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Anonymous

Former CEO, Lidl UK 

Lidl: Hard Discounter Business Models

{audio:0:00:08}Paul, could you help us set the scene for our conversation today with a sense of Lidl's history in Ireland and the market it entered? Could you include a feel for the market structure and the existing competitive landscape, which Lidl found itself in as it was opening?

{audio:0:00:30} Lidl entered the Irish market in 1999, in a place called Cookstown. That was in the heart of Northern Ireland, right bang in the middle. If you were to imagine Northern Ireland as a circle, Cookstown would be in the very middle. That was serviced from Scotland and it was very much dipping its toes into the water. The market back then would have been unaware of Lidl. It was an unheard-of German discounter. People would have believed all the products, whether that be the milk, the meat or the tins of beans, all came from Germany. A certain amount of that was true, but also a large amount of that wasn't true. The perception would have been very much of a discounter, offering rock bottom prices, rock bottom quality and if you were spotted in a Lidl car park then you might be having financial difficulty. It certainly wasn't a cool or hip place to be seen.

{audio:0:01:35} Then in the year 2000, they entered the Irish market and it would have been a period of rapid expansion, get a site, get four walls put up, get some pallets in and start trading. The evolution of the model and the shopping proposition has very much changed in those 20 years; it is night and day. In terms of the core model, that is unchanged. There have been little tweaks to it here but the absolute fundamentals of cleanliness, friendliness, availability and good customer service have not changed. They're in a position now where they have 200 stores going from strength to strength as far as market share is concerned, so it absolutely is working. When you consider that initial customer perception of the brand back then, to be where they are now 20 years later, is pretty good going by anyone's estimation.

{audio:0:02:41} It is pretty serious growth. How well do you feel the incumbents understood the model and what they were really up against?

{audio:0:02:53} The internal employee would have understood the model because, in terms of our conversation here today and the examples I can cite and stories I can tell on the explanation behind that, we are talking about something that is exceptionally simple. I remember in the interview I had to join the company, it was made clear to me in the following terms: Do you know what Paul, you don't need a degree in nuclear science to work here, you just need an exceptional attitude and be willing to work hard and add value every single day you are here. In terms of understanding the model of, not necessarily as simple as, pile it high and sell it cheap, people did understand what they were trying to achieve in those days.

{audio:0:03:49} How would you account for Lidl's impressive growth – going from a near zero in 2000 – to 12.7 market share today?

{audio:0:04:14} The major breakthrough was in 2010, when Lidl introduced a marketing campaign based around Northern Ireland called “Proud to Serve You”. What that campaign essentially did, was communicate to the customer a bit more detail about who Lidl was, what they stood for and what they could offer. A large part of the repeat customer, in the early days, stemmed from people going into Lidl out of curiosity. It was more of a, what's this all about, as opposed to, I'm going in for the Bellarom chocolate or the Strathvale meat. What “Proud to Serve You” achieved for the Northern Irish consumer was the understanding that Lidl had been around for over a decade by that time.

{audio:0:05:13} We sourced our milk from Omagh and that milk was sourced from Omagh from day one, not later. We bought beef from Northern Ireland, it's Northern Irish beef, and then they coupled that with some taste tests and various awards that were won. All of a sudden, you started going from a reasonably successful model and business, to people now having huge amounts of credibility with it and understanding that this was local food made by local people. The wording of quality was also important and carefully worded, so that whatever the item might be, sparkling water, olive oil, chocolate or cereal, it was never pitched as, this is the best cereal that you can buy in the United Kingdom. What it did communicate very well, however, was that this cereal, or whatever the item was, was as good as, if not better than its comparative.

{audio:0:06:19} Whenever you compare the price of like for like, whether that be Kellogg's cereal versus own brand cereal, these were coming out as well as Kellogg's but at a fraction of the price, so that really ramped it up a gear. If I was to pinpoint one particular game changer in the Northern Irish market, that would be it. The difference between the Northern and Southern Irish markets was the absence of ALDI as a competitor. In the South, there is more of an understanding about the German discounter, due to the similarities. It is not exactly the same but there are definitely similarities. ALDI have bent on a few things whereas Lidl have absolutely stuck to what they are about.

