Lidl and Hard Discounter Culture

Former CEO, Lidl UK

Why is this interview interesting?

  • The central aspects of the hard discounter business model that distinguishes it from the set up of mainstream retailers (competitive positioning, pricing, format & real estate strategy, operating cost structure & labour productivity, supply chain & logistics)
  • The principles of organizational culture by which a hard discounter like Lidl is run and how these differ from mainstream retailers (incentives and company values, talent acquisition and retention)
  • The leadership and cultural values at hard discounters that contribute to discounter success that are applicable to larger incumbent retailers

Executive Bio

Ronny Gottschlich

Former CEO, Lidl UK

Ronny spent most of his career with a discount grocery food retailer Lidl, where he worked in various positions from 2000 to 2016. This culminated in the role of CEO for Lidl’s UK business from 2010 to 2016. Lidi’s UK business grew revenue from GBP 2.5bn to over GBP 5bn under Ronny’s leadership, doubling its market share in under five years. He now runs his own retail consultancy business Heunadel. Read more

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Interview Transcript

A very good morning to you Ronny, it’s a delight to have you with us. Before we dive into the salient aspects of the discounter business model, could you tell us a little about your experience over the last few years in food retail, with a couple of highlights?

Good morning Will and thanks for having me, and good morning or whatever the time may be to the listeners. I’ve spent most of my career with a discount grocery food retailer called Lidl. For the last 16 years, I’ve been working with that German giant. When I joined them in 2000, it was a known business model in Germany and in quite a few parts of Europe I would say, but it was not so well known in the UK or not so established. I worked through the ranks. This is very typical for the 3 or 4 discounters; they’re trying to grow their talent from within rather than bringing in many people from the external world. They’re trying to grow their people by making them appreciate how tough the working environment is in their stores: work as an area manager become a regional director.

At some point, I was lucky enough to run the UK, as CEO, from 2010 until the end of 2016. And in that time, we managed to grow that business, mainly through like-for-like growth, from about £2.5 Billion to around about £5 Billion, which was phenomenal at the time and I’m sure caused quite a few of the incumbents a few headaches.

That’s north of 14% growth per annum.

It was huge growth with all the associated problems as you can imagine: finding staff quickly enough, not having enough warehouse space. From an external point of view, it sounds like a phenomenal story, and trust me, the appetite internally would have been even bigger. But, sometimes, even though you’re working for a very big corporate business, it felt like a start-up business, with all the headaches associated. And maybe we could have squeezed out a few more percentage points market share. We just couldn’t find enough staff, we just couldn’t get enough warehouse space built quickly enough and a few other things held us back from growing faster.

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