Target and Lidl Should Enter Into A Strategic Partnership. Here’s Why

In 2013, executives at Lidl made the decision to enter the U.S. grocery market. Lidl is a German-owned discounter that operates over 12,000 stores located in 31 countries. Lidl competes on price hence the reason why it is referred to as a discounter. Lidl sells around 4,000 products in their stores of which 80% are private label. Lidl’s products are consistently recognized for their quality and low prices; especially Lidl’s fruits, vegetables, dairy products, and meats. Lidl stores also have bakeries that offer breads, pastries, loaves and rolls, desserts, and other baked goods. Lidl provides a great customer experience.

I’m a fan of Lidl. I have tremendous respect and admiration for the executives and associates who have made Lidl one of the greatest grocery retailers and companies in the world. Lidl has done an excellent job of providing customers with products of exceptional quality, and I like the different store designs used by Lidl globally. I especially like the design of the Lidl stores with all of the glass windows; they’re super cool.

Lidl executive Kenneth McGrath, was given the role of leading Lidl’s market entry into the U.S., overseeing the development of its Stateside headquarters in Virginia, and commencing the process of acquiring store sites along the east coast. Lidl established their U.S. headquarters in Arlington, VA, in 2015. I was working for Amazon when Lidl announced they were entering the U.S. grocery market; I wasn’t surprised. ALDI had entered the U.S. in 1976, and in 2015, ALDI was operating around ,1,200 stores. Wherever ALDI opens stores, Lidl is sure to follow.

I have extensive experience in retail and I have invested thousands of hours researching the retail industry globally. I was convinced that Lidl’s executive team, led by CEO Brendan Proctor, who took over for McGrath when he departed in 2015, didn’t fully understand what he was up against. I was also concerned by what I perceived to be a lack of awareness and experience among the team members tasked with launching Lidl’s U.S. operations. Launching a supermarket chain is challenging. Launching a German-owned discount supermarket in the USA where most people had never heard of Lidl, and couldn’t even pronounce the name correctly, was especially going to be difficult. Americans pronounce Lidl as ‘lidd-el’ rhymes with bell. It’s actually pronounced ‘lee-del’ rhymes with needle.

To be successful, Lidl US had to execute flawlessly; something I knew they couldn’t do. I estimated that Lidl would encounter many problems related to marketing, store assortment, store site selection, operations, and supply chain management. The biggest flaw in Lidl’s plan was that I knew they weren’t going to spend enough time educating American consumers on why they should love Lidl’s private label brands and that would significantly hurt their sales. (Lidl is a household name in many countries outside the U.S. Lidl isn’t used to having to invest in marketing.)

I was confident that Lidl would only open 40 to 50 stores in the first one to two years in the USA; an appallingly low number of stores for a grocery retailer dependent on scale for success. In June 2017, Lidl opened their first stores in Virginia, North Carolina, and South Carolina; with a promise to open 100 stores over the next 12 months, and 100 stores annually thereafter. As I expected, things didn’t go according to plan. By the Summer of 2018, Lidl had opened just 53 stores. Lidl was struggling with selecting the right locations to open stores; customers didn’t understand Lidl’s assortment of products; and Lidl’s supply chain and logistics costs were enormous. The team responsible for launching Lidl, “didn’t know what they were doing,” according to a leading grocery analyst I spoke with.

On July 8, 2018, I decided to go public with my concerns about Lidl US, by writing this article for Forbes: Lidl USA: What Went Wrong And What It Can Do To Recover. Members of the press, analysts, consultants, and senior executives from Lidl and other grocery retailers, told me it’s the best article ever written about Lidl’s entry into the USA. I greatly appreciate the compliment.

In the article, I outline Lidl’s many missteps and I provided strategies for how Lidl could improve their operations. The section of the article that generated the most discussions and feedback was my recommendation that Lidl should call a halt to their expansion, and do something that I believe Lidl should have done when they first entered the U.S. market: Form a strategic partnership with Target, and open Lidl stores inside most, if not all, of Target’s stores. Target operated 1,844 stores in 2018. I had contacted several members of Lidl’s USA team in June 2015, including Brendan Proctor, and I recommended that they speak with Target. No one at Lidl wanted to talk about Target; especially Proctor. Instead, Proctor chose to stay the course regarding Lidl’s strategy in the USA. I knew Proctor was making a big mistake.

