July 5, 2013

Aldi goes British

photo: The Grocer
Aldi UK top brass: Matthew Barnes, Tony Baines and Roman Heini
After 23 years of hard slog, it would seem that mega-rich Aldi has finally won the hearts & minds of the UK High Street. The German discounter has beaten local giants Tesco and J. Sainsbury to win "The Grocer of the Year Award". At all events it is illuminating to see members of its secretive management in bow-tie at London's historic Guildhall - without turned-up collars and dark glasses. The annual prize awarded by The Grocer is nothing less than a knighthood for the Aldi Süd subsidiary which has been growing far faster than the overall market over the last two years. According to market researchers Kantar, annual sales growth has averaged 30 per cent throughout 2013. Aldi's 500-odd stores now have a 3.6 per cent share of the UK grocery market outpacing rival Lidl (3 per cent). Here in Old Germany, one is a little surprised, however, at the explanations behind the decision of the judges.
June 27, 2013

Asda reassigns store space for community use

Andy Clarke, CEO Asda/Walmart (photo: The Daily Telegraph)
Andy Clarke: "We want our stores to be at the heart of their local communities"
Now didn’t Robin Hood also come from the North of England? Asda’s plan to offer excess out-of-town hypermarket space to local communities has stirred debate in the UK and even triggers echos of Swiss retail visionary Gottlieb Duttweiler*. As the Leeds-based Walmart subsidiary, with estimated 2013 revenues of €30bn, is the UK’s second-largest retailer this obviously carries weight. CEO Andy Clarke’s decision reflects a number of major trends: The growth of online, convenience and discount shopping; the difficulty of selling general merchandise in big-box food stores; a “space race” and land bank legacy with too much store footage chasing too few consumers in a long recession. Lebensmittel Zeitung also asked Clive Woodger, Chairman of brand consultants SCG London, to assess Clarke's ideas. As a retail architect at design company Fitch over 20 years ago, Woodger was instrumental in developing Asda’s “Superstore of the 90s” in the middle of the space race. Meanwhile, as Germany is far more overstored than the UK, shouldn't we also be talking about Asda's initiative here?
June 27, 2013

Fleury takes the helm of Metro's hypermarkets

Didier Fleury, CEO "real,-" hypermarkets (photo: Georg Lukas)
Didier Fleury: "Metro doesn't need Real, but Real needs Metro"
“If at first you don’t succeed, try, try again!” This old English saying could well be the motto for "real,-" the hypermarket subsidiary of German retail giant Metro Group. Metro boss Olaf Koch clearly hasn’t been able to find a buyer for real,- and seems to have decided on a new and perhaps last push to get the company going again. The owners of Metro have upped the Mönchengladbach company’s investment budget to €500m. But they expect Didier Fleury, CEO of real,-, to achieve a two-percent ebit margin and two-percent annual like-for-like revenues growth within three years. Fleury’s talented predecessor and fellow Frenchman Joël Saveuse didn’t achieve this on a sustainable basis. So does he have a real chance?
June 13, 2013

Lidl goes USA

photo: Lidl
Schwarz Group boss Klaus Gehrig: "We will start in the USA, the timing is right"
Admittedly a little later than Columbus, but it’s never wise to underestimate a Swabian. German discounter Lidl is preparing to conquer the USA. If all goes to plan, its first 100 stores could be opened on the heavily-populated East Coast in 2015 as part of an estimated €500m initial investment. A four-member team, headed by Ireland country manager Kenneth McGrath (37) and colleague Kevin Proctor (40), is already sounding the market. It is also searching for suitable store, DC, and head-office sites. Clearly Lidl is looking for a strategic alternative to Europe, where it has businesses in 25 countries outside Germany but doesn’t see major growth potential. The no-frills retailer’s expansion plans on the continent are relatively modest. Only entries into Serbia and Lithuania, two relatively small countries, are still on the books for next year.
June 11, 2013

Karstadt CEO Andrew Jennings says goodbye

photo: Andrew Jennings
On the way out: Karstadt CEO Andrew Jennings
Not like Caesar: He came, he fired, he failed. The news that Andrew Jennings (64) will not renew his current contract as CEO of Karstadt at the end of this year has come as no surprise. Revenues at the German department store group have fallen during his tenure, and local trades unions have become increasingly militant. Jennings’s appointment to the troubled company two-and-a-half years ago was hailed as an inspired decision. It was believed that an international department store expert would bring some cosmopolitan flair to a tired brand which had once been a German retail icon. In retrospect, however, a bitter interpretation of events would be that an Anglo-Saxon manager was brought in precisely because a foreigner would have fewer qualms about making local staff redundant. At any rate, Karstadt owner Nicolas Berggruen (51), who bought the company out of insolvency for a symbolic sum of one euro in 2010, could have difficulty finding a replacement.
June 7, 2013

