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The secrets of Lidl's global success: a shipping firm, a coffee factory and an Irish boss
From inflatable pools to chainsaws, you never know what you'll find in the
Lidl
middle aisle. But few Irish shoppers know how
the chain
secures its flow of weekly special offers: with its own shipping company.
Tailwind Shipping operates 10 ships with an annual capacity of around 110,000 containers – and is expanding. It bought five additional container ships in May, while in June it contracted a Chinese firm to build five more.
Some 25 years after its launch in Ireland, where it has a 13.8 per cent retail market share, the company's own shipping line is a key part of its response to pandemic-era supply chain insecurities.
It doesn't stop there. After severe delivery difficulties five years ago, Lidl's Schwarz Group parent company has expanded its in-house production in a big way, with its own factories for coffee, ice cream, toilet paper and pasta.
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Lidl's production sister company had turnover of €4.6 billion last year, prompting one German newspaper to note wryly that Lidl's parent is Europe's largest noodle maker north of the Alps.
It's all a long way from 1973, when Ireland entered the European Economic Community (EEC) and Lidl began life as a shameless copycat of the original Albrecht Discount.
Some 52 years on – for now at least – Lidl has decided in its favour the battle for supremacy with its German arch-rival
Aldi
.
'The goal was always to be as good as Aldi, now Lidl has overtaken Aldi,' said Prof Carsten Kortum, a retail academic who worked as a Lidl manager for 17 years until 2010.
In global terms, Lidl is now the fourth-largest retailer by turnover, with a 43 per cent higher global turnover than Aldi, which is placed seven in the global ladder.
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Aldi may be the original German discounter but, a decade after the death of its last founding brother Karl Albrecht, the company is struggling to reinvent its offering and structures amid public family feuds.
Today's Lidl bears little resemblance to the company Carsten Kortum joined in 1997. Back then, it was still leaning into its Swabian-Protestant roots of puritan penny-pinching efficiency.
'We used pencils to write prices on card signs so we could reuse them, company cars were wrecks and, by the middle of the year, we usually ran out of office supplies,' laughs Kortum of DHBW, a state university founded in Baden-Württemberg that integrates academic studies with workplace training.
He attributes much of Lidl's success today to its successful expansion across Europe with largely autonomous local subsidiaries.
These new companies, from Wexford to Warsaw, tapped local suppliers and brought fresh management thinking into the inherently conservative German retailer. For Kortum, these ideas and innovations expanded, rather than undermined, Lidl HQ's focus on German efficiency.
'Lidl had to learn that success only comes if you give people freedom without too much control from the centre,' he says. 'Lidl's working language is still German but Lidl as a purely German retailer doesn't exist any more because it wouldn't work.'
Lidl's enigmatic billionaire owner Dieter Schwarz is Germany's richest man. Illustration: The Irish Times
Ireland has been a key part of its new success. Kenneth McGrath, the Lidl Ireland chief executive from 2009 to 2013 who taught recession-hit Ireland to embrace the German discounter, is now chief executive of the entire group.
'He was brought in to modernise the group, as someone who knows the US market and not just the German discounter world,' said Manfred Stockburger, chief correspondent of retail trade newspaper Lebensmittelzeitung. 'But he is a child of Lidl and he knows every screw you have to turn to change something.'
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Aldi is far ahead of Lidl in the US, has pushed into China and remains an unquestioned king of retail efficiency. Photographer: Chris J. Ratcliffe/ Bloomberg
While Lidl races to diversify, Aldi appears more interested in its core business as a retail price leader. But even here it is under attack.
On page seven of last Thursday's Bild tabloid, Aldi insisted it was the 'inventor of low prices'.
That claim came two pages after Lidl, in a cheeky full-page advertisement, presented a bag of fruit and vegetables it said was 21 per cent cheaper than Aldi.
Such robust advertising claims are familiar elsewhere in Europe but less so here. In the these retail giants' home turf, it seems the gloves are off.
No one in Germany is writing off Aldi just yet. Still family-owned and with huge capital piles, Aldi is far ahead of Lidl in the US, has pushed into China and remains an unquestioned king of retail efficiency.
But many see a worrying pattern: it is closing its online store and still testing a customer loyalty programme. Lidl's online store is booming and its customer loyalty app is now well established.
Helping to drive Lidl's reinvention is a deep-pocketed parent company, the Schwarz Group, a family-controlled and unlisted corporate giant with €154 billion in annual revenues last year.
As well as Lidl and the hypermarket chain Kaufland, the Schwarz Group has branched out into recycling (2024 turnover: €3.9 billion) and future technologies such as its Stackit cloud computing offering.
The pitch to companies: 'Data sovereign, crisis-proof, innovative and a Swabian original. The German cloud for all companies that want to remain independent.'
As part of this sovereignty strategy, the Schwarz group is co-funding a European alternative to the US-dominated field with the German-based Aleph Alpha AI, promising clients full control as well as EU data protection and security standards.
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Today, Lidl operates 12,000 stores in 31 countries. Photograph: Alex Segre/ UCG/ Universal Images Group via Getty Images
Lidl's enigmatic billionaire owner
Dieter Schwarz
is Germany's richest man. Forbes estimates his fortune at $49.8 billion, making him the world's 24th richest person. Born in Heilbronn in southwestern Germany in 1939, Schwarz operates his privately-held business interests through a series of foundations that limit transparency and filing requirements.
Married with two children, Schwarz guards his privacy and only a handful of images of him exist in the public domain.
The Schwarz empire has its corporate roots in the company Südfrüchte Großhandlung Lidl & Co. Schwarz's father Josef became a partner in 1930 and the firm was renamed Lidl & Schwarz KG.
Schwarz began working in the company as a buyer in 1962, opening his first store in 1968 and, five years later, his first discount retailer. To avoid jokes about Schwarzmarkt (black market), he secured the rights to the Lidl name and, by the time of his father's death in 1977, had 30 discount stores.
Today, Lidl operates 12,000 stores in 31 countries and its parent Schwarz Group has a total of 595,000 employees. It has 186 stores in Ireland, and last year employed 5,529 staff here. Some 1.5 million shoppers pass through the doors of its Irish shops each week, it says.
The Schwarz group has invested in childcare and sports streaming service Dyn, alongside the German football league, while Dieter Schwarz has backed what he hopes will be Europe's largest AI hub: the Innovation Park Artificial Intelligence in his hometown of Heilbronn.
'Schwarz has stepped away from day-to-day activities,' says one long-time trade observer, 'but having him still there as the patriarch remains hugely important for Lidl's success'.
