Following in the footsteps of Amazon: thanks to the cloud, the annual revenue of the IT department of supermarket owner Lidl reached €1.9 billion

The Schwarz Group, owner of the German supermarket chains Lidl and Kaufland, is actively developing its IT business, according to the Financial Times. We are talking about providing cloud computing and cybersecurity services to corporate clients based on the Schwarz Digits division.

The Schwarz Group began deploying IT services in 2021, starting with a system intended for internal use. The goal was primarily to eliminate dependence on third parties. Since there were no suitable providers in Germany, the group sought to at least use European service providers to avoid storing data in other jurisdictions. Having come to the conclusion that no existing provider could meet its needs, the company decided to create its own cloud service – StackIT.

In 2023, Schwarz Digits became an independent operating entity. Annual revenues reached €1.9 billion and employ approximately 7,500 people. Schwarz Digits’ clients include the German enterprise software company SAP, the Bayern Munich football club and the Port of Hamburg, among others. The main advantage of Schwarz Digits cloud services is that all customer data is processed and stored exclusively in Germany and Austria, where strict privacy and data protection laws apply.

Image source: Lidl

In 2023, the Schwarz Group decided to venture into AI technologies by acquiring a minority stake in the German startup Aleph Alpha. Founded in 2019, this company develops large language models (LLMs). The startup focuses on the concept of “data sovereignty.” The company offers its LLMs to corporate clients and government agencies. Late last year, Aleph Alpha led a funding round worth more than $500 million, with Schwarz Group as one of the investors.

According to Axel Oppermann, owner of German IT consultancy Avispador, Schwarz Digits’ focus on cloud computing, cybersecurity and AI was “well thought out” as all three areas are of significant interest to clients. In fact, Schwarz Digits has become a serious regional competitor to such giants as Amazon Web Services (AWS), Google Cloud and Microsoft Azure. However, to reach the international level, according to Oppermann, Schwarz Digits lacks a developed partner network.