Amazon's food delivery challenge in Germany

Amazon.de pickers (photo: Amazon)
Working for the Yankee dollar: Amazon staff picking orders in Germany
After years of tests in hometown Seattle, Amazon could start its “Amazon Fresh” food delivery service in Los Angeles today. The online retail giant intends a roll-out to at least 20 other metropolitan areas in the US and to move overseas in 2014. Amazon already offers a staggering online assortment of 500,000 food & non-food items in the States. It will soon be offering 18,000 fresh food lines in selected Californian zip codes. Delivery will be free on orders of $35 or more. Outside the US, where Amazon made 43 per cent of its total revenues ($61bn) last year, the company already has, for instance, quite a substantial food offer in the UK. Their local site even offers more than 1,000 lines of jam! But it's still not a full shop and lacks fresh food. More importantly, do British customers really use it on a market dominated by Tesco.com? Meanwhile, what might work in the States on those wide, open plains, where rural communities are often badly served by modern retail, could run up against a wall in heavily urbanised and concentrated Germany. Could the Americans be biting off more than they can chew on their largest foreign market?
May 30, 2013

Alan Lafley returns to lead Procter & Gamble

photo: Procter & Gamble
The king is dead, long live the king: Alan Lafley enthroned again at P&G
Did he ever leave? When Alan G. Lafley looks down from his office at Procter & Gamble headquarters in downtown Cincinnati, he can view once more the serene, wisteria-hung plaza where staff love to munch sandwiches over lunch. But the old and now new Chairman, President & CEO of the giant consumer goods maker has returned from retirement to a company in semi-crisis. Why has “A.G.” now replaced Robert McDonald (59) – the very man he chose as his own successor less than four years ago? Probably, mild-mannered Lafley has been amused at most of the media commentary since last Thursday which runs broadly as follows: Lafley did a good job at P&G, but made a mistake premiumising the brands; Bob McDonald then did a bad one, putting cost savings into innovation and marketing; So McDonald's days were numbered when activist investor Bill Ackman acquired a $2bn stake in the company last July; but P&G, with its promote-from-within culture, couldn’t find a successor and had to resuscitate senior citizen Lafley (66 next month). All this needs to be taken with a healthy dose of scepticism.
May 30, 2013

Best Buy vs. Amazon.com

photo: Best Buy
Best Buy: A bricks & mortar dinosaur?
Is Best Buy on the way up, or will Amazon.com prove its nemesis? US business media and Wall Street analysts have pounced on Best Buy’s Q1 results for 2013/14. True to form, they interpret each set of quarterly figures as proof of their own views. Some pundits believe that the world’s largest electronics retailer is failing, others that it will rise again like a phoenix from the ashes. Best Buy, who challenged German hero MediaMarkt/Saturn on entering Europe in 2008, was certainly savaged by the bears last Christmas, sending the share price to a historic low. They regard the Richfield/Minnesota company as a natural victim of "showrooming". But is the US giant's demise really such a slam-dunk case?
May 22, 2013

Aldi Nord gets a refit

photo: Hans-Jürgen Schulz
Aldi Nord: Larger, more modern stores
In our internet-obsessed times, dominated by Amazons, Yahoos, Apples and Samsungs, it is a sign of Aldi's continued significance that any change to its physical store base still hits the headlines. Germany's leading retail brand remains a potent social force and is almost a cult in Europe's most prosperous country. After years of stagnation, revenues at Aldi Nord, the northern branch of Aldi's vast empire, are growing again "at more than 5 per cent". The company sees this success as confirmation of its decision to begin a huge modernisation programme. This has included the upgrading of 4,300 of Aldi Nord’s 5,000 European outlets over the last 18 months as well as a quiet revolution in traditional merchandising strategy. But why is Aldi revamping its store network in an increasingly online world?
May 22, 2013

German retailers greet Croatia EU entry

photo: Jörg_Konrad
Pioneer: German discounter Lidl was one of the first to realise that Croatia has more to offer than holidays
If all goes to plan, beautiful Croatia is set to become the 28th member state of the European Union as per the beginning of July. Whatever EU entry may mean to its 4.4m consumers, the opening of this small Balkan market will certainly facilitate the expansion of foreign retailers. To date, most of Europe's Big Boys (Tesco, Carrefour, Casino, Auchan etc.) have given the Istrian republic a miss. As Croatia only offers annual retail sales of around €16bn, they have clearly decided to concentrate on larger Poland and Hungary. Meanwhile, the nearness of Germany and Austria to Croatian borders has given their national retailers a head start. So Lidl, Kaufland, Spar Austria, Rewe Group (Billa, Bipa), Metro C&C, perfumery group Douglas, drugstore operator Müller, and DIY leader Obi now look set to profit from their first-mover bonus.