Lidl chairman steps down over strategy differences

Thu Mar 20, 2014 11:29am EDT

* Chairman, buying head both leaving secretive company

* Lidl expands fast to become Europe's biggest discounter

* Owned by Germany's third-richest man, Dieter Schwarz

* Lidl is considering entry to United States in 2015

By Emma Thomasson

BERLIN, March 20 (Reuters) - German discount supermarket chain Lidl has removed Karl-Heinz Holland from his position as chairman, citing "unbridgeable", but undisclosed, differences over future strategy.

In an unusually blunt statement, the secretive company said Holland was leaving after more than five years as chairman, 12 years on the board and a total of 23 years at Lidl, but did not say who would be replacing him.

"He has made a significant contribution to the development of Lidl as the European market leader in the discount segment," the Schwarz group, which owns Lidl, said.

The group said Dawid Jaschok, head of buying and marketing for Lidl, would also be leaving the company for the same reason, also without elaborating on the strategic differences.

Based in Neckarsulm in southern Germany, Lidl is owned by Germany's third-richest man, Dieter Schwarz, son of the company's founder Josef Schwarz. Klaus Gehrig took over as the chain's chief executive from Dieter Schwarz in 2004.

Gehrig and Holland are credited with helping Lidl expand rapidly in Europe to some 10,000 stores employing 180,000 people, including 3,300 in Germany, 1,400 in France and hundreds each in Britain, Spain, Italy and Poland.

Lidl, which opened its first store in 1973, is considering following its arch-rival Aldi into the United States next year, with 100 stores reportedly planned as a first step. Britain's Tesco has recently pulled out of the United States after a costly failure with a new low-price chain.

LOSING SHARE

Lidl accounts for an estimated almost three-quarters of the Schwarz group's 2012/13 turnover of 67.6 billion euros ($94 billion), making it Europe's third-biggest retailer behind Carrefour and Tesco. The Schwarz group also owns Germany's biggest hypermarket chain Kaufland.

Former head of buying, Holland took over in 2008 when Lidl was embroiled in a scandal after German authorities opened an investigation into allegations that the company employed detectives and used cameras to spy on staff.

Since then, discounters like Lidl, Aldi and smaller rivals have been losing market share in Germany to supermarkets as once frugal consumers have demanded more upmarket products and a better shopping environment.

Discounters, which still have a huge 43.9 percent of the German market, have been retaliating by moving away from goods stacked in boxes on pallets in shabby stores to introduce more branded goods, in-house bakeries and premium products.

The same strategy has also helped Aldi and Lidl steal market share in Britain from market leader Tesco, Wal-Mart's Asda, J Sainsbury and Wm Morrison.

Aldi's sales growth in Britain accelerated to a record 33.5 percent in the 12 weeks to March 2, giving it a market share of 4.3 percent, while Lidl held on to the record 3.2 percent share it reached last month.

($1 = 0.7189 Euros) (Editing by Mark Potter)

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