Lidl board change signals impatience in U.S.: Report

Editors note: This story was updated Sept. 28 with additional comment from a Lidl spokesperson in Europe

An executive change overseas could be a signal of distress over Lidl’s nascent U.S. invasion, reports out of Europe this week suggested.

The German business trade newspaper Lebensmittel Zeitung, citing confidential sources, reported that Michael Aranda, the former CEO of Lidl Spain, would be appointed to a Lidl divisional board with oversight of the U.S. — the highest level of leadership behind the company’s board of directors and its demanding CEO Klaus Gehrig. Aranda is said to be replacing Daniel Marasch in that role.

A spokesperson for Lidl on Thursday confirmed Aranda's appointment to the role of "Bereichsvorstand Länder" (translated: department executive for country supervision) and said Aranda would oversee the U.S. operations from headquarters in Neckarsulm, Germany. "In his function he will closely cooperate with the local U.S. management team in order to drive the expansion forward," the spokesperson told SN. "The close cooperation between international board members, which are assigned to a group of countries, and the local management team is the usual way Lidl has operated for many years."  

According to the Lebensmittel Zeitung report, the change addresses Gehrig’s concerns that the performance at least some of Lidl’s 37 U.S. operating stores have been “frighteningly weak,” and that the prescription to fix them was to introduce additional discipline in executing the company’s plan. Aranda, a 17-year veteran of Lidl Spain, is thought to be “a systematic thinker who grew up within the Lidl system,” said Matthias Queck, a research director LZ Retailytics, an advisory firm associated with the trade publication. “They want to exert more control. … Instructions from the headquarters are to be executed without further thinking.”

The change provides an example of the “paramilitary” style of management at Lidl that has helped the company execute rapid growth in concert with cost discipline throughout Europe, sources added. And though the company has pledged to make adjustments as necessary as it grows in the U.S., that can accompany a pressure to do so quickly. “Lidl wants to force success, achieving in maybe 10 years what Aldi did in more than 40,” said Queck, referring to Lidl’s German foe that that has operated in the U.S. since 1976 but is only now accelerating the pace of its growth.

Lidl officials in Europe and the U.S. publicly disputed the notion that the U.S. rollout is struggling. U.S. spokesman Will Harwood said the Arlington, Va.-based division was “delighted” with its U.S. performance to date, saying performance so far has exceeded expectations. “We feel very confident with where we are as a company and we’re proud of our launch to date,” he said. The Europe-based spokesperson said stores were "above plan."

Lidl opened its first stores June 15. Another three stores (Gastonia and Rock Hill, N.C., and Suffolk, Va.) are due to open Thursday. Lidl this week also confirmed the scheduled opening Oct. 12 of a store in Newport News, Va.

Aranda was succeeded by Claus Grande as CEO of Lidl Spain late last week. Marash, the Lebensmittel report said, will remain on the board but turn his focus on other markets.