{audio:0:07:05} Could you go into more detail about what the two hard discounters are doing differently in Ireland?

{audio:0:07:13} ALDI set out that this is all our own brands, so there was no going in for Cadbury's chocolate or Kellogg's cereal. Lidl said, we're going to offer you two types of cornflakes, Kellogg's or our own Crownfield brand. It is your choice to pay £2 or £2.50 for the branded one or £1 for the unbranded one. We are not going to offer you 17 different types of cornflakes. We will offer you our own brand and an alternative, and that brand will be as cheap or cheaper than Tesco or ASDA. The own brand will be so eye-wateringly cheap that you are not going to be able to ignore it, even from a trying perspective. Once you try something and realize, you understand and become a fan or hero, and you will not move away.

{audio:0:08:16} What percentage of the Lidl assortment, in an average store, was own label versus branded?

{audio:0:08:36} It is very difficult to give a percentage on that because it is a changing product group. Some items are discontinued and some are coming in, so every day or every week that changes, but probably around 10% to 15% as a rough guide. When you look at the shelf. you have your top shelf, middle shelf and bottom shelf. Sometimes there are four or five shelves, but the own brand will always be at eye level, first in flow. The brand will be on a shelf but always hidden. It might even be on the floor. I remember Nescafe coffee never ever made it off ankle height, but there's a reason for that, that was always to promote the own brand and give it the best possible chance.

{audio:0:09:36} What was ALDI's ratio of branded to unbranded?

{audio:0:09:43} Once upon a time, it was zero but now that is changing. It is continually increasing, so yes, that is an example of how Lidl has absolutely stuck to what they believed in and continue to improve. 20 years ago, there was no bakery, but today there is near enough one in every single store. That was a phenomenon in itself from how labor intensive it was going to be to have an in-store bakery. If you imagine an item of non-food at £25.99 or a croissant at 39p, which needs to be handled several times, it is very labor intensive. Managing and developing that to become a profitable string to the bow was difficult, but it was achieved by taking little steps. First by trimming hours, then minutes, then seconds, it becomes the personification of a well-oiled machine operating like clockwork, with as close to zero waste as possible.

{audio:0:10:55} In terms of the share of international sourcing versus local sourcing, how did that evolve over the period you were at the business?

{audio:0:11:20} There are certain types of fruit and veg that cannot be grown in an Irish climate, so that cannot be sourced locally and no one can claim to change that. When you move into chiller items such as meat, poultry and bread, the majority is Irish-bought. If we take the chiller as an example, long-life cheese and yogurt will be internationally sourced. The French are the best at cheese making so we source from them. When it comes to the bakery, milk, ham and cooked meats, then there always was and still is, a big emphasis on Irish sourcing. All our meat and poultry is sourced from Northern Ireland, so is our milk, and we use a well-known brand to make our bread.

{audio:0:12:39} When it comes to an ambient product group such as a long-life tin of beans, Lidl has a phenomenal amount of buying power. You are not going out and saying, hi, we are a small business in Northern Ireland with 38 stores and we want to stock tins of beans, we will take a pallet per week. You are saying, we have 10,000 stores that will be selling 20 to 40 cases per week. Suddenly you are filling containers with one item and the economies of scale you can benefit from are astronomical. It is a very fine balance between consumer demands, sourcing local meat and poultry, and bread from the bakery down the road. When it comes to a standard product which was never sourced locally, whether that be biscuits or coffee, then it is all about being price sensitive and being able to provide fantastic quality at the cheapest price. That is where you need to have big buying power behind you.

