Schwarz Group

Lidl's 'Outsider' CEO in Surprise Departure

  • Why it matters

    Why it matters

    The departure of its chief executive comes at a critical time for the company.

  • Facts

    Facts

    • Mr. Seidel had numerous clashes with Klaus Gehrig, chief executive of the Schwarz Group, which owns Lidl.
    • Company insider Jesper Hojer, previously head of international purchasing, will take over the top job effective immediately.
    • Mr. Hojer will have to contend with a new management structure as well as expansions into new markets.
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    Audio

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Sven Seidel
Lidl CEO Sven Seidel faced opposition at the company, partly because he was viewed as an outsider. Source: DPA

Less than a year ago, Schwarz Group’s chief executive, Klaus Gehrig, did away with the German formal form of addressing people at the world’s fourth largest retailer.

Just like at young, dynamic startups, the company’s employees and bosses, including those at the group’s subsidiaries Lidl and Kaufland, are now on a first-name basis. But that doesn’t mean all is harmonious, as outgoing Lidl chief executive, Sven Seidel, has learned

They may have addressed each other by their first names, but “Sven” and “Klaus” had clashed a number of times on core management issues at the discount giant. The business relationship ended “due to differing views on business strategy” but by “mutual agreement,” according to the official statement. Still, despite Mr. Seidel leaving the German supermarket chain in top financial condition, there was little praise for his achievements over his three-year tenure.

Thirty-eight year-old Jesper Hojer is stepping into the top job after a stint as head of international buying. The home-grown talent has worked his way up through the company’s ranks over a 10-year career there. Mr. Hojer has the kind of resume that has been a prerequisite for every new Lidl boss for decades – apart from Mr. Seidel.

Fellow executives viewed the outgoing CEO as an outsider when he took up the management post at the discount supermarket chain.

Fellow executives viewed the outgoing chief executive as an outsider when he first joined the discount supermarket chain. He may have started his career at Schwarz Group discounter Kaufland, but he then moved to Porsche Consulting. Mr. Gehrig appointed him to Lidl’s executive board in 2011 after the two become acquainted through consulting projects and in a surprise move, appointed Mr. Seidel as CEO three years later.

Still, the outsider had ambitious plans. More than a year ago, Mr. Seidel told Handelsblatt that changing the corporate culture at Lidl was a matter close to his heart. Such statements coming from a chief executive without the necessary Lidl pedigree or power base didn’t go over well with fellow executives. But at the same time the company was in urgent need of a public image makeover. The discounter had faced numerous scandals that had battered its reputation, including admissions that it spied on employees and kept track of the number of visits staff made to the toilet.

The smart and urbane Mr. Seidel had his eye on international expansion. He liked to talk up the U.S. launch, for which 150 stores were planned by 2018, as a “job for the boss.” For his in-house critics, this kind of self-praise was viewed as inappropriate. The 43-year-old had also set his sights on expansion in Australia, where rival Aldi Süd has been scoring successes for years. But he was forced to give way to sister company Kaufland, which is now preparing for a lucrative entrance to the new market. Mr. Seidel’s concept for ordering items online and pick-up stores faced pushback too and a test run slated to start in Berlin branches last December is still up in the air.

As Mr. Seidel wasn’t the first to learn: Mr. Gehrig is the ultimate decision maker.

Mr. Seidel’s departure has also brought with it a total change of direction in management. Lidl’s new boss, Mr. Hojer, will work in a centralized structure in which all strategic decisions must be coordinated. The Schwarz Group will now be headed by a five-man executive committee including Mr. Gehrig and Mr. Hojer, as well as Kaufland chairman Patrick Kaudewitz. Completing the quintet are Andreas Strähle who is responsible for finance, controlling and personnel at the group, and Gerd Chrzanowski, who heads IT, production and real estate.

The management team will have their work cut out for them. This year the Schwarz Group is set to pass the €90 billion ($96.3 billion) sales mark for the first time but at the same time the group has major projects including the U.S., Australian and online expansions. The challenges may have prompted Mr. Gehrig to bolster the centralized management of the two retail organizations.

“We know that various things we used to rightly do separately before, today must be combined,” Mr. Gehrig said in an interview with regional newspaper, the Heilbronner Stimme. The new management, he said, will collegialy discuss strategic issues but won’t be democratic.  “In the end, one must decide,” he insisted.

And as Mr. Seidel wasn’t the first to learn: Mr. Gehrig is the ultimate decision maker. His predecessor Karl-Heinz Holland made a surprise departure as chief executive of the discounter in March 2014, despite a successful tenure. Then, as well, there was talk of “unbridgeable” differences over future strategy. According to a company insider, it related to disputes over personnel decisions.

Lidl’s new boss, Mr. Hojer, likely knows what lies ahead. Mr. Gehrig is already 68 years old but has made no secret of the fact that he wants to continue deciding the fate of Germany’s largest retailer for the foreseeable future.

 

Florian Kolf leads a team of correspondents, who cover the trading and consumer sector for Handelsblatt. To contact the author: kolf@handelsblatt.com

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