Lidl’s CEO Merry Go Round 

The Schwarz Group, Lidl’s parent company based in Germany, allocated $4B for Lidl to enter the U.S. grocery market. Executives at the The Schwarz Group weren’t happy (and rightfully so) about the lack of progress from Lidl CEO Brendan Proctor. Dozens of planned stores were delayed or abandoned, and the stores that did open were generating disappointing sales. In May, 2018, Lidl announced they were seeking a “new beginning” in the U.S., and they replaced Proctor with Johannes Fieber. Fieber ignored the idea of partnering with Target, and kept in place most of Proctor’s strategy.

From 2018 to 2021, Lidl made little progress. Store sites were selected but few stores were built. Stores that had foolishly been opened in locations where they could barely be seen by passersby were closed and relocated. Other Lidl stores were closed because of poor sales. Lidl was open for business but they lacked a coherent strategy. Fieber was replaced by Michal Lagunionek in 2021. I reached out to Lagunionek, but he wasn’t interested in partnering with Target either. Under the guidance of Lagunionek, Lidl made a few improvements but not enough. Store openings and sales continued to fall short of The Schwarz Group’s expectations.

Lidl’s performance was so bad during this period that I thought Lidl may exit the U.S., like the British retailer Tesco, who entered the U.S. in 2007 only to exit in 2013 after losing nearly $2B. However, multiple sources from Lidl told me, “The Schwarz Group will never sell Lidl’s operations in the U.S. or exit the market.” I appreciated the desire for Lidl to remain in the U.S., as the grocery market is gigantic when compared to other countries. However, without major changes, I knew that Lidl’s performance wouldn’t improve, and losses would increase.

I wrote LinkedIn posts and spoke on podcasts about why the CEO’s of Lidl were struggling. When Lidl enters a new country, they use a “copy and paste” model for launching stores. Lidl executives follow the same strategy and they rarely, if ever, deviate from the playbook. Why didn’t Lidl partner with Target in 2015 as I suggested? It wasn’t in the playbook. In Europe and other regions, the playbook worked. In the U.S., however, I knew the playbook would fail. Lidl needed to utilize a different strategy.

In July 2023, Lidl closed 11 stores; some of which had been open for less than two years. In August 2023, Lidl announced that Joel Rampoldt would replace Lagunionek as CEO. Rampoldt officially became CEO in February 2024. Rampoldt is Lidl’s fifth CEO since they entered the U.S.

Rampoldt is a highly skilled executive. Prior to joining Lidl, Rampoldt worked for the consulting firm, Alix Partners, where he provided consulting and leadership to help retailers drive sales and margin improvement by focusing on their key commercial levers: pricing, promotions, product assortment, finance, vendor negotiations, strategy, supply chain and logistics, and operations. Over a five-year period, Rampoldt was instrumental in leading multiple retail transformations. Sources from Alix Partners (a consulting firm that I think highly of) stated to me that, “Joel took an honest interest in the clients that he supported,” and that, “Joel is the type of executive that you want for a CEO. He’s a hard worker, intelligent, a deep thinker, he knows how to assess a situation and make changes, and he knows how to influence people and get things done.” In addition, a source stated to me that, “Joel isn’t afraid to take risks.”

Prior to Rampoldt becoming CEO of Lidl, he engaged with Lidl while working as a consultant for Alix Partners. During a conversation with coworkers from Alix Partners, my article about Lidl was brought up. According to a source, Rampoldt stated that, “I agree with everything in the Lidl article. I especially like the idea of Lidl partnering with Target.” The source also stated to me that someone (not Rampoldt) made the comment, “I think Lidl made a mistake by not partnering with Target already.” Rampoldt replied that he believed “Lidl and Target could still partner.” The source also revealed that Rampoldt and others complimented me because I have, “no fear about sharing my ideas and opinions,” and that I am a “very strategic thinker with an uncanny ability to see things that are going to happen in business years before everyone else.” I appreciated the kind words.

