Martin Brandenburger: €30m investments in Lidl Cyprus stores are on the way
07:11 - 23 January 2024
The cautious stance of consumers forced to get by on a significantly reduced income has contributed to the compression of consumption including in the supermarket sector, the CEO and Chairman of the Board of Directors – Lidl Cyprus Martin Brandenburger says, noting that any predictions for 2024 can only be made with caution.
In an interview with InBusinessNews, in the context of "IN Business Forecasting 2024," Brandenburger underlines that, to support Cypriot consumers, Lidl Cyprus has gone ahead with a permanent price reduction of up to 33% on more than 380 products, making a real difference to a family’s budget.
Regarding plans for Lidl Cyprus, he explains that, to date, more than €220 million has been invested, while for the three-year period 2024-2026, another €30 million will be allocated to the stores network.
At the same time, the installation of photovoltaic systems in Lidl stores is underway, the number of which is expected to reach nine by the end of the 2024 financial year, while the company's priorities also include the installation of electric charging stations.
Underlining that businesses need more flexibility and less state intervention, the CEO and Chairman of the Board of Directors – Lidl Cyprus explains that the fewer the restrictive legislative regulations, the greater the possibilities of increasing investment, strengthening jobs, developing workers' skills, and also achieving lower prices.
In light of inflationary pressures, high interest rates and unpredictable ever-changing geopolitical developments, how do you see the economic environment shaping up in 2024?
It is a fact that we went through a very difficult period, with successive challenges. From the economic crisis to the pandemic, and of course the recent energy crisis and successive inflationary waves. However, we are in a normalisation phase, although several challenges remain active. This is mainly due to the geopolitical instability of the region, which can affect some sectors, such as tourism, and always in relation to specific markets. I am confident of the positive development of the market, which will certainly benefit our industry as well. The upgrades from international businesses, the influx of European funds with the Recovery and Resilience Mechanism (RRF), and in general, the attraction of foreign investments in the country, make up a fertile economic environment. After all, estimates speak of an acceleration of economic growth in 2024 and 2025.
What do you consider to be the biggest and most difficult challenges that the Cypriot economy will have to face?
The challenges for the Cypriot economy are multidimensional, however, in my point of view, three challenges stand out: the management of inflationary pressures, geopolitical instability and the lack of a skilled workforce. In terms of the workforce, the challenge concerns both numerical and qualitative adequacy, with an emphasis on skills and experience. Cyprus is tangential to the core of geopolitical developments and the uncertainty arising from these developments and the ever-changing environment affects all aspects of the economy.
Considering the company’s latest upgrades, is it now well on its way to growth?
The evaluation of the development of the economy is complex and subject to many factors. There may be improvements or upgrades in specific areas, but what matters is the overall performance of the economy. This is an open challenge for both government and the retail sector, as there is an inextricable relationship of interdependence and interaction. I believe that the Cypriot economy now has a strong background and a track record with tangible examples of recovery and dealing with all the challenges that may come to the fore. It is definitely ready to cope, and of course continue its development course in the near future.
What do you think will be the course of the field in which you operate in 2024?
In general, and with regard to the supermarket industry as a whole, we can speak cautiously about the coming year. The economic environment remains vague and events in the international geopolitical sphere are often unpredictable. In 2023, despite the industry's sales growth in value terms, sales volume declined, following the reduction of consumption. One of the main reasons was consumers’ cautious attitudes, who were forced to manage a significantly limited income.
To support Cypriot consumers, we have gone ahead with a permanent price reduction of up to 33% on more than 380 products, that really makes a difference to a family’s budget. It is no coincidence that through the Lidl Plus programme, the average consumer can save up to 1200 euros a year.
We move cautiously, decisively but also ambitiously, as befits a leader company. Our priority remains to maintain competitiveness and of course to continue to effectively respond to the daily needs of Cypriot consumers.
What are the biggest industry trends/changes you anticipate in 2024?
We always face emerging challenges in close cooperation with all of our stakeholders. We align both our thinking and our perspectives. In general, we have a dynamic and demanding environment in the retail sector and in particular in the food retail sector. We prioritise the need to digitise business processes, the escalating consumer need for sustainable consumption, increasing regulations on sustainability issues, as well as supply difficulties due to the strained transport situation.
What are the most important problems that are currently plaguing your sector and the solution of which you consider to be a priority in view of the New Year?
Any market can remain healthy and competitive with conditions. Businesses need more flexibility and less government intervention. Because the fewer the restrictive legislative regulations, the greater the possibilities of increasing investments, strengthening jobs, skills of workers, as well as achieving lower prices. After all, at Lidl Cyprus, we embrace and implement a truly healthy business logic that consistently returns benefits to the market, the economy in general and of course society.
If you could ask the Government to take specific measures or formulate policies to support/strengthen your sector, what would they be?
Undoubtedly, any decisions and measures of the respective government have a direct impact on businesses, and on retail. Especially when it comes to a company like Lidl Cyprus, which faithfully follows the letter of the Law, with full transparency in its entire range of activities. The Cypriot government can support retail companies in various ways. Some of which involve financial incentives, tax breaks, modernisation of bureaucratic processes, as well as training programs to develop skills and innovation in the sector. Also, creating an environment that favours entrepreneurship and development can encourage businesses to further invest in both society and the environment.
What is your organisation's plan/strategy for 2024? Should we expect new products/services/developments and your further establishment in the market? Will it be a year of growth/expansion or maintaining your existing place met in the market? Can you tell us about any of your plans in particular?
To date, we have invested over 220 million euros. For the three-year period 2024-2026, we intend to allocate 30 million euros for the network of our stores. We are proceeding with the installation of photovoltaic systems in our stores, while a photovoltaic system has already been put into operation in our warehouse. By the end of the current financial year (March 2024), 1 new installation will have been added to the existing 5, while by the end of the 2024 financial year, we plan to have completed the addition of 2 additional PV systems in our stores, bringing the total to 9. At the same time, we are prioritising the installation of electric charging stations in our stores. Today, we operate stations in 4 stores and in our headquarters, while it is expected that by 2024, electric charging stations will be installed in 100% of our stores. But we are also pioneers in the field of proper management of natural resources, as well as in reducing both waste and food waste. As part of our business operation, we are already committed to 50% less food waste.
What role does technology, such as artificial intelligence, play and what changes is it expected to bring about in your field?
In September 2022, we successfully completed fully automated in-store ordering, a multi-dimensional project that automatically recommends merchandise needs for stores, maximising availability and reducing overall supply chain costs and food waste at the source. Needs are calculated based on an algorithm, which evaluates data such as historical data, turnover trend, bid data and weather forecast. At the same time, we provide reliable and timely product and price information thanks to electronic price tags available in all of our 20 stores.