00:41Dimensions that one would more readily expect to find in Seattle or Mountain View.
00:45But anyone who looks closely will realize that Lidl has been changing for some time now.
00:50Today, the company has far more in common with Amazon than with Aldi.
00:53Over the past five years, a digital infrastructure universe has emerged, consisting of cloud computing, cyber defense, AI, and mega data centers.
01:02A technological superpower that has long since sold its services to industry.
01:06Europe's only real answer to Amazon, Microsoft or JetGPT.
01:11How a discount retailer began to reframe the question of digital power.
01:15Lidl. Most people assume that behind these four letters is just an ordinary supermarket.
01:21But in the Spreewald, 90 kilometers south of Berlin, the company is currently building a data center that surpasses all previous dimensions.
01:29An investment of 11 billion euros, 200 megawatts of connected load, space for up to 100,000 AI chips.
01:35A mega-project that makes even Tesla or Deutsche Telekom look old and shows where the Schwarz Group behind Lidl has been developing for many years.
01:45To one of Germany's largest tech companies.
01:48Whether it's cybersecurity, cloud computing or artificial intelligence.
01:52The company is now involved everywhere and is even challenging Amazon and OpenAI.
01:58To understand why a discount retailer in particular is launching an attack on Amazon and the like, it is worth taking a look at where this development began.
02:06To a place that initially has little to do with high-tech.
02:10Neckarsulm, a quiet town with a historic market square, baroque church and a 170 billion corporation.
02:17From here, the Schwarz Group manages its 595,000 employees worldwide.
02:22At the top is Dieter Schwarz, 86, with a fortune of 34 billion euros, the second richest man in Germany.
02:30Schwarz avoids the public eye, gives no interviews, and even photos of him are scarce.
02:36He built the foundation of his wealth in the 1970s.
02:39Schwarz takes over his father's food business, relocates the headquarters to Neckarsulm and focuses on expansion at any cost.
02:47The model for this was Karl and Theo Albrecht, the Aldi brothers, who revolutionized the German food trade at that time.
02:55Schwarz adopts the discount store principle and scales it up.
02:58The strategy is working.
03:00In 2024, the Schwarz Group will generate over 175 billion euros in revenue.
03:05The discount chains Aldi Nord and Aldi Süd, which also includes Hofer, together have 112.
03:12For decades, Klaus Gehrig, nicknamed Killeval, ran the company with an iron fist.
03:17He was considered a close confidant of Schwarz, who oversaw the sales and branch structure down to the smallest detail.
03:23When digitalization gained importance in the food trade in the early 2010s, Gehrig reacted cautiously.
03:30Digital initiatives were stopped early on or never even started.
03:34And I need people who can make me understand the time we live in today, because I don't have a computer.
03:40In 2019, things started to stir behind the scenes.
03:43The question was whether the company would stick with brick-and-mortar retail or focus more on online and digitalization.
03:51Gehrig has a clear opinion on this.
03:53This attitude had consequences.
03:54Finally, Dieter Schwarz makes the final decision.
03:57Gehrig has to leave.
03:58Schwarz takes over briefly and shortly afterwards puts Gerd Schrozanowski in charge.
04:03Just one year later, it launched its first major digital offensive with Lidl Plus.
04:08The app is a complete success and is sometimes ranked second among the most popular shopping apps in Germany.
04:14Directly behind Temo and various classified ads or Amazon.
04:18With the outbreak of the Covid pandemic, Germany is experiencing a sharp increase in hacker attacks.
04:24Internal analyses show that the Schwarz Group is also vulnerable.
04:27A suitable opportunity will present itself in November 2021.
04:31The Israeli security company XM Cyber is up for sale.
04:35It was founded by the former head of the Israeli secret service Mossad.
04:40Several US tech companies were reportedly interested, but the contract went to the Schwarz Group.
04:45For approximately 700 million dollars.
04:47This will create a highly professional security architecture in Neckarsulm.
04:51And it is not limited to the Black group.
04:54Today, even large German companies like SAP or Commerzbank are relying on cyber solutions from the black market.
05:00The Schwarz Group requires enormous computing power, but does not want to store sensitive data in external data centers.
05:07The cloud market is dominated by four large hyperscalers from the USA and China.
05:11Microsoft, Google, Amazon and Alibaba.
05:14For a retailer that processes millions of customer data points daily, this is a risk.
05:19Data security can only be guaranteed if the infrastructure remains under one's own control.
05:25The solution is created in-house.
05:26The Schwarz Group is building its own cloud, initially for internal purposes.
05:31Lidl and Kaufland's IT systems, including online shops and logistics, run in their own data centers in Germany and Austria.
05:39In 2022, Schwarz opened the platform to external customers and positioned it under the name Stackit as a European cloud alternative made in Germany.
05:49The group's digital business is growing rapidly and now generates around 2 billion euros in revenue per year.
05:55Still small compared to the core business, but with significantly higher margins, as a look at the industry shows.
06:00While in the food retail sector often only a few cents per euro remain, the cloud business is highly profitable.
06:06At the end of 2022, the publication of JetGPT caused a worldwide hype surrounding artificial intelligence and the question of what role Europe will play in this field in the future.
06:18One of the few European alternatives is being developed in Heidelberg.
06:22LF Alpha, a start-up that develops its own AI systems with its Luminous model series.
06:28But in order to compete with the major US providers, the company needs capital, lots of capital.
06:33In November 2023, the Schwarz Group joined as one of the most important investors.
06:39In total, around 500 million euros are flowing in, a large part of which comes from the Schwarz Group.
06:44At the same time, the next big project, the AI Innovation Park, is growing in Heilbronn.
06:49By 2027, a complete ecosystem for AI research and start-ups is to be created here.
06:55financed in part by the Schwarz Foundation, which is providing 50 million euros for the construction alone.
07:01Further funds are provided through IPAI-Management GmbH, which belongs directly to the Schwarz Group.
07:07A total of up to 2 billion euros is expected to be invested in the project.
07:11In September 2023, Gerd Schrasanowski introduces a new division in the Schwarz empire, SchwarzDigits.
07:19The division is managed by the two co-CEOs Rolf Schumann and Christian Müller.
07:24Schumann brings many years of experience from SAP and Siemens.
07:27Müller has worked at the company since 2004, starting in Lidl's IT department and leading Schwarz IT from 2018.
07:35SchwarzDigits brings together everything the group has built up in the digital sector in recent years.
07:41From the customer app to cybersecurity and proprietary cloud and AI infrastructure.
07:46What began as a loyal app is gradually evolving into a comprehensive digital architecture.
07:52First securing their own IT systems, then building their own cloud, and now getting started with artificial intelligence.
07:59In this way, Schwarz is building a digital ecosystem, initially developed for Lidl and Kaufland, then specifically opened up to external customers.
08:06Whether this approach will succeed remains to be seen.
08:08Competition is fierce, technological change is rapid, and some projects will only be able to be evaluated in years.
08:15But for the Schwarz Group, this course is above all one thing.
08:18A long-term bet on Germany's technological future and on the chance to become Europe's answer to Amazon, Google and OpenAI.
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