April 16, 2014

Schwarz Group challenges Tesco

A Kaufland hypermarket (photo: Kaufland)
Unmistakably bright: A Kaufland hypermarket
Given the depressing annual group trading profit and like-for-like sales figures he was obliged to announce today, Tesco CEO Philip Clarke might not feel in the mood to mull the latest buoyant news from Schwarz Group. With net sales of €74bn for the year to the end of February 2014, the Neckarsulm-based company looks set to push Tesco down soon to number three in the list of leading European food retailers and is already snapping at the unhappy UK retail giant’s heels. If Schwarz Group continues to grow at its current giddy rate of 10 per cent per annum, the parent of “Lidl” discount stores and “Kaufland” hypermarkets could soon challenge Carrefour to become Europe’s largest retailer.
April 10, 2014

Rewe at the gas station

Rewe to go at an Aral gas station in Dusseldorf(photo: Georg Lukas)
Rooftop advertising: Rewe to go is trialling its first convenience store at an Aral service station in Dusseldorf
You’ve got to start somewhere! A good 20 years after the idea became mainstream in the UK, Germany’s second-largest food retailer is trialling its "Rewe to go“ convenience store format at Aral petrol stations. Yesterday’s start in Dusseldorf represents the first of ten pilot stores of between 80m² and 140m² in the Federal State of North Rhine-Westphalia. The trial is set to last for a year, but could then be rolled out on a national basis. Neither party seems particularly worried about the co-branding. A huge cube in “Rewe to go” corporate green announces the new venture from the roof of the otherwise blue and white Aral service station. Flags fly with the slogan “Frisch. Schnell. Neu” (fresh, quick, new), there is a long advertising banner at the fuel pumps, and a girdle of balloons runs around half the building. The joint-venture looks like a win-win for both partners.
April 3, 2014

Price cartels and the German food trade

The German Federal Cartel Office in Bonn (photo: Ludwig Heimrath)
Legal eagle: This bird has sharp eyes, ears and claws
"Naughty boys, you've sinned against the 11th Commandment: Thou shalt not get found out." Needless to say, this is not how the German Federal Cartel Office worded its whopping fine on Wednesday of Carlsberg Germany and Radeberger Breweries. Allegedly, German brewers have been collaborating on prices – a claim they vehemently contest. If this is true, then our processors of water, barley and hops are in good company. The increasingly active officials at the Bonn-based Bundeskartellamt have already swooped down on various sweets makers, coffee roasters and sugar refiners in equally contentious issues. They have also been closely examining potato wholesalers and sausage manufacturers. In all, the cartel authorities now intend to fine the brewers involved a total €231m. Oetker subsidiary Radeberger stands to be hit hardest (€155m); the national branch of Danish group Carlsberg says it faces €62m; and the remainder will fall on a number of smaller breweries as well as individual managers. This draconian treatment raises some general questions apart from the obvious one as to its basic fairness. Are the fines excessive to the point of harming the companies concerned? And do "principal witnesses" who remain scot free such as AB-InBev gain an unfair advantage?
April 2, 2014

Müller's high stock turn

Mr & Mrs. Erwin Müller (photo: Matthias Richter)
Spinning the merry-go-round: Company owner Erwin Müller
To misquote Oscar Wilde: "To lose one top manager may be regarded as a misfortune, to lose eleven looks like carelessness." Co-chief executive Wolfgang Lux, who was appointed in November, represents only the latest departure at Müller, Germany's third-largest drugstore operator. In October, finance head Hansjörg Plaggemars and sales manager Brigitte Brunner packed their bags. Over the last few years, it has been time to say goodbye to Gerhard Nachbauer, Martin Wolgschaft, Klaus Scheible, Waldemar Anding, Markus Buntz, Gerhard Kramer, Rainer Müller and Horst Rainer Petermann. How can one interpret the ever more rapid turn of the personnel carousel at Müller? And does it matter?
March 23, 2014