Joel’s leadership, business acumen, finance expertise, and consulting experience, is exactly what Lidl needs in my opinion. Rampoldt isn’t blindly following the Lidl playbook. Rampoldt has worked tirelessly to lower costs, improve store operations, and invest in supply chain management and logistics. Sources from Lidl have told me that Rampoldt’s efforts and leadership have “driven results,” and that Rampoldt is doing “a nice job as CEO.” Other sources I spoke with voiced frustration at the slow pace of growth, but they were complimentary about Rampoldt.

In October 2024, Lidl announced they were reintroducing itself as ‘The Super-EST Market’ as part of a new brand campaign. According to Rampoldt, “This brand relaunch allows us to reintroduce Lidl US in a big way, especially as we continue to grow our business. We’ve always known how super we are. Now, it’s time to spread the word.” Lidl teamed with award-winning advertising and design agency MONO to create a new, fresh look. Click here to see the new campaign commercials. Great job, MONO and Lidl.

However, much more has to be done, in my opinion.

I remain concerned about Lidl’s inability to execute at a level I believe they should have already achieved in the U.S. ALDI successfully opens stores monthly across America. ALDI opened 87 stores in 2022, 109 stores in 2023, and 120 stores in 2024. ALDI is proof that American consumers will embrace a German discount retailer. Lidl established their headquarters in the U.S. in 2015; Lidl operates 12,000 stores globally; yet Lidl only operates 183 stores in the USA. Lidl should be operating between 600 to 800 stores. The inability of Lidl to execute at the same level as ALDI in the U.S. is inexcusable. Period.

ALDI isn’t Lidl’s only competition. Lidl should be concerned that Amazon has opened 100 Amazon Fresh stores in the U.S. Amazon has also launched Amazon Grocery, a small format store concept that will range in size from 4,000 to 25,000 square feet, and carry between 3,500 to 7,000 products. Amazon is investing heavily in its private label brands, omni-channel capabilities, technology, logistics, retail store media, and customer experience. Amazon wants to win on price — and they can. If Lidl doesn’t drastically change their strategy, Amazon will easily surpass Lidl, to become 2nd only to ALDI in terms of operating small format discount stores. Lidl US must not allow that to happen. If they do, Lidl should exit the U.S. market.

I can’t stress this point enough: The Schwarz Group must become more aggressive regarding the U.S. market. In my opinion, a minimum of $10B to $12B should be invested in Lidl US. Lidl has incredible potential in the USA, but I believe most of Lidl’s efforts in the U.S. prior to the arrival of Joel Rampoldt, can only be described as being a failure. I encourage Gerd Chrzanowski, CEO of The Schwarz Group, to provide Joel Rampoldt with the capital and support he needs to accelerate Lidl’s growth and market share.

Is The Schwarz Group committed to keeping Rampoldt as CEO? I don’t know. If there is a change at CEO, I recommend replacing Rampoldt with Tony Hoggett, formerly of Amazon; Claire Peters, VP Worldwide Amazon; Vineta Bajaj CFO of the Rohlik Group; Suzy Monford, CEO of Heritage Grocers Group; or Sergie Goncharov, former CEO of Pyaterochka, which operates nearly 20,000 grocery stores.

The Best Strategy

As we enter 2025, I am more convinced than ever that I am right about the need for Target and Lidl to form a strategic partnership, and that doing so is the best strategy for both companies. Why am I so confident? Because I’ve been through this before. In 2013, I wrote a research report where I recommended that Amazon should acquire Whole Foods Market. I sent a copy of the report to several executives at Amazon — they hated the idea of Amazon acquiring Whole Foods — and each told me that “Amazon will never acquire a grocery retailer.” In May, 2016, I turned the research report into an article, and I posted it on LinkedIn. Many people, including executives from Amazon, reached out to me to say they enjoyed reading the article. On June 16, 2017, Amazon acquired Whole Foods. Never say never.

Target has struggled to create a grocery business that meets the needs of their customers. The majority of Target’s customers buy their groceries elsewhere because the prices at Target are too high. This is costing Target billions of dollars annually. Target has tried to revitalize its grocery business for over a decade. Sales have improved, but Target’s grocery business is considered to be a laggard when compared to Walmart and other grocery retailers. Grocery executives that I spoke with from several leading retailers for this article listed several key issues that they believe Target must address such as executive leadership, pricing, promotions, assortment, operations, value proposition, supply chain and logistics, and store presentation.

