Schwarz Group surges relentlessly forward
The secretive Swabian parent of small- and big-box discounters Lidl and Kaufland now looks almost unstoppable on its route to world domination.
Meanwhile, the sober clique around elusive founder Dieter Schwarz at head office in Neckarsulm must be almost drunk with success. Exaggerating? Just look at the needle on the speedometer, dear reader, you'll find the latest figures exhilarating...
Bullish as ever, CEO Klaus Gehrig is determined to break through the €90bn sales mark this year. He is likely to succeed given his past record. In the business year to the end of February 2016, the group pushed net revenues by an impressive 8 per cent to €85.7bn, following a 7-per-cent rise the year before.
Depending on how one chooses to calculate food & non-food, national VAT rates and currencies, this would already make Schwarz Group the world's third-largest food retailer after US giants Walmart and Kroger, but before Aldi.
The major growth at Schwarz Group is essentially attributable to a continuous increase in capex which is set to jump this year from €5.2bn to €6.5bn. These vast sums are primarily funnelled into the building of new stores and the modernisation of existing ones.
For all the recent trading up and talk about being a supermarket, the big brass insist that Lidl will remain true to its roots. "We are discount and will stay discount," says Lidl boss Sven Seidel. "We want a modern shopping atmosphere, but we aren't moving away from a discount format."
Lidl plans to combat this with a considerable increase in special offers. Its new "Super 5" offer, for instance, puts five brands on offer for one whole week.
This is echoed by sister company Kaufland whose CEO Patrick Kaudewitz is also sharpening prices. Here the compact hypermarket operator can draw on both brands and its "K-Classic" own label programme.
So watch out the competition. In 2010, Lebensmittel Zeitung warned the trade that Schwarz Group would soon beat Tesco in the international sales ranking. It did, albeit with a lot of help from Tesco itself. One must now ask how long it will take before Lidl alone is as big as Carrefour? And perhaps Kroger should look for another acquisition?
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