{audio:0:13:53} EBITDA margins in the early 90s were double digit in the UK, when ALDI first entered the country. They have since come down dramatically as the discounter's market share has risen. There has been a subsequent massive re-basing of pricing in mainland UK over the last 30 years, across the industry. How has that played out in Ireland?

{audio:0:14:34} Certain items have an exceptionally high margin, such as non-food items, own brand confectionery, perishables and wine. Where the margin does get hurt is on things like fruit and veg because, ultimately, it does not matter what price ASDA and Tesco are selling bananas at. Lidl has to be cheaper, even if that means running at a loss. There is no decision such as, milk is 99p in Tesco, how much should we sell it for? It has to be less than 99p. There is no big science behind that. When it comes to own brand and non-foods then yes, there is a bit more science to it. The fresh offering cannot be that you can get an own brand loaf of bread at ASDA for 19p and Lidl's own brand white loaf is 25p; that cannot happen, full stop.

{audio:0:15:48} How much cheaper would it be to do my average shop at Lidl versus Tesco or Super?

{audio:0:16:14} Our deal is, seeing is believing. I remember an example where there was a trolley filled with goods and it was rolled to the front of the shop. There was a large Lidl receipt printed out and placed on top of it and there was a Tesco or ASDA one beside it. The example I remember was a full shop costing £136 Pounds in Tesco, for a fair-sized trolley, and the equivalent in Lidl was £89. That is a massive difference, especially when you multiply that out, per week, for the consumer.

{audio:0:17:06} On certain categories you are pricing at, if not marginally lower; the fresh category, for example. For own brand, how big can the pricing discounts get and how would Lidl approach that?

{audio:0:17:24} I was in a Tesco's store last night and Frosties was £2.99 and the like-for-like equivalent own brand – and people might argue it is not like-for-like – was £1.14 in Lidl. That is quite a strange price point; it is not 99p or £1.99 or £1.19 but I think that adds a little bit of credibility for the customer. £1.14 is as cheap as this can be. £1.13 is not doable, but they are also doing us a favor by not charging us £1.15. The consumer's optic of looking at that plays a little bit on the subconscious mind.

{audio:0:18:10} During your decade at the business, how did you see incumbents responding to the way Lidl priced? They were bleeding market share to you guys and, I guess, scrambling to figure out how to stem that market share loss.

{audio:0:18:41} I remember the Thursday morning opening of a particular store in Northern Ireland. We had various visitors, from new customers to Lidl fans, but I also remember a couple of gentlemen joining from Tesco. They were literally walking around, visibly scratching their brows, thinking, how are we going to deal with this? It was always a feeling of mine that there would have been a bit of: yes, it's just Lidl, ignore them, they are small fry, don't worry about them. At that time, Tesco were worrying about being opticians, a telephone network operator and a holiday operator, and they lost focus on what they were actually standing for, which was a grocery retailer. Lidl were not looking over their shoulder at what Tesco were doing, they were instead concentrating on what they did and trying to do that as well as they possibly could.

{audio:0:19:50} Tesco have, ultimately, found it quite hard to compete with the pricing proposition because their range is so diluted. There is an aisle of olive oil that they have to know which one to be compared to, whereas Lidl have the brand and the own brand and it is what it is. The way Lidl's model is set up, it's almost impossible to beat. That is the long and the short of it, unless you simply become a copycat, in terms of model and proposition.

{audio:0:20:24} Thinking about the pillars of Lidl's operating model and the efficiency of their operating structure, was there anything that shocked you when you first joined the business?

{audio:0:20:42} If I think back to Lidl just before 2010, in 2008 it was quite a robotic environment. There still are systems and procedures, but you could have your day defined to the minute about the order of your routine. I'm talking about a shop floor level here where there was discipline, but if there was a new to assortment item, here's where it went, this is where it goes in the assortment. Not down the aisle or up the aisle or a different shelf, that's where it goes and that's where you have to put it. Nowadays, there is a bit more creativity about what each store manager or area manager can be in terms of a retailer, using their mind to say look, I'm in a holiday resort here, I need more space for ice cream than someone who is in a city center store needs where it's not that type of customer.

