February 28, 2019
Love birds: The union between Ahold and Delhaize looks both increasingly happy and profitable
Surely this is the stuff Board bonuses are made of? Dutch-Belgian retail giant Ahold Delhaize has just announced a spanking set of results for 2018 and ambitious plans for 2019. In the second full business year since the two companies merged in July 2016, net revenues reached a whopping €62.8bn, while free cash flow grew by nearly a quarter to €2.3bn. The Zaandam-based grocer now runs a vast bricks & mortar empire with 6,770 superstores, supermarkets and convenience stores in the Benelux, Central & Eastern Europe and the US. This reflects the long traditions behind Ahold and Delhaize as retail brands. But the new company is also using its annual capex of €2bn and beyond to pursue an omni-channel strategy via click & collect as well as home delivery services Bol.com and Peapod.com. Net consumer online sales on both sides of the Atlantic have now reached €3.5bn. Given these impressive results, we asked CEO Frans Muller how he intends to top them in 2019...
January 31, 2019
Brainbox behind the Big Box: Lim Il-Soon
Everyone, even Donald Trump, knows that the focus of human civilization is rapidly returning to its historic cradle in Asia. The ingenuity and diligence of its vast population have brought the region to the fore once more – a process only accelerated by the globalization of the world economy and the advance of the internet. One of the most fascinating cultures in Asia is undoubtedly South Korea, and it is no coincidence that local retailers are the most advanced internationally in e-commerce. A leading figure in the Korean trade is Lim Il-Soon, CEO of Homeplus. The country's second-largest retailer has just given a big shot of Asian expertise to international buying group European Marketing Distribution (EMD)...
January 17, 2019
New fishing rights?
It is strange how a country that gave the world the gentleman's club in all its sedate glory is itself so eminently unclubbable. But the fact remains that the Brexit referendum in June 2016 has polarised a normally phlegmatic UK electorate. Not since the days of the Cavaliers and the Roundheads has the nation been so divided. After Theresa May's failure to obtain parliamentary backing for her Brexit agreement with the EU on Tuesday, a no-deal scenario looks increasingly possible on March 29. This alarms many. The Confederation of Business Industry (CBI) has warned that a hard Brexit could shrink GDP by up to 8 per cent and put thousands of jobs at risk. Supply-chain concerns now weigh on many industries and on few more so than food retailing, which relies heavily on imports from the European Union. Brexiters claim that such fears are exaggerated or deliberate scaremongering. In a post-factual world where truth is often hard to ascertain, one inevitably turns to the experts. But, if only they could agree! As this blog has almost exclusively hosted Remain views to date, in the interests of fairness, we asked David Collins, Professor of International Economic Law at The City Law School in London and a prominent Leaver, for his view of the current impasse.
December 21, 2018
Alexa, tell me the future
Another twelve months, another chance, another challenge. Every December, we ask a panel of international retail experts for their take on the future of the trade. As in previous years, Lebensmittel Zeitung put the scattergun question: "What do you see as the most significant or exciting development in retailing/fmcg manufacturing and the most important challenge for the future?" Will these gurus continue to stress the disruption caused to the industry by the increasing digitalisation of our society? Will they despair about Brexit and a world still oppressed by domineering old men? Will they worry about the amount of (micro)-plastic in our oceans and the threat of global warming? Or will they just surprise us? We print their answers here in alphabetical order of surname...
November 29, 2018
Eat me, I'm Italian
Retailers have been peddling own label for nearly a century now. One relatively new variant is to export it onto the shelves of foreign grocers. Waitrose was one of the first to do so in 1999 with the sale of premium own label to ParknShop in Hong Kong. The UK multiple now exports to more than 50 countries. Swiss giant Migros also markets its 'Café Royal', 'Frey-Schokolade' and 'Orange Garten' brands internationally. What was once seen as an exotic niche is growing in popularity as more and more retailers discover export as an additional revenue stream. The great beauty of this, of course, is not competing with oneself on one's home market. A recent, but formidable player to join this band of merry own label exporters is Coop Italia. The Bologna-based consumer cooperative created a special division for the purpose in 2015, Coop Italian Food. After having obtained listings in around a dozen countries worldwide, Anna Verga, Head of Global Business, is now trying to crack the German market. Will the lady be successful? We also asked own label guru and Private Label Manufacturers Association (PLMA) president Brian Sharoff for his take on the subject...
