Sales At Owner Of Lidl Hit €175bn

Schwarz Group, the German firm that owns the Lidl and Kaufland chains, saw its revenue increase 4.9% to €175.4bn during its financial year to 29 February 2025.

Despite the “tense global economic situation”, the group created approximately 20,000 new jobs after expanding its network of stores by around 300 to approximately 14,200.

Lidl, which has been the fastest-growing supermarket in the UK over the last year, increased its store revenue by 5.3% to €132.1bn. At Kaufland, revenue rose 2.9% to €35.2bn. The group’s total online revenue was unchanged at €1.7bn.

Meanwhile, the Schwarz Group’s manufacturing operation supplied goods worth around €4.6bn, primarily to Lidl and Kaufland stores, reflecting an increase of 9.5% compared with the previous year.

Despite the volatile economic situation, the group increased its investment programme by 7.5% to €8.6bn in the fiscal year, €3.3bn of which was spent in Germany. This funded store expansion, the development of its warehouse network, and more capacity in its European data centres.

For the current year, Schwarz Group stated that it would be investing around €9.6bn, €3.7bn of which will be in Germany.

“The successful 2024 fiscal year for the companies of Schwarz Group is primarily based on the tireless efforts and outstanding commitment of our employees. Together, we are shaping the future of our group and working on innovative solutions for the challenges of tomorrow,” said Gerd Chrzanowski, General Partner Schwarz Group.

“This has enabled us to grow sustainably together in all divisions, even in a time of global uncertainty, and to continue investing in Germany as an economic hub and in a digitally sovereign Europe.”

NamNews Implications:

• For context, Tesco’s global sales are €78bn. vs Schwarz Group €175.4bn. 
• i.e. Schwarz Group have the option of subsidising growth in local markets...
• And given Lidl has been the fastest-growing supermarket in the UK over the last year…
• …despite this being a time of unprecedented global uncertainty…
• …time to try finding ways of working with Lidl?

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Aldi Voted ‘Supermarket Of The Year’ For Wine

Aldi has beaten off competition from Waitrose and Co-op to be named ‘Supermarket of the Year’ for wine at this year’s People’s Choice Drink Awards, which took place earlier this week.

The discounter won the gold medal after receiving the greatest number of public votes, with its own brand Pierre Jaurant Côtes De Gascogne white wine also recognised within the ‘Mindful Drinking: Light and Easy’ category, taking home a silver.

Aldi noted that success has been fuelled by its customer-centric approach and responsiveness to consumer trends, developed in direct response to shopper demand.

Julie Ashfield, Chief Commercial Officer at Aldi UK, commented: “We’re thrilled to receive this award for our wine range, showcasing our commitment to offering exceptional value without sacrificing quality. Thank you to our customers for recognising our dedication.”

NamNews Implications:

• Stakeholders might benefit from reminding themselves of how far this ‘impertinent discounter’ has come…
• …on its 35-year UK journey
• ...in this sophisticated UK market
•  (With you or without you?)

Aldi & Lidl as problem solvers?

Unlike the redundant-space, 80/20 issues of the mults, Aldi & Lidl see online as a way of reducing car-park congestion and queueing instore.

In an interesting twist on accepted wisdom that discounters are simply trying to imitate the mults, Simon Johnstone of Kantar Retail gives details how discounters innovate to solve the problem of 'custom-bunching' resulting from Aldi's Special Buys on Thursdays and Sundays.

Developing online focused on lifestyle helped Aldi spread the traffic...

A number of other examples are given in the article, all examples of discounter-specific creativity.

Given that much discounter growth is at the expense of brands, branded NAMs that can find ways of working proactively with Aldi & Lidl have to gain an advantage over the competition.

In other words, the combination of NAM creativity and discounters' apparent willingness to innovate in terms of - their - problem solution suggests ways forward for NAMs that are prepared to put the fire-fighting on hold and trigger a brainstorming session with Aldi or Lidl...

Where are Aldi & Lidl headed, profitwise?

Thinking back to the relative simplicity of the 800 SKU model, based primarily on surrogate label with a handful of anchor brands, coupled with low staffing levels and small outlets, it was relatively easy to beat the multiples on price and yet make adequate profits.

At that time, it was cost-effective to approach the multiples’ suppliers of private label, and piggy-back on key lines, without picking up origination and compliance costs.

However, now that the discounters are extending their ranges via more creative product introductions, it follows that they will need more expertise in terms of more support staff in R&D, Tech, QC, apart from picking up the burden of the usual ‘9 out of 10’ failure rate…

Furthermore, as they continue to grow share, consumer media will highlight any product defects, thus triggering the ‘tell a friend’ mechanism – 'if I like it, I tell one friend, disappoint me and I tell 10 friends…'

All adding further to the compliance overhead.

Given the fact that the mults continue to keep pressure on shelf prices, it follows that the discounters’ additional costs will dilute bottom line performance. Perhaps this will become an opportunity for an entrepreneur to re-discover the original 'hard discount' formula, and launch a competitor to Aldi & Lidl?