{audio:0:21:45} The overall changes in Lidl have been massive and we could be explicit on operations or culture but, ultimately, the core model hasn't changed; it hasn't deviated from what it essentially started out as in Germany. The biggest change is the optic around how the supermarket looks to the customer. Beforehand, it was very blue, yellow, this is the color of the tiles and the wood. We now have a gray model and the image of the store has changed dramatically, in terms of quality of artwork, merchandising and product display. When I joined, non-food got dumped right onto the tables and there was no difference in heights, it wasn't at eye level. All of that has moved on. When you see pictures of what it used to look like, it's frightening how poor it was. We probably thought it looked quite good back then, but now it looks current, world class in fact, and it could go toe-to-toe with any retailer. Nothing much has changed, there is still artwork, it is just the quality behind it.

{audio:0:23:14} The product is still exactly the same. There is no change in the recipe or range. The jam has not changed, but how it looks and how it is displayed has. The packaging, even an own brand, has changed massively. There are some things that are still the same where it is still white and green or white and red, but now Lidl's own brand has become a brand in their own right.

{audio:0:23:44} Has there been a change in principles from senior or group level management in Germany in terms of the core values which are brought to life in operations?

{audio:0:24:12} In terms of group level management, there is one thing that is of absolute importance that will always be number one and that is market share. Provided that Lidl is ahead of ALDI in market share then you can be assured there is not going to be too much trouble on the horizon. Thereafter from a country, cluster, district and store level, the KPIs in terms of how the success is defined, is around a number. However, there would be four champions or four main headings around turnover growth. If you were turning over 100,000 per week this year, as long as you are turning over more than 100,000 and in line with the average growth, keep it going and that is good news. If your turnover is declining and the region, country or area is improving, then you are going to have some attention brought to why that might be.

{audio:0:25:23} Wastage is the other element which needs to show continuous improvement. That is in the amount of tomatoes getting thrown out versus what would be perceived as normal. Or the inventory, the amount of bottles of alcohol that are leaving the store without being paid for, through the back or front door. Overall, the most crucial is productivity, the amount of hours or labor cost being spent versus turnover. There are interesting ways to measure that. When I say interesting, it is ultimately very simple. The net turnover of the store, divided by the amount of hours spent in store, is your productivity figure. A different way of wording it is the amount of pounds going through the till per hour spent. That figure can be anything from 290 to 390, with 400 being a possible upper limit. Think about that for a second. For every hour spent in a store, cleaning, packing out the product, doing price changes, returns to the warehouse, counting stock or serving the customer, £400 through the till per hour spent is quite the figure. The operational hours of the store might be 5 o’clock in the morning – where no money is going through the till – to 10 o’clock at night – where the store is shut and you are cleaning. That is not productive time. It is needed time and it achieves something but the till bell is not ringing with money going through it.

{audio:0:27:18} The equivalent number for a Walmart in America is $200 per hour.

{audio:0:27:23} Yes, that is where Lidl is strong. Walmart might be able to push and get it to 220 or 230 but there is still a massive gap. Some people view that as being unattainable, whereas Lidl are still looking at ways to get to 500. Nobody believes someone in Lidl is running around with a whip getting people to run faster up and down the aisles, but there is a big difference between working hard and working smart. The new word in Lidl is efficiency. I used the bakery as an example earlier on in our conversation. What started out using 35 hours per week to bake, merchandise, clean the section and deal with wastage at night has been trimmed down to 30 hours. Now we are getting into how to save minutes.

