In a recent episode of the "OFFBounds" podcast, Mirko Saul, SVP of Innovation at Schwarz Digital, offered a rare glimpse into how one of Europe's largest retailers approaches technological innovation.
As the technology arm of Schwarz Group—parent company of Lidl and Kaufland with 14,000 stores across 30 countries—Schwarz Digital's methods for evaluating, testing, and scaling new technologies provide valuable lessons for any company that wants to keep up in a rapidly evolving industry. (Just for comparison, Walmart has a total of 10,607 retail stores worldwide.)
Although the interview focuses on store tech, I particularly enjoyed Marko's framework for identifying, selecting and measuring new tech partnerships.
In this article I recap his framework and consider how players in the retail media space (retailers, brand advertisers, and even solution providers like agencies) can learn from Schwarz' tech scouting model.
You can watch the original interview here on Youtube or search for the "OFFBounds" podcast – it's a new favorite of mine!
The Schwarz Innovation Framework
Mirko's team follows a structured approach to innovation that combines careful evaluation with practical implementation:
1. Problem-First Technology Scouting
While many innovation departments chase shiny objects, Schwarz Digital primarily focuses on solving specific business problems identified by their retail brands. "They first come with the problem... and then you search for the technology that could solve them," Mirko explains. Retail is notoriously cost-sensitive; the group wants to avoid “innovation theater.”
They’ll also sometimes start with “shiny” or emerging tech if it has a clear potential benefit—but in either case, they verify that it aligns with the overarching strategy of Lidl, Kaufland, or other Schwarz Group units.
2. Preliminary Research & Vetting
Mirko explains how the team sources and initially evaluates potential solutions.
First, they scout through multiple channels. Mirko's team engages with universities, attends industry events, and taps direct partnerships with large tech companies. This ensures they keep a pulse on relevant tech developments.
When startups or vendors pitch, the team uses prior knowledge of store processes (and the retailer's scale) to do a quick "gut check." Only a fraction of pitches align well enough to merit the next step.
3. Lab Testing Before Store Implementation
Perhaps most fascinating is Schwarz's commitment to thorough testing before any customer-facing deployment. They have a fully built -out physical "lab store" where they can test the technology in an almost real environment – but without real customers!
This store is built to the same layout specifications (aisles, checkout lanes, backroom, etc.) as an actual Lidl or Kaufland location. A typical process—like scanning an item or stocking a shelf—can be performed just as in a live store.
Company employees or the innovation team itself can simulate shopper actions (e.g., picking up items, scanning barcodes) to see how technology performs in typical scenarios.
Because these are controlled sessions, they can precisely measure results. And this step avoids disrupting store employees, customers, or impacting operational efficiency in real stores.
4. Defined KPIs from Day One
Mirko emphasizes the importance of establishing clear metrics before testing begins: "We agree on KPIs so what we want to achieve... otherwise you just test and then what?" This measurement discipline forces stakeholders to define success criteria before investing resources—a practice that's often overlooked in innovation initiatives. He says this is surprisingly difficult for a few reasons:
- Lack of Historical Benchmarks: Without past data, there’s no clear standard to measure success against.
- Many Possible Success Indicators: Different teams prioritize different success metrics, making it tough to settle on one set.
- Cross-Functional Stakeholder Buy-In: Multiple departments must align on which performance measures truly matter.
- Tech’s Real Impact Emerges Mid-Test: Unforeseen benefits or drawbacks often become clear only after pilots are underway.
- Balancing Short-Term vs. Long-Term Goals: Innovations deliver future strategic value, but retail demands near-term ROI.
While this step is challenging, without predefined metrics, you risk "testing for testing's sake."
5. Incremental Store Rollouts
If the tech proves viable in the lab, it moves to a handful of real stores or warehouses. The business unit (Lidl or Kaufland) must support it. Because store teams can be resistant to new processes, Mirko's group involves them early. They collaborate on "what does success look like?" so that operational teams aren't blindsided.
Schwarz implements what Mirko describes as "not just one store but also not 10 or 20 stores" for initial real-world evaluation. This measured expansion allows for troubleshooting at manageable scale before committing to full deployment.
6. Integration-First Evaluation
Even if a technology "works," it has to be cost-effective at Schwarz Group scale. They examine:
- Total cost of ownership
- Ability to integrate with existing retail operations (point of sale, inventory systems, data lakes, etc.)
- Capacity of the vendor to support thousands of stores in 30 countries
The decision to roll out (or not) comes after this evaluation. If the business case holds, the tech may enter a scaled deployment. If not, they document learnings and move on—seeing even "failed" tests as valuable knowledge that saves the company larger missteps down the line.
Lessons for Retail Media Players
1. Tie Ad-Tech or Media Solutions to Core Business Goals
Just as Schwarz Digital starts with "pain points," so too should retailers and brands evaluating new partnerships. Clearly identify the business objective (e.g., drive incremental revenue from on-site ads, improve brand share of voice, reduce campaign management costs) and map any technology pilot to these objectives.
2. Use a Lab (or Limited Campaign) With Specific KPIs
Before doing a huge, "all-in" ad-tech rollout, run a small proof of concept with certain categories, sub-brands, or a single region to see how the tool performs against a benchmark. How can you isolate the variables as much as possible and create your own 'Lab Store' simulation?
3. Require Vendor Scalability
Just as Schwarz Group demands that prospective technology partners handle 14,000 stores, a retailers and brands must confirm that a vendor can handle your existing and projected volume (of advertisers, of products, or marketplaces, etc) as well as how it will integrate with your roadmap of planned capabilities.
4. Integration & Data Sovereignty
While Schwarz Digital actively embraces external technologies, they made one crucial exception by building their own sovereign cloud system.
"As a European company which sticks to European rules like GDPR," Mirko explains, external providers couldn't guarantee that customer data "would only be in Europe and not used to train AI models."
For retail media teams, this raises a critical question: Which (if any) components of your stack are strategic enough to warrant in-house development versus external partnerships? It's possible that the true number is zero.
5. Involve Stakeholders Early
Whether you're a brand advertiser rolling out a new measurement system or a retailer building an ad platform, consider which stakeholders need to buy in. Offer training and keep them looped in on how the new system will improve day-to-day processes, not just "add complexity."
6. Be Willing to Shelve Technologies
Perhaps the most valuable insight from Mirko's interview is his candid assessment of technologies that looked promising but failed to scale—specifically autonomous store technology: "We quite rapidly realized that it doesn't work on a large scale store... it works technology-wise to be clear, but it doesn't work commercially."
Retail media solutions often change quickly, and some promising ideas never pan out (e.g., an advanced personalization tool might not pay off at scale). A "quick kill" can save months of wasted time. Document the lessons learned, then pivot to more viable solutions.
Conclusion: In Tech, People Matter The Most
Throughout the interview, Mirko repeatedly stresses that technology adoption hinges more on people than capabilities: "A lot of the projects failing not because of the technology but because you were not able to convince your colleagues that it makes sense."
For retail media practitioners—whether from brands, agencies, or retail platforms—this human element cannot be overlooked. Even the most promising ad-tech solution will fail without proper change management, stakeholder buy-in, and training.
As Mirko concludes, successful innovation requires both technological vision and organizational perseverance—a lesson that applies equally to store technology and the rapidly evolving world of retail media.
