Europe’s largest retailer built an empire in the shadows

Lidl’s owner, Schwarz Group, started out building systems for internal use in 2021 and now offers cloud computing and cybersecurity services to corporate clients.

Its IT unit, Schwarz Digits, which became an independent operation in 2023, has signed contracts with clients including Germany’s largest software group SAP, Germany’s top football club Bayern Munich and the Port of Hamburg. Last year, the unit had annual sales of 1.9 billion euros and 7,500 employees.

“We didn’t start out with a commercial motivation in mind, we just wanted to meet our needs,” Christian Müller, co-chief executive of Schwarz Digits, told the Financial Times in a rare interview. “We are on a very steep growth path.”

A key selling point of its service is that all customer data is processed and stored only in Germany and Austria, two countries with strict privacy and data protection laws.

When Schwarz, a privately held company with sales of 167.2 billion euros, began exploring new options for data storage, “it didn’t want to be dependent on a third party,” Müller said.

If there was no German option, he wanted to at least use a European provider and avoid storing data in other jurisdictions. After concluding that existing providers could not meet its needs, the company decided to build its own cloud service.

“We have a lot of highly sensitive data,” Müller said, such as sales patterns at individual stores, price calculations, customer information for the Lidl loyalty program and details on the group’s 575,000 employees.

Once Lidl had its own cloud up and running, it soon discovered that other German companies were asking the same question and wanted to use the largest cloud services in the United States and China.

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