P&G opens own online shop

P&G German headquarters (photo: Mario Vedder)
New dawn in Schwalbach: Headquarters of P&G in Germany
Procter & Gamble's recent opening of its first German online shop has been conspicuously low-key. The US giant now offers a broad spectrum of its brand portfolio to internet customers. This includes big names such as Pampers, Gillette or Pantene as well as electronics lines under the Braun label. At least for the time being, P&G's recommended sales prices have been pitched high enough not to unduly worry local retail partners. And the world's largest fmcg manufacturer is clearly at pains to emphasise that the new site is not intended to compete with retailers. Instead, P&G stresses that pgshop.de will serve as a market research tool to study customer buying behaviour and to communicate product information. To date, German retailers have reacted with studied nonchalance. So all is hunky-dory, right?
March 11, 2014

German retailers keep cool in Russia

Rewe's Billa supermarket in Moscow (photo: Rewe Group)
End of the party? A Rewe Group "Billa" supermarket in Moscow
As the political situation deteriorates in the Ukraine, have German retailers a plan B for their investments in Russia? For years, we have been used to hearing at roadshows and Annual General Meetings: "Yes, business is hard in eastern Europe, but sales are booming in Russia." If tensions increase with the European Union and the USA, how will this affect flourishing revenues at "Globus" hypermarkets, "Billa" supermarkets, "Obi" DIY stores, and "Metro" Cash & Carries? And how will the political impasse affect German suppliers and global food prices? Dr. Eckhard Cordes, Chairman of the influential Committee on Eastern European Relations, warns of an "escalating spiral of mutual economic sanctions".
March 7, 2014

Metro's Russian winter

Metro C&C Russia (photo: Metro Group)
Stumbling on the steppe: Metro C&C in Russia
The crisis in the Crimea and the sharp decline of the rouble appear to have placed a big question mark in the minds of investors over the London IPO of Metro Group's Russian Cash & Carry business. If you pursue profit in a foreign country with a repressive regime, one shouldn't be too surprised if international politics suddenly foil your best-laid plans. But, if your company urgently needs to reduce indebtedness and to raise money for the improvement of operations, then it is perhaps ill-advised to make any project in Russia a part of your turnaround strategy. Such, however, would seem to be the current situation of Metro Group in the dark empire of Vladimir Putin.
March 4, 2014

Rewe arms for Amazon

Rewe CEO Alain Caparros (photo: Rewe Group)
Upping the ante for food online delivery: Rewe CEO Alain Caparros
Only days ago, Germany’s largest newspaper claimed that Amazon.com intends to launch a food delivery service here as from September. Adding fuel to the fire, our own leader reports that Rewe CEO Alain Caparros is looking for around 200 staff to man a new e-commerce project. Lebensmittel Zeitung also claims to have knowledge of an internal company document dating back to the beginning of this year in which Caparros warns that the US online giant could soon be starting in this country. With his usual rhetorical flair, the eloquent French manager is also believed to have implored Rewe’s independents to embrace the internet or read their name on a tombstone.
January 31, 2014

Lidl recokes

Coca-Cola
The real thing: Lidl has quickly relisted Coke
Now that didn’t take long, did it? Only last week Lebensmittel Zeitung reported that Lidl had delisted Coca-Cola. Now the world knows that Germany’s no. 2 hard discounter by sales will be selling “Coca Cola Classic” again in all its 3,300 local stores as from March. The two giants still haven’t completely composed their current differences, however, as the fate of Coke’s other brands (Fanta, Sprite, Coca Cola Light and Zero) still has to be resolved. The decision to take on an iconic US brand in a World Cup year when the retailer is on the verge of entering the States always looked odd. Given that even arch-rival Aldi felt obliged to list Coke last year, it seemed stranger still. Now that Coke has been relisted, the whole affair looks like a skirmish in a larger power play that mighty Lidl has lost.
December 26, 2013

Retail gurus view 2014 & beyond

2014_Future_Simone-Peter_pixelio.de
A matter of perspective
Another year older and hopefully wiser! 2013 is now history and a known quantity, but what does the future hold in store for us all? Given mankind's limitless imagination and capacity to innovate, nothing is so certain as change. At least if Amazon.com CEO Jeff Bezos has his way, we won't need to go to the shops anymore: Everything will be delivered to our doorstep from the sky by "octocopter" drones. Every twelve months we ask trade gurus from around the world for their take on the future and the shape of things to come. Pundits from online start-up operations to corporate finance experts were invited to answer the question: “What do you see as the most exciting development in retailing or the fmcg industry and the most important challenge for the future?”