The brutal truth is that Target has failed to hire the right executives to lead the grocery business, and Target has failed to design and implement a grocery strategy that will allow them to win with customers. Opening Lidl stores inside Target stores will create an inviting and dynamic grocery experience. Customers will be attracted to Lidl’s best in class private label products, especially their award-winning fruits, vegetables, meats, dairy products, baked goods, and Lidl’s ‘Gold Medal’ winning wines. Lidl’s produce is fresher than what is sold at Whole Foods Market and Sprouts Farmers Market, according to grocery executives I spoke with. Customers will be able to shop for all of their groceries in one location as name brand products such as Coke, Pepsi, Cheetos, Doritos, Skippy Peanut Butter, and other popular brands, will also be sold in the stores and on shelves adjacent to the stores. What customers will love most are the low prices.

Is Lidl the only grocery retailer Target can partner with? No. Target wanted to acquire Sprouts Farmers Market, but Sprouts wasn’t interested; Sprouts doesn’t need Target. Target could attempt a partnership with Trader Joe’s, but I don’t believe Trader Joe’s will be interested. When I worked as a consultant for Kroger, I recommended that Kroger try and merge with Target or form a partnership; talks were held but no deal was made. Target could partner with Publix, something I’ve recommended. Publix primarily operates in Florida, but they have a desire to scale nationwide. Publix can open small format stores inside Target stores to accelerate their expansion and increase their brand awareness. A combined Target/Publix would be a powerhouse. What about ALDI? I don’t believe ALDI would be interested in partnering with Target. I also believe Lidl offers Target a better option for customers than ALDI. What about Amazon? It’s possible (but not likely) that Amazon will acquire Target, and open Whole Foods Markets inside Target’s stores. Target could choose not to partner with anyone. In fact, Target could choose to divest their grocery business like they divested their pharmacies to CVS.

In my professional opinion, I believe groceries are one of the weakest links in Target’s retail model. Target has a strategic imperative to form a partnership with Lidl. However, if Target doesn’t want to partner with a grocery retailer, an acquisition of Body of Work and/or SKIMS, and a partnership for Target-exclusive fast fashions from Shein, should be explored. The Wild Card — Target and Lululemon merge. Probably won’t happen but if it does…WOW!

Lidl’s biggest competitor is ALDI. Like Lidl, ALDI is truly one of the best grocery retailers and companies in the world. I am an ardent admirer of ALDI. ALDI currently operates 2,443 stores in the USA. ALDI announced in 2024 that they’re opening 800 more stores in the U.S., and investing $9B to continue growing their market share. ALDI plans on operating 3,200 stores by 2028, making ALDI one of the largest grocery retailers in the U.S. I anticipate that ALDI will continue to surgically open stores in the U.S. beyond 2028, and also make strategic acquisitions. ALDI is an execution machine. It will take billions of dollars and decades for Lidl to catch up with ALDI, if Lidl continues with their current strategy. There is a better way — partner with Target.

Target operates 1,963 stores in the U.S., with more stores planned for opening. California has the most Target stores with 318. If Lidl partners with Target, they will be able to rapidly close the gap with ALDI. Within two to three years after forming a partnership, it’s plausible that Lidl branded stores can be opened in 1,250 to 1,500 Targets. By 2030, the renovations and openings should be complete in all Target stores. Opening stores inside Target stores will eliminate the need for acquiring permits and real estate. It’s conceivable that Lidl will save as much as $1B or more in costs via a partnership with Target. In addition, Lidl can open standalone stores to increase the total number of stores they operate; between 500 to 800 by 2030. It’s possible that by 2035, Lidl will operate more stores than ALDI. Target can manage the process of replenishing Lidl’s stores with groceries until Lidl opens additional distribution centers (DC) across the U.S. Lidl currently operates three DCs.

