

(July 6) Company press release

• • Kroger has partnered with warehouse logistics technology company Knapp to enhance the capacity of its Great Lakes distribution center in Ohio. The company will implement automated storage, case order picking and palletizing. Kroger noted that the upgrades will improve the distribution center’s efficiency and double its handling capacity.
• • The renovation is set to complete this summer and will expand the center by 130,000 square feet. The center first opened in 2003 and serves 115 stores in central and northwest Ohio, the Ohio Valley and southwest Michigan.

Walmart Hires Chris Cracchiolo To Lead Walmart+ Membership Program

(July 6) ProgressiveGrocer.com

• Walmart has hired Chris Cracchiolo to lead Walmart+, the retailer’s membership program. Former Senior Executive at American Express, Cracchiolo will take over the role as Senior Vice President and General Manager of Walmart+ from July 12, succeeding David Echegoyen, who left Walmart in June 2021 to join a private equity firm.
• The membership program first launched in September 2020 and is Walmart’s answer to Amazon’s Prime, offering subscribers free unlimited delivery, fuel discounts and other perks.

EUROPE RETAIL AND TECH HEADLINES

Harvey Nichols Launches Its First Children’s Clothing Range

(July 6) RetailGazette.co.uk

• British luxury department store chain Harvey Nichols will start selling items in its first children’s clothing collection from its Leeds store from late July.
• The children’s range, which is also available online, comprises 700 different styles and 25 brands, including Balmain, Chloé, Givenchy, Stella McCartney and Zimmermann.

Lenta Receives Approval for Billa Russia Takeover

(July 7) EsmMagazine.com

• Russian grocery chain Lenta has received approval from the Federal Antimonopoly Service (FAS), a national regulatory body, to acquire supermarket chain Billa Russia. The transaction is set to complete on August 2, 2021, and will see Lenta acquire 161 supermarkets and Billa Russia’s supply chain infrastructure. The transaction is expected to be completed on August 2, 2021.
• The move follows Lenta’s entry into an agreement to acquire Russian supermarket chain Semya Group for €27 million ($32 million) in June 2021.

Lidl Opens Sustainable Supermarket in the Netherlands

(July 7) RetailDetail.eu

• German discount retailer chain Lidl has opened an energy- and CO2-neutral supermarket in Almere, the Netherlands.
• The store is powered entirely by solar panels located on its roof and surrounding park, and was constructed using sustainable and recycled materials. Customers can charge their cars or electric bicycles for free in its car park and the store is supplied by an electric truck.

Tesco Expands Partnership with Loop on Refill Services in Physical Stores

(July 6) ChargedRetail.co.uk

• Tesco has expanded its partnership with refill grocer Loop in order to offer the service in its physical stores later this year.
• Currently available only online, the service enables customers to order household brands in refillable, reusable containers made of stainless steel, aluminum, glass and BPA-free plastics.

X5 Announces Launch of Online Media Platform for Food and Related Content

(July 6) EsmMagazine.com

• Russian grocery retailer X5 has launched a new online media platform, “food.ru,” focused on food and related content, including cooking classes, healthy eating habits and recipes.
• Through the new platform, the food retailer intends to expand its customer reach, drive traffic to its core business and generate sales. In addition to the “food.ru” website, X5 has launched a mobile app and social media accounts with the same branding.

ASIA RETAIL AND TECH HEADLINES

Flipkart Partners with PhonePe To Digitalize Cash-On-Delivery Payments

(July 6) IndiaRetailing.com

• Walmart-owned Indian e-commerce platform Flipkart has partnered with Indian digital payment platform PhonePe to digitalize its cash-on-delivery payment service. Under the partnership, PhonePe’s QR code service will enable Flipkart customers to pay digitally through any unified payment interface (UPI) app at the time of delivery.
• Through the partnership, Flipkart is seeking to drive contactless payments and minimize the use of cash in payments made on delivery of items.

HSV Group Receives New Investment from Mekong Capital

(July 5) DealStreetAsia.com

• Vietnamese private equity firm Mekong Capital has invested in HSV Group, the country’s largest beauty retailer. Although the transaction value was not disclosed, Mekong Capital stated in January 2021 that its Mekong Enterprise Fund IV (MEF IV) typically makes investments of $10–35 million.
• The investment is aimed at expanding HSV Group’s brand range and accelerating store network growth. As of June 30, 2021, its store count stands at 105.

Li & Fung Launches Private Label Brands for JD.com

(July 7) Company press release

• Hong Kong-based retail supply chain and logistics company Li & Fung has launched a multi-category collection of private-label products for online marketplace JD.com under the brands “Made by JD,” “Best Home” and “Jingmeng.”
• In July 2020, JD invested in Li & Fung with a view to collaborating on end-to-end digital supply chain management services for the online marketplace’s private brand initiatives, including the consumer-to-manufacturer (C2M) business model that is gaining momentum in Mainland China.

Suning.com Receives Billion-Dollar Bailout Backed by Alibaba and Government Entities

(July 6) Bloomberg.com

• Chinese retailer Suning.com has received a bailout worth ¥8.8 billion ($1.36 billion) from a consortium backed by Alibaba and Chinese government bodies, including the Jiangsu provincial government and the Nanjing state asset management committee.
• The bailout will remove Zhang Jindong, founder of Suning.com, as a controlling stakeholder. According to the terms of the deal, the consortium will acquire a 16.96% stake in Suning.com.

Zomato Receives SEBI’s Approval for IPO

(July 5) FinancialExpress.com

• Indian online food delivery platform Zomato has received approval from the Securities and Exchange Board of India (SEBI)—the country’s national securities and commodity regulator—to raise INR 82.5 billion ($1.1 billion) via IPO. The company is set to launch on the Indian capital market on July 19.
• In February 2021, Zomato had raised INR 18 billion ($250 million) in funding from US-based investment firms Tiger Global and Kora, valuing the food delivery platform at INR 388.8 billion ($5.4 billion).