June 14, 2012

German cartel office bares teeth to retailers

Alain Caparros, Rewe CEO (photo: Rewe Group)
Not amused, Rewe CEO Alain Caparros: "What future for Dohle, Coop, Wasgau?"
The Bundeskartellamt (Federal Cartel Office) seems determined to prove to Germany's retail oligopoly that it is not a paper tiger. To date, the competition authorities seemed content to bridle Edeka-Gruppe, Germany's largest food retailer with a 20.2 per cent market share, imposing strict conditions on its purchase of discounter Netto and regional retailers Ratio and Trinkgut. Now, however, they have turned their guns on Rewe Group, Germany's no. 2 food retailer with a 16.7 per cent market share. The bone of contention is Rewe's buying co-operation with regional multiple Wasgau which both parties had wanted to start on July 1. A written reply by the cartel authorities to an enquiry by Lebensmittel Zeitung did not pull any punches:
June 5, 2012

Metro Group sells Makro C&C stores in the UK

Olaf Koch, CEO Metro Group (photo: Bert Bostelmann)
Olaf Koch: "We must now show results rather than just announcing them"
Viewed in isolation, there was nothing untoward about Metro Group selling its English C&C business to local wholesaler Booker last week. After Morocco, the UK is only the second country the company has ever exited, and its business empire still spans 30-odd nations and three continents. Looked at more closely, however, the long-expected departure from the British Isles is symptomatic of a wider malaise within Germany's largest retailer by annual revenues. "After generating losses (in the UK) for years...it's a logical step to terminate a business which doesn't meet our medium- and long-term expectations...Metro can now concentrate on its core markets," says CEO Olaf Koch. So far, at least, so logical, but it wasn't a pretty sight.
June 1, 2012

Talk with Diageo Europe CEO Andrew Morgan

Andrew Morgan, Diageo Europe CEO (photo: Diageo)
Andrew Morgan: "Germany is growing like an emerging market for us"
After allowing major rivals to steal market share for years, London-based Diageo plc has rediscovered Germany. In fact, the world's largest spirits maker is on a roll here. Diageo's new thrust in the Federal Republic is a counter-intuitive move by the maker of Smirnoff vodka and Johnnie Walker whisky. After all, Germany's spirits market, like its population, is hardly on the increase. So why is Europe CEO Andrew Morgan, a man whose very name sounds like a rum brand, rubbing his hands with glee when it comes to business in Germany? At first blush, he shouldn't be. Retailing here is dominated by hard discounters, and the recession in other parts of Europe has worried local consumers enough for them to eat out less. Gastronomy has been hit correspondingly hard.
May 25, 2012

Embattled Schlecker awaits saviour

Arndt Geiwitz, insolvency administrator (photo: Thomas Rohnke)
Problems, problems: Schlecker insolvency administrator Arndt Geiwitz confirms new losses
How are the mighty fallen! Only one year ago, Schlecker was still deemed Europe’s largest drugstore operator by sales and outlet numbers. Now the Ehingen-based company is fighting for its very survival. Despite closing 2,300 stores and pruning staff numbers by 11,000 to around 13,500 since the opening of insolvency proceedings on March 28, Schlecker is in the red again. The already dire situation has been exacerbated by the stopping of compensation for bankruptcy since this date. Lebensmittel Zeitung estimates that a lower two-digit million euro loss has accrued over the last six weeks, although the exact figure has not been confirmed by Schlecker’s insolvency administrator Arndt Geiwitz. Up to March, the family-run company owed €300m in outstanding payments to suppliers alone. After the emirate of Qatar, whose royal family owns a 25 per cent stake in UK food multiple J.Sainsbury, quit the bidding table on Wednesday, Geiwitz claims that “intensive” negotiations are being held with two potential investors.
May 17, 2012

Metro Group starts new round of cost cutting

Metro Group head office (photo: Ludwig Heimrath)
There is a house in Dusseldorf: Metro headquarters waits for the rising sun
Oh, happy days! With its three-year reconstruction programme (Shape 2012) hardly complete, Metro Group has already embarked on another round of cost-cutting. New CEO Olaf Koch is apparently preparing to make "painful cuts" only months after arriving at Germany's largest retailer by sales. Although officially no decision has been taken on the number of redundancies, trade unions believe these could mean up to 800 job losses. At mission control in Dusseldorf some fear that around half of the approx. 4,000 staff could be axed. Koch (41) wants to reduce group costs by around €100m per annum and has asked all relevant divisions to submit proposals. But can all the blood, sweat and tears placate Haniel, Metro's majority shareholder and indebted to the tune of €2.4bn?
May 10, 2012