Is Target the only option for Lidl? No. The Schwarz Group (TSG) could acquire the retailer Kohl’s, which operates 1,175 stores, but there are several challenges in doing so. First, the average Kohl’s store is 80,000 square feet which is much larger than Lidl stores which average 25,000 square feet. For comparison, the average ALDI store is 10,000 square feet. Second, Kohl’s is in a downward spiral. In 2001, Kohl’s was worth $23B. Today, Kohl’s is worth $1.5B. If TSG acquires Kohl’s, they will have to make major changes to the business model. For example, Kohl’s generates 55% of their revenue from selling their private label products. TSG would be wise to minimize the branded label products in the stores and maximize the focus on private label. Most of the branded merchandise could be made available online only. Opening a Lidl store inside every Kohl’s location would create an exciting customer experience, and generate additional revenue. Sephora has opened stores in many Kohl’s, and that would also attract customers. Another interesting option for TSG to consider is acquiring Kohl’s, opening Lidl stores inside Kohl’s stores, and partnering with Target, Academy Sports, Primark, and other retailers, to sublease the excess square footage available in each Kohl’s store. The stores can be rebranded as Lidl Academy Sports, Lidl Target, Lidl Primark, etc.

Walgreens is being sold to the PE firm, Sycamore Partners. Walgreens operates 8,560 stores in the U.S. The average Walgreens store is 15,000 square feet. TSG could acquire 2,000 to 4,000 stores from Sycamore Partners, or lease the stores, and open stores designed specifically for the square footage available in each store. Lidl has relationships with contractors, and they have an expert team of real estate agents, architects, and construction personnel who can choose the best store locations and design plans for remodeling the stores. TSG may choose to keep the pharmacies and offer customers a discount pharmacy option managed by Walgreens, Lidl, or a third party; this would significantly differentiate Lidl from ALDI. This option offers the fastest opportunity for Lidl to become larger than ALDI by store count in the U.S.

I rank a partnership with Target as the best option for The Schwarz Group and Lidl. In Second Place, I rank acquiring or leasing 2,000 to 4,000 stores from Walgreens. In a very close Third Place, I rank an acquisition of Kohl’s.

Lidl has a strategic imperative to form a partnership with Target.

It’s Happening 

When Rampoldt became the CEO of Lidl, I had to assume that he would contact Target, since sources I know at Alix Partners had informed me that my Lidl article had come up in discussions and that Rampoldt supported the idea of Lidl and Target partnering. I have multiple sources at Lidl and Target, and I spread the word among my sources that I wanted them to contact me if Target and Lidl begin to have discussions. My sources didn’t let me down. Discussions about a partnership with Target began inside Lidl US in 2024, and eventually included outreach and discussions with Target. A source intimately familiar with Lidl’s strategy in the U.S. stated to me, “It’s happening. Things are moving slowly but a partnership with Target looks possible.”

Prior to writing this article, I contacted a high-level Target source. I stated that I believe Target and Lidl are in discussions about a strategic partnership, and I asked my source to confirm if I was right. Two-days later, my source contacted me and said, “Target had discussions with Lidl this year (2024) about a partnership of some kind. More discussions are planned and it looks positive.” I asked my source to confirm if Joel Rampoldt is leading the discussions for Lidl; my source confirmed that he is. However, my source was unwilling to state that a deal was imminent, and they told me that a deal may not happen at all. I strongly encourage both companies to keep the discussions going. I believe it’s possible that a deal between Target and Lidl will materialize in early 2025.

If what my sources say is accurate, and if Target and Lidl are serious about a strategic partnership, I strongly advise Target to do one of the following:

1. Hire Joel Rampoldt, and name him the EVP of Grocery Finance, Strategy and Operations, for Target. Target must give Joel the authority to make any personnel and organizational changes that he deems necessary. Rampoldt must be responsible for Target’s grocery business, grocery supply chain and logistics, grocery operations, and ensuring that Lidl stores are opened as efficiently as possible inside Target’s stores. Rampoldt will step down as CEO of Lidl.
2. Hire Tony Hoggett, Claire Peters, or Suzy Monford, or another candidate, to run Target’s grocery business, and Rampoldt remains the CEO of Lidl.
3. Rampoldt remains CEO of Lidl, but he is also named Target’s EVP of Grocery Finance, Strategy and Operations. This option offers interesting possibilities, and it would greatly reduce the complexity involved in making a partnership succeed.