{audio:0:28:25} That is absolutely spelled out. The store gets a sheet that tells them how many pain au chocolat you need to bake in the morning, how many you need to bake at 10 o’clock, and based on what you have at 12 o’clock, this is the likely figure you will need for the rest of the day. You need a judgment call whether you bake 20, 30, 100 or 200. During the baking operation, there is a diamond concept on the floor where, here is my tray, there is where I put the croissants, here is the discard trolley where I put the empty box, here is the trolley that is going into the oven, and I don't have to move my feet to do this, which makes it exceptionally efficient. That is not working hard, where you are scrambling from one end of the room to the other. It is very methodically laid out to prevent wasting time baking more product, resulting in wastage recorded that evening.

{audio:0:29:24} Applying that bakery example to every other section of store operations, you get an idea of how everything is based on efficiency. You will not save time by not doing a stock take, but you will save time by doing stock takes as quick as possible and giving people the appropriate tools. There is a big understatement, as far as the perception of Lidl, where you need to run and have sweat coming off your brow. The internal focus, from a central perspective, is how can we make the lives of people working hard in the store, easier? How can we send out the artwork on a Friday afternoon which they need for the following week, in an order so that they are not having to hunt through stuff to be able to find it, and that they are not getting 30 when they only need 15 of something?

{audio:0:30:24} Everything is thought out to the nth degree. Whenever there are price changes coming, does the store need a big ticket or a small ticket, because we are not going to send out both because then we will have to work out which one is which. Everything is thought out to the nth degree, in order to make people's lives easier in store. It is not about getting them to work, giving them so much to do or time-consuming activities, there is a big responsibility and onus centrally to be able to continuously improve systems and procedures, to make it as efficient as possible. Whenever there is a saving made, there is no putting the feet up to say, yes, sorted that out, that is as efficient as can be. Almost immediately, another project is started to reevaluate how that can be made even better.

{audio:0:31:24} Whenever you get into that relentless attitude then it becomes something that wears off as to how this is going to be. We are never ever going to settle. We are never going to stop. We are never going to say, that is enough. It is absolutely relentless.

{audio:0:31:40} How does the business reward that behavior and what systems are in place to encourage continuous improvement?

{audio:0:31:52} Bananas will always be cheaper in Lidl, however the person who is packing out those bananas in Lidl will definitely be getting paid more than in a Tesco, so there is a big incentive when it comes to remuneration. Whenever you think of that as a notion in itself, if you offer big rewards you will attract good quality or at least you have the choice of good quality. If you are offering £10 an hour for a sales assistant and everyone else is offering £8.72, naturally more people are going to gravitate towards that and suddenly you find yourself being able to pick from the crème-de-la-crème, as it were. That is a big incentive.

{audio:0:32:44} The second thing I would add, in terms of reward or how you might motivate people or why they are into it, is because there is a good understanding of why. The Lidl I joined might have said, here are the cornflakes, there is where they go, full stop, do it. That is a very blasé example, but nowadays, there is a much more methodical way of saying: this is why we are changing this from A to B. Here are the benefits for us as a business, one, two and three, and here are the benefits to you as an employee, one, two and three. Things get done, and get done well, because there is a good understanding of why.

{audio:0:33:24} Thirdly when it comes to the element of how people are rewarded, what is measured gets improved. That is a good way of summarizing it. If you think of any KPI, whether that be wastage or productivity, if you are privy to a league table that is being distributed weekly, monthly, quarterly or annually, anyone with pride – which the vast majority of Lidl employees have in abundance – you are going to want to be number one.

{audio:0:34:03} Is there an international or regional league table?

{audio:0:34:07} It depends. Cookstown is not going to be benchmarked directly against a store in Cork, but certainly within a district or region, benchmarking exists. It also depends on the level. A CEO will benchmark himself against another country. A regional director will benchmark himself against another region. Head of sales will benchmark himself against another region, but from a sales element. An area or district manager will be worried about his neighbor. The store managers will be worried about who they get to see at weekends and meetings within the district. It is an inescapable mode of measurement and everything gets measured. There are certain things that get focused on and will be conversation topics.

