Lidl boss: The costs of going online just don’t add up

Härtnagel says that Lidl’s new customer acquisition during the pandemic has been hampered by the rapid growth of online grocery since March and the “incredible” work of competitors who have added capacity to meet the surge in demand. 

However, while the Lidl boss accepts that the discounter will be playing in a reduced grocery market once the pandemic recedes, he still doesn’t feel the benefits of moving online outweigh the substantial costs. 

“It’s not a secret that there is one section of the supermarket sector that has increased massively, and that is online. The online e-grocery market share has risen from a pre-Covid-19 7.5% market share to now 13 or 14%. And that is incredible. But it also is part of our reality that we don’t think that it’s going to remain on that level,” he said. 

“I don’t think it will go back to pre-Covid 7.5%, but if we meet somewhere in the middle at 9% or 10%, for a discount retailer that’s totally fine.

“Then we can focus on 90% of the market and not get distracted with a non-profitable online proposition and just do what we’re best at, which is serving communities with the best-quality food at the lowest prices.” 

Härtnagel says the discounter remains “laser-focused” on its bricks-and-mortar business as the main channel of future growth due to the margins his business operates at. 

“With the margins that we are operating on, which are wafer-thin in a discount operation, there is no way that we could offer free deliveries or anything like this to our customers. We really don’t want to gamble with the biggest promise that we give to our customers.”

App’s the way

While not giving active customer figures, Härtnagel says the Lidl Plus app, which launched last September, is really driving growth, both in terms of sales as well as new customers. 

“We launched the app in September 2020 and we can really see an acceleration of our growth since that date. It’s the only real thing that we have changed – the launching of that app.”

He said Lidl would be working this year on “building” on the successes of the Lidl Plus app with its focus on customer loyalty. 

While he said the loyalty scheme, with money back in the form of vouchers for money spent, had eaten into margins somewhat, he added it’s “paying back in an increase in turnover” already and was “absolutely worth the investment”.

“We are really pleased with how the app has gone. But we’re building this and this will be another step,” he says. “We will never be beaten on price, Lidl Plus app or no Lidl Plus, but it is a nice extra benefit for our most loyal customers.”