Conclusion

The grocery industry is undergoing massive changes. Costco is becoming a dominant player in groceries. Kroger and Albertsons failure to merge will weaken Albertsons as a company. Albertsons will begin closing stores in 2025. By 2026, Albertsons will likely attempt a merger with Ahold-Delhaize USA; something they tried to do in 2022. Kroger is falling further behind Walmart. Instead of buying back stock (ridiculous), Kroger should acquire the Ocado Group, and name Tim Steiner CEO of Kroger. Tony Hoggett would make an excellent CEO of Kroger. Amazon is investing heavily in different store formats like Amazon Grocery and Amazon Fresh. Whole Foods continues to experiment with new store formats. In 2025 or early 2026, Amazon is opening a 250,000 square feet Supercenter near Simi Valley, CA. Amazon is a growing threat to most grocery retailers.

The $1.5 trillion grocery industry has become exceptionally competitive. Established players in entrenched markets are working harder and investing more to retain their customers and attract new ones. Walmart is the largest grocery retailer in the U.S. with 25% market share. Target is in 9th place with 2.7% market share. Lidl isn’t in the top 10. Walmart has invested $50B over the last three years to open warehouses powered by technology from Symbotic, invest in AI, and expand their strategic partnerships; for example, Walmart’s partnership with 345 Global. Walmart is transforming their company through technology and automation, and it’s accelerating their ability to lower costs and disrupt their competitors. Target must invest more in automation and technology. Most important, Target must invent a new grocery model to give Target a competitive advantage. For example, in addition to opening Lidl stores and selling groceries, I firmly believe that Target can launch a new warehouse club model that will disrupt Costco and Sam’s Club. Lidl will change the game for Target.

Top 10 Grocery Retailers By Market Share

Walmart = 25.3%

Kroger = 10.1%

Costco = 9.2%

Albertsons = 6.4%

Publix = 4.8%

Ahold​Delhaize = 4.6%

Aldi = 3%

Amazon, Whole Foods, Amazon Fresh, Amazon Grocery = 3%

Target = 2.7%

HEB = 2%

Target CEO Brian Cornell, will step down as CEO in 2025. Michael Fiddelke, EVP and COO of Target, should be at the top of the list of internal candidates to replace Cornell. I like and respect Fiddelke, and he has legitimately earned the right to be CEO. If Target wants to hire a CEO from outside the company, my top external candidates to replace Cornell are Richard Dickson, CEO of Gap; Chris Nicholas, President and CEO, Sam’s Club; Kathryn McLay, President and CEO, Walmart International; and William White, SVP and Chief Marketing Officer, Walmart. Whoever is named the next CEO of Target, the grocery business will be a major issue they’ll need to solve. A partnership with 345 Global, led by Founder and CEO Mark Edwards; and a partnership with Wiliot; are a must-have for Target in 2025. The benefits will be immense for Target and their customers.

Groceries are strategic to Target’s future. Target has an incredible opportunity to reinvent itself as a leading destination for groceries. I first recommended a partnership between Target and Lidl in 2015, and I’m glad that discussions are taking place. I firmly believe that both companies have a strategic imperative to make the partnership happen. If done correctly, a combined Target/Lidl will offer consumers arguably one of the most exciting grocery options in retail.

In my opinion, Target/Lidl can increase their share of the grocery market to between 6% to 8% by 2030. Target can conceivably become one of the top 3 or 4 grocery retailers in the U.S. if they implement the right strategy and hire the best executives to run the grocery business. If Target achieves the goal, they will generate billions of dollars in additional revenue; this is why the next CEO of Target must view groceries as being strategic. Lidl, via a partnership with Target, and opening 1,000+ standalone stores, has the potential to overtake ALDI as the largest discounter in the U.S. between 2030 and 2035.

Think BIG, Target and Lidl. THINK REALLY BIG!!

I do not have a business relationship with any company I name in this article. All discussions with sources were off the record to protect their identify. The opinions expressed in the article are my own. 

An earlier version of this article attributed a quote to Joel Rampoldt, that was actually made by another individual. In addition, it wasn’t made clear that the quotes from Rampoldt took place prior to him becoming the CEO of Lidl. The article has been edited to correct the errors.