{audio:0:35:01} There are thousands of costs that get associated with a business such as Lidl, but at a regional level, there might only be 26 accounts or costs that would actually be focused on a monthly basis, because some things change. An example of that might be electricity. You need a certain amount of electricity to run a store, but provided you close your freezers, put your chiller blinds down and turn the lights off at night, there is only so much that you can do to improve that. Let us rather focus on security costs; how many hours are we spending on security? During the week, does the store need it? Is the security that has been in the store for the last six months, showing results in terms of loss? If not, maybe we need to look at an even more expensive CCTV or tech report that prevents unauthorized exit without paying. It is all a circle that is interlinked. There is no room to be a passenger on this boat. If you choose that path, your colleagues will want you off the boat.

{audio:0:36:29} It sounds like an intense degree of internal competition which creates a motivating environment?

{audio:0:36:43} Lidl has never offered financial motivation or bonuses for achieving a sales figure. It makes no difference whether you are 21 or 51, if you are a year one or year four store manager, you are on exactly the same salary. Or whether you are in a London store doing 500,000 or another store in Birmingham or doing a fraction of that, it is the same job and gets the same level of remuneration. It is a very fair environment; there is no one who happened to do a better interview or who shouts or knocks a door louder that gets paid more.

{audio:0:37:40} Overall, I would say the pride element comes into play. You cannot ignore the league table and pretend it does not exist. You want people to be challenged on the league table and positions. Ultimately, employees believe they need to do something to prove themselves.

{audio:0:38:00} You mentioned that you cannot be a passenger on this ship.

{audio:0:38:09} Thinking about company culture I remember two watershed moments; one an Irish initiative, the other an international one.  Believe it or not, Lidl did not have values. Any company worth their salt nowadays has values. You will find it on a website or on any recruitment material. In 2015, four company values were introduced: trust, respect, recognition and responsibility. They were very simple and memorable and not above their station. They had minimum expectations and, therefore, you were able to challenge against those values if someone was being untrustworthy. If someone was being disrespectful, you could point to one of our values.

{audio:0:39:14} That evolved and although the values were not forgotten, they were replaced by a hand representing leadership at Lidl. The five points these fingers stood for were leading through communication, developing team members, being dynamic and higher performing, establishing trust and being a fair role model who leads by example. I have already mentioned high performing, which was how we as managers or senior leaders in the business led. You were dynamic and high performing. There was no option to not be. Within the realms of fairness if you were not, that was unacceptable.

{audio:0:40:03} This is not unique to Lidl but based on widely accessible research. There is nothing more detrimental to team spirit or morale than someone not being challenged on pulling their weight. If we are a football team and I am fully exerting myself during training and in the matches and you are not, if you are turning up late and not even breaking a sweat, that will have a very damaging impact on our team morale. So that is not allowed to fester, that is not allowed to develop and it is not allowed to last. That is not to say that it does not happen, but it gets dealt with as soon as possible, while being as fair to the employee as possible.

{audio:0:40:50} How did the relationship between those values and your approach to customer service evolve, during your time at Lidl?

{audio:0:41:15} If you were to go into a store 20 years ago, you would go up to a short till belt, whether you had five, 15 or 55 items, and have an option of one, two or three tills. There might be a queue there, but ideally in the Lidl world there is only two people ahead of you, one being served, one waiting and you are the third person. There was a target then, where the cashier should have to achieve 35 items per minute, and there was actually a break button on the till that you paused, to help you achieve this target.

{audio:0:42:10} The customer would go to the other side with their trolley, not really knowing, have I got time to a get a bag here or what do I put this in, while more items were being thrown at them. The till belt is still the same, there is no focus today on the 35 items per minute but there is more of an understanding from the customer what is going to happen. I am going to go up, get my items scanned and then it is up to me to either have a box or a bag to put my items in or else move them to the packing bench. Looking at it more specifically, it is not business jargon, but widely accepted. If you look after the people in your business, those people will look after your business, and Lidl has been good at looking after their staff. How has customer service specifically evolved over the years?

