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USA: why suppliers should be keeping a close watch on it over the next 12 months

Discount retail chain Lidl US (owned by German Schwarz Gruppe) announced its CEO, Johannes Fieber, will be leaving and will be replaced by Michal Lagunionek, a board member at Lidl International, in early June. It was also announced that Lidl Denmark’s CEO Dirk Fust will be moving over to the US to help with network expansion. We look at the background of the new duo and what it could mean for the future of the discounter in the US.

Michal Lagunionek, who is the new CEO? Lidl US has named Michal Lagunionek as its new CEO from the beginning of June 2021 replacing Johannes Fieber. Fieber arrived at Lidl US in 2018 and played a key role in the discounter’s store model evolution to better align with American shoppers’ habits and expectations. He managed to transform the model and put Lidl back on the store opening path.

Michal Lagunionek has been at Lidl for over 20 years. He was Lidl Poland’s CEO for 10 years before joining Lidl’s International board six years ago where he oversaw the development of the discounter in several markets including, the US since 2020 when Lagunionek took over from Roman Heini as President.

His experience as a board member will be highly important for Lidl US but it’s probably his 10 successful years as CEO of Lidl Poland that could help him have an impact. During his time as CEO in Poland, Lagunionek oversaw the opening of more than 470 stores resulting in sales jumping from €300mio (US$ 360mio) to €3bn (US$ 3.6bn).

Poland is a unique market for Lidl. First, it’s one of the few major European countries where it is one of the top three retailers (second largest in Poland). Secondly, its main competitor, local discounter Biedronka, is also the market leader (21% market share vs 8% for Lidl). This unique position means Lidl needs to constantly innovate and evolve its assortment as well as maintain price competitiveness to differentiate and better compete with Biedronka. Lagunionek will bring with him this knowledge around model evolution, price, and network expansion to unlock growth.

Dirk Fust likely to play a key role in the ramp up of store openings Lidl Denmark CEO Dirk Fust announced earlier this month he will be leaving his role to take on new responsibilities in the US. His exact role at Lidl US is yet to be confirmed but he will bring on board success and knowledge around network expansion.

Fust was named CEO of Lidl Denmark in 2016 when the discounter was operating 102 stores with only one or two new opening per year. He was tasked to ramp up the network expansion, which he successfully did. During hist time as CEO, more than 30 new stores opened with around seven new store openings every year, making it the fastest expansion pace since Lidl entered the country in 2005. For 2021, Fust secured the biggest investment plan ever in Denmark at €135 mio (US$ 160mio) placing the discounter in a position that is fit for the future with the goal to reach 200 stores within the next seven years.

The appointment of Fust at Lidl US is strategic as there are similarities between where Lidl US is today compared to Lidl Denmark in 2016 in terms of accelerating the network expansion. Fust is bringing a wide breath of experience and knowledge and is likely to contribute to the ramp up of store openings.

Finally, in Denmark, Fust has also been a key enabler to adapt the company strategy to the local culture which seems to be one of the next areas of development at Lidl US to ensure the success of the discounter in the longer term.

Fust told CEO magazine in 2020: “We adapt the Lidl brand to each individual country in which we operate. I’ve worked in Germany and also on the international side, so I’ve visited more than 20 of the countries we are in. What has worked so well for us is exploiting our global processes while at the same time having the freedom to adapt that framework to local cultures.”

Could the duo evolve Lidl US and create a disruptor? Despite the German head office supporting future development in the US, it’s still difficult to measure the overall success of Lidl US. Yet it shows the head office is confident its operations in the country are in a good place and they believe there are opportunities for growth.

Some might argue the number of stores remain low, but let’s not forget that it took 20 years to Aldi to reach 500 stores in the country, something Lidl is likely to achieve in 10 years, especially if it ramps up its pace of expansion. It will benefit from some tailwinds as its value proposition will resonate with a larger part of the population due to the likeliness of the K-shaped recovery for the economy, but there will also be headwinds coming from the rapid growth of ecommerce.

It seems Lagunionek and Fust are arriving at a pivotal time for Lidl in the US as the discounter has found the right store format and the focus is again on expansion. Both will bring a wide breath of knowledge and expertise that will be paramount to ramp up the expansion pace but also to evolve the assortment to ensure it is aligned with shopper needs. Despite being early to say if Lidl could play a stronger disruptive role in the US, market suppliers should keep a close eye on the development and actions that will be implemented by Lagunionek and Fust in the next 12 months as the retailer could rapidly evolve in size and by assortment.

Inside the latest stores Lidl continues to improve the design of its stores offering an enhanced shopping environment. Every new store now displays the mention “Food Market” on the outside façade to help increase the brand awareness.

Wooden-like fixtures in the produce area give a more natural look and feel while the wooden crates in the wine section showcase premium wines. The in-store bakery and the wide assortment of freshly baked goods are a strong point of differentiation compared to other retailers.


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