Leaving us all to ponder on where the legal responsibility for damage to consumers can be laid: retailer or O/L manufacturer?

Welcome to the high-cost world of ‘normal’ retail…

What if Aldi & Lidl grow at 10% in flatline?

Apart from politicians' assurances re post election growth, just suppose that we are into flatline growth for the next five years, at least...

Also given Aldi & Lidl combined share of 9% (see yesterday's NamNews) and a conservative (!) estimate of 10% growth vs major mults at 0%, the two discounters will reach 15% share by 2020...

The resulting issue for suppliers has to be, barring radical changes in discounter ranging policy, most of this growth will be via surrogate branding, at the expense of national brands...

Branded suppliers have a choice:

• Either persuade the discounters to stock more brands...
• Or find a way to optimise private label, and seek a fair share of the discounter action

...whilst the major mults mount the deepest price cuts ever, possibly fuelled by back to front margin moves...

Lidl’s giant step for UK discounting?

                                                                                                                              pic: Liverpool Echo

According to the Liverpool Echo, Lidl are to take over Liverpool's historic Lewis's Building, once one of the city’s landmark stores.

But having been empty for several years, it is now in line for a makeover by the chain. The ground floor will be taken up by Lidl, but much of the rest of it is still being developed as part of the Central Village apartments complex.

If Lidl are truly planning a move to large-space retailing, the issue will be whether a full-range offering, complete with overheads, will allow the discounter to operate the same low-cost business model, or will it have to compromise its pricing advantage over major mults?
(or is this the first move in opening a Kaufland Hypermarket in the UK by Lidl's sister company?) 

Watch this space, literally…

A one-off approach to Aldi and Lidl?

Traditional NAMs and their marketing colleagues have been reared in a culture of continuity. In other words, we spent years building up relationships with consumers and customers, on the premise that a strategic approach to brand optimisation produced a predictable and acceptable return on investment, growing a level of brand equity that would carry us over the troughs in demand.

This all changed with the 2007 global financial crisis and the emergence of the savvy consumer, gradually morphing into the savvy buyer, each unwilling to outsource their purchase decision-making to marketers and retailers, in a continuous search for demonstrable value-for-money, for each purchase…

The results are evident in the successes of Aldi and Lidl at the expense of Tesco and the other mults…

We are now as good as yesterday’s sales results, everywhere…

Any supplier attempting to build up a continuous relationship with the discounters, soon realises that life in this channel consists of a series of one-off initiatives, each bearing little or no relationship with previous moves made with the retailer.

In fact, thinking about it, the same now holds true for dealings with the major multiples (the over-rider agreement is now seen as ineffectual and is fast becoming increasingly dis-credited as the row about commercial income escalates…).

And perhaps this is how it should be in business..

If this is the case, perhaps all branded manufacturers should target Aldi & Lidl with one-off experiments to help their colleagues become accustomed to discontinuity, developing skills that can then be applied, hopefully with even more effect, via their traditional customers, making each initiative ‘the best ever’, as if our livelihood depended upon it…as it probably does…

Lidl in it for brands as Schwarz Group heads to No.1 grocery retailer in western Europe by 2018?

With 2013 sales of €48.9bn compared with Carrefour at €76.7bn and Tesco at €73.1bn,  Lidl's faster rate of growth combined with Aldi means discount channel sales are expected to have raced up to €211bn against the giant stores’ €385bn on a CAGR of 4% by 2018, according to a new report on the grocery channel by Planet Retail.

Schwarz Group, which also owns the store chains Handelshof and hypermarket Kaufland, has operated since the 1930's. 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 the year 1977, the Lidl chain comprised 33 discount stores and latest figures show that it currently has 9,800 outlets...

The threat for branded suppliers
Whilst Lidl carry more brands than Aldi, the issue still remains that in a flatline market with any growth coming at the expense of competition, Lidl's growth rate represents a threat to branded products.

However, given its high use of surrogate labels, and with most branded suppliers focused on branded competition, Lidl and Aldi have thus managed to stay beneath traditional radar, in most cases.

NAMs now need to catch up by factoring Lidl & Aldi into their trade strategies, as per our earlier KamBlog

(Alternatively, why not await their discovery that national brands under pressure represent an even greater opportunity than surrogate labels...?)

*More Lidl details here

Factoring Aldi into your trade strategies

Despite its rate of growth and probably because of the fact that there is little national brand potential in Aldi, branded goods suppliers may not have a way of giving Aldi the 'status' it deserves within trade strategies...

This may be because most companies focus planning resource on finding ways of growing the business, especially in flat-line times... They may also be tasked on establishing reasons for falling sales, but this emphasis may fail to see beyond corporate rear-protection.

Instead, why not consider devoting one of the planners (or one day a week for smaller companies) to focus on sources of business loss and and their progression, in terms of increasing threat in the future?

In other words, treat significant sources of loss with the same emphasis as sources of growth. This would then provide a way of raising Aldi's profile within the company to a level commensurate with its importance in the market...

Or perhaps it is preferable to wait until it is responsible for 10% loss of sales?