{audio:0:43:04} The till process has still been the same but there is more of a focus on the customer's feedback. Today it is very easy to Tweet Lidl, email them or call them with complaints. In the days of social media, any misdemeanor will be highlighted within seconds before you have a chance to react. There are “happy or not” terminals you see at airports and service stations where on the way out, the customer is asked: do you have a big green smiley face on you at the minute, or do you have a roaring red crying face? By pressing the button, the back-office staff were able to determine, here is the day or week in a Belfast store, when the customers are most happy, and here is when they are most sad. You inevitably found that times that were very red, as far as people's contentment, queues might have been long. We might not have got the roller right at that point or the availability of product in the evening where people have gone in for five items. I have already mentioned Lidl only has two types of cornflakes. If the cornflakes are missing then someone is going to end up disappointed.

{audio:0:44:30} These things have become much more scientific in terms of how they are measured, whether that be happy or not but also internally. There is an audit department within Lidl, consisting of five to six people, who spend their working week on the road visiting stores, compiling reports on fruit and veg quality, the amount of missing items in store and the amount of people waiting in till queues. What is also interesting is that Lidl has become more vocal or brave. The Lidl I joined had a rule saying, if you are on till you need to be serving one person and you need to allow two people to wait. If that queue is exceeded then you need to get another person on the till. Today there is communication with messages on the shop floor notifying the customer. If you are waiting in a queue more than four, something is not right, speak to a member of staff to open another till.

{audio:0:45:39} They have become a lot braver in letting the customer know their own rules and being managed or challenged against those rules. This is a courageous step that not many businesses would have the conviction to do.

{audio:0:45:59} Having spent a decade at this business Paul, what are the most unique aspects in the way Lidl operates, relative to their mainstream competition?

{audio:0:46:19} In terms of the uptick as to what you or any other customer would see going into Lidl or a different supermarket, those differences are clear to see: range, value, price and shop floor size. Behind the scenes, one of the biggest differences is that Lidl is a very young company. This hand that I referred to, there needs to be a level of dynamism about people who join and who are in senior positions. Personally speaking, I joined as a trainee district manager at 21 years of age. Think about that in itself, how many businesses would recruit a 21-year-old who would be very quickly responsible for a network of stores? This was not running a store or helping someone run a store; this was straight in, senior manager level. That is unique in itself, but if you extrapolate that further, the senior positions, heads of department, executive level and director level, are all taken up by people who have moved through the business. These are not so-called experts in a different field who have joined and can say, here is how we do it, here is how we did it in another organization or business. These are people who have gone through the various levels and therefore have enormous amounts of credibility having been there, done that and got the t-shirt.

{audio:0:47:54} The big thing that I would see different in Lidl is the profile of the people running it. These are not seasoned professionals with years of experience behind them. These are young, hungry, dynamic people with exceptional attitudes and are very hard working. That explains a lot about how much of a push and drive that there is in terms of the performance of the business.

{audio:0:48:21} How much autonomy do local managers have with regard to the pace of growth or the nature of the assortment? Are processes internationally standardized?

{audio:0:48:46} The processes are very standardized. This is not some store manager's matrix that he has developed. Here are the rules, here is the assortment and your success will be defined on how well you can implement those rules and how accurately you can do it. The model that is there works. It is how well you implement that model and lead your staff to accomplish that. If you implement the model as described then you will have this huge success. If you do not implement the model then you are going to find that tougher and you will have to repeat things and go backwards to go forwards. If you are joining Lidl as a retailer you are not being handed a blank canvas. The design of the store is not even an Irish concept. It is approved and authorized in Germany. With the assortment there is a responsibility on the manager that local management have the full range but they are not able to go out to the local bakery and say, give me six of those for Saturday please, and let us see if we can sell them. Everything of that ilk is centrally controlled. Uniformity brings the efficiency.

Former Head of Sales Organisation, Lidl Ireland and current Managing Director, McKee's Foods

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