forumforfuturemarketing

by Katharina Michailov and Inna Mayer

This article will discuss whether LIDL operates Marketing 3.0 or whether they try to merely inflate their brand.

LIDL is a German retail store chain in the discount segment. It was founded in 1930s and is headquartered in Neckarsulm. LIDL has 88,000 stores in 22 countries and employs 150,000 people worldwide, of which 50,000 work in Germany. The discount chain is part of the Schwarz-Group-Companies, which includes Kaufland and Handelshof.

In recent years, LIDL has been confronted with a variety of scandals. The first scandal began in 2004. The United Services Union (ver.di) detected that LIDL could monitor their employees via video cameras and prevented the formation of works councils. Then ver.di issued „The Black Book „, which denounced the personnel policy of LIDL.

(Source: http://lidl.verdi.de/schwarz-buch/schwarz-buch_uebersetzt/#black_book_on_the_schwarz_retail_company_english, accessed June 16, 2011)

In addition, LIDL was given voice to the negative „Big Brother“ award in the category world of employment. In 2005 LIDL had to remove its shark steaks from the range after protests from animal protection organizations. Furthermore, the discount chain was condemned of loss-leader pricing before the Higher Regional Court of Stuttgart, due to the widely advertised LIDL-Ticket for the „Deutsche Bahn“ (German railway) which was sold out in less than a few hours.That same year, the NGO attac initiated together with the party on the left. Linkspartei.PDS launched a nationwide campaign against the working and production conditions. In the year 2007, the cooperation with the environmental organization Greenpeace ended outrageously. LIDL sold the Greenpeace magazine with a circulation of 150,000 copies, but most of which were disposed because the customers had no interest and no remission law had been agreed on. Moreover Greenpeace also didn´t want to lose its credibility because in the tests of the magazine LIDL products were also tested. In 2008 the journalist Günter Wallraff published the article „Our daily bread“ in „Die Zeit“ (newspaper) in which he criticized the poor pay, working conditions, poor hygiene and unsafe operation of a supplier. In 2008 and 2009 ver.di, the magazines “Stern” and “Der Spiegel” revealed the spying and the systematic collection of medical data of employees.

Due to the numerous scandals LIDL was forced to respond, not to lose the consumer confidence altogether. In the course of time the discount store chain started the holistic scale campaign „On the way to tomorrow“ in the year 2008.

(Source: http://www.lidl.de/de/Verantwortung, accessed June 16, 2011)

LIDL defined core principles for this :

„Economic success depends largely on how successfully we bring our core principles of simplicity and customer focus with a responsible use of natural resources and a respectful treatment of customers, employees and business partners into balance.“

The Company has passed corporate, management and behavioral principles, so that core principles can be lived in everyday business. In addition LIDL is involved in the four areas of environmental and climate protection, employees, corporate social responsibility and product range. The mentioned areas will be presented in the following with a few brief examples.

Environmental and climate protection

Since March 2011 the PET bottles of own-brand “Freeway“ and “Saskia” are manufactured to 30 percent by recycled PET material. The goal is to increase this proportion to 50 percent shortly. In addition, in the period 2008 to 2011 the reduced weight of bottles (without caps and labels) was reduced from 38 to 26 grams. There are also climate-friendly logistics centers (including the cooling systems operated with natural refrigerants) and an efficient logistics (including short-distance transportation). With a new branch generation LIDL sets new standards in energy efficiency and sustainability. The new stores need 100 percent less heat, have 30 percent less CO2 emissions and 10 percent less power consumption compared to a conventional food market. Since 2007 LIDL supports the Association of German Nature Parks outside their division.

Employee

The biggest scandals involved the treatment of employees. To regain the trust of the employees LIDL has introduced “Commissioners of Social Affairs & employees” which are on active service area wide in the federal territory. These persons of trust take care of the concerns of the full-time employees. All these conversations are treated confidentially. In addition to that, the hotline „LIDL helps“ was set up for employees to resolve problems. In 2008 LIDL joined the „Fair Company“ party, dedicated to the respectful treatment of interns. LIDL also reaffirmed the equality of opportunity for everyone by employing people from 102 different nations. To get a better insight into the different opinions of the employees, the discount chain commissioned (2008) the renowned Institute for Industrial and Organizational Psychology at the University of Mannheim to conduct an anonymous employee survey and an additional follow-up survey after some time. The study founded that on a rating scale from 1 to 6, the question of „joy and fun at work“ was valued with extremely positive with a mark of 1.6. beyond that, the staff assessed their unity to LIDL with a score of 1.88.

Corporate Citizenship

For several years LIDL has been working with the association “Deutsche Tafeln”. Since 2008 5,000 deposit return machines (in about 3,200 LIDL stores nation-wide) were equipped with a pledge donation button. And in addition to that the customers can always ask where their money gets donated to. LIDL is involved abroad as well. Since the year 2009, the company supports a mobile health service in the region of Dhaka in Bangladesh, which is one of the poorest countries in the world. It also is an important country of production for the global textile industry. LIDL also supports the needy in Peru by the temporary sale of certified products,of the own brand “FAIR GLOBE” from Peru.

(Source: http://www.lidl.de/de/Mobiler-Gesundheitsdienst-in-Bangladesh, June 16, 2011)

Product range

The high quality of the assortment is checked and controlled systematically by LIDL´s own quality management. It is also worked with independent and accredited testing laboratories. Many items are marked with approved labeling initiatives. These include the “Marine Stewardship Council”, “Forest Stewardship Council”, “The EU-Ecolabel”, “Blue Angel” and “PEFC”. In additionto that , LIDL is the first business enterprise which offers tissue paper with reduced CO2 emissions and exclusively uses 100 % recycling paper for its own budget handouts.

The scandals of recent years show that LIDL was forced to launch a holistic concept of sustainability to win back consumer confidence. The initiative „On the road to tomorrow“ was therefore launched in 2008. Since the commitment was only started because of numerous scandals, it seems likely that LIDL is trying to merely inflate their brand.

Recent scandals in the years 2008 and 2009 illustrate this assumption. The company was not able to operate confident management at short notice on all levels. Consistent implementation and long-term commitment and a deep conviction on corporate and employee level are required for this. The business model discounter seems to be susceptible to scandals.

Since LIDL hasn´t drawn attention to themselves through scandals in the past two years, it seems that the company seems to be on the right track. But only time will tell whether LIDL can earn through their initiatives, the credibility and trust of their customers and operate a sustainable business management at all levels.

Bibliography:

http://www.karriere-bei-lidl.de/cps/rde/xchg/lidl_ji/hs.xsl/5309.htm (accessed 14.06.2011)

http://www.verdi.de/lidl/ (accessed 14.06.2011)

http://www.stern.de/tv/sterntv/magazin-verkauf-greenpeace-kuendigt-deal-mit-lidl-592058.html (accessed 14.06.2011)

http://www.attac.de/archive/lidl/ (accessed 14.06.2011)

http://www.zeit.de/2008/19/Wallraff-19 (accessed 14.06.2011)

http://www.lidl.de/de/Verantwortung (accessed 14.06.2011)