Regional multiple Bünting launches online shop

myTime.de, Bünting online delivery service (photo: myTime.de/Thorsten Helmerichs)
German pioneer: Bünting staff in one of the company's "Famila" stores pick food for the new myTime.de online shop
Sometimes small can be beautiful, but in the world of mass retailing, where God is generally on the side of the big guns, it is usually clobbered. All those who like to support the underdog must therefore hope that Bünting will succeed with its new online shop. Bünting who? Yes, gentle international reader, Bünting. On 23rd April, this regional multiple based in Leer/East Friesland was the first German bricks & mortar retailer to open an online shop with a national delivery service. Even more surprisingly, the choice of just under 25,000 grocery lines will span 18,000 food items, including fresh produce, as well as kitchen-related non-food and health & beauty products. One must savour this news slowly in order to appreciate its merits. Not Germany's national food giants, Edeka, Rewe or Metro, but a regional SME is offering a superstore assortment via the internet.
May 3, 2012

Supermarket in a smart phone

Tesco Korea, scannable posters (photo: Tesco)
Shopping while you wait: Commuters in Seoul order Tesco.com products with their smartphones
You have to hand it to Tesco; they are one of the few big international retailers who understand that consumers want to shop anywhere, any time. When the rumour hit the internet last summer that the UK's largest grocery multiple by sales had created a virtual shop in a metro station in the South Korean capital Seoul, few were prepared to believe it. The idea that shoppers would order products online while waiting for the train or bus on their way to work seemed implausible to say the least. That they would use their smart phone to scan quick response (QR) codes off product placards in order to pick their orders up from local Tesco stores on their way back from work, or have them delivered home the same evening sounded, more like science fiction than real-life retailing. Tesco didn't exactly help by narrating an Abyssinian shaggy dog story that it was all a mistake and just a clever marketing gag fabulated by an overambitious advertising agency determined to win the Cannes Advertising Festival prize. We now know differently.
April 26, 2012

Lidl's moral dilemma in Greece

Lidl Greece store facade (photo: LZ-Archiv)
Under Greek fire: Local politicians accuse Lidl of overcharging for own label products
In ancient Greek tragedy the hero's moral dilemma often consisted in being damned if he did and damned if he didn't. Worse still: his primary virtue contained the seed of his nemesis. 2,500-odd years later, Lidl, who has opened 230 stores since entering Greece in 1999, faces a similar situation as the bankrupt nation teeters on the verge of a financial and economic precipice. The Neckarsulm-based company is currently under attack from national authorities who claim that it is selling own label products at excessive prices. In the wake of a growing wave of anti-German sentiment, local media have indicated that the authorities are preparing to take legal action. Various local internet platforms portray Lidl as a greedy carpet bagger eager to enrich itself at the expense of Greek consumers bleeding in the national debt crisis.
April 19, 2012

Tesco's carbon footprint

Tesco's carbon footprint (photo: The Grocer)
Footsore: In four years, Tesco has labelled less than one per cent of its assortment with carbon footprints
Tesco is generally recognised as a forerunner when it comes to carbon footprint product labelling. But the UK's leading grocer by sales seems to have gone a little lame on what former CEO Terry Leahy had intended to be a triumphant marathon. Over the last four years, Tesco has only managed to research 1,100 lines and to label around 500 on an average assortment of 70,000. Against this backdrop, Professor Simonetta Carbonaro, CEO of REAL_Ise Strategic Consultants, and Dagmar Bottenbruch, Board Director at FLO-CERT, the certification arm of Fair Trade, dispute the usefulness of CO2 labelling. Both international sustainability experts give the whole idea a thorough bastinado.
April 12, 2012

Talk with retail grandee Luc Vandevelde

Luc Vandevelde, Change Capital Partners (photo: Change Capital Partners)
Luc Vandevelde is one of a growing number of former top retail managers who have made their way into the lucrative world of private equity. The former Chairman of Marks & Spencer and Carrefour founded private equity fund management company Change Capital Partners (CCP) in 2003. The London-based business invests in medium-sized consumer goods companies and retailers throughout Europe. Vandevelde (61) is thus in an excellent position to compare the very different worlds of the Plc and the private equity-financed mid-cap. This polite, polyglot Belgian is modest about his own achievements and stresses the importance of fellow MDs Roger Holmes, Steve Petrow, and Stephan Lobmeyr. He also feels that the title of CEO should be translated as "Chief Enabling Officer“ rather than as "Chief Execution Officer“.