November 6, 2018
Dogmatix, always ready to scout abroad for his master
The rich cultural heritage with which la grande nation has enriched our world must surely also include Asterix. Among the delights of this children's comic is Dogmatix, the little dog who frequently makes himself useful by sniffing out exciting new opportunities and adventures for his master. Perhaps it wouldn't be stretching the simile too far, if we compared these two legendary characters with online retailer Cdiscount and its big French retail parent Casino? At any rate, Cdiscount is hounding through Germany at breath-taking speed. Since putting its first paw on the right bank of the Rhine in July, France's third-largest e-commerce player by sales has organised 14,500 collection points in the packet shops of local logistics company Hermes. Cdiscount wants to open 6,200 more with parcel delivery company DPD by the end of Q1 2019. So given this very loud bark, let's talk to the leader of the pack, Cdiscount CEO Emmanuel Grenier, about his plans in Germany...
October 4, 2018
From Russia with love: German consumers could soon enjoy super cool prices
Talk about audacity! Russian discounter Torgservis plans to enter Germany via Berlin-based subsidiary TS Markt. The retailer from Krasnoyarsk in Siberia wants to rent "more than 100" stores with sales areas of 800m² to 1,200m² and 30 to 40 parking spaces. Expansion is planned in both Northern and Eastern Germany, including Berlin and the federal states of Mecklenburg-Western Pomerania, Saxony, Saxony-Anhalt, Thuringia, and Brandenburg. TS Markt is already advertising online for Category and Business Development Managers on its German website ts-markt.de. At first blush this looks very much like carrying coals to Newcastle. After all, Germany is the international home of discounting. You can find discount stores on any local High Street, trade research company LZ Retailytics counts nearly 16,100 of them. Working on the basis that "Poor people must save, and rich ones like to", powerful giants such as Aldi and Lidl have carried their no-frills, low-price message with invariable success to nearly 50 countries world-wide over the last 60-odd years. So have the Russians gone suicidal or mad? Or do they know something we don't know?
August 16, 2018
Burn, baby, burn! This radical student protest slogan from the summer of '68 would be a good motto for European retail managers today. However much bonus-fuelled board members may talk about nurturing shareholder value, figures from Bloomerg tell a very different story. In fact trade top brass seem to have been merrily burning investors' money. According to the US financial news company, Economic Value Added was negative for many leading grocers if one looks at their last reported business years. These include such illustrious names as Ahold Delhaize, Carrefour, Metro, J. Sainsbury and Tesco. As any discussion about EVA quickly becomes technical and gives CFOs a wonderful chance to speak Persian to the layman, we asked Insead professor Marcel Corstjens to talk us through this yardstick and what the Bloomberg figures really mean for retailers, managers and shareholders.
July 19, 2018
Gary Swindells, President Costco France, at the US company's first warehouse club in Villebonne-sur-Yvette
Asterix and Obelix would doubtless shop there. At the end of June, Costco celebrated its first birthday at Villebon-sur-Yvette, a small town 25km south of Paris. This is just one of 750 wholesale clubs in the US, Canada, Mexico, Japan, Korea, Taiwan, Australia, the UK and Spain. Given that outlets average 13,200m², it is a little surprising that Costco has also found the space to open in Iceland. The concept, which enabled the Issaquah/Washington-based giant to post a whopping $126bn in revenues last year, is as successful as it is unusual. The nearest European equivalent would be a Cash & Carry store, but one where end consumers can also shop if they pay an annual membership fee. Any European store expecting customers to pay for the privilege of spending their hard-earned money in a big hangar wouldn't survive a week in business. But Costco clubs, with a standard assortment of only around 3,300 lines, offer attractive quality brands at very competitive prices. A rapidly changing treasure trove of 500 exceptional products, ranging from motor scooters and boats to pianos, also creates an Aladdin's cave effect. This makes Costco one of the few really fun concepts in modern mass retailing. But can Costco recreate its global success in Continental Europe and will it come to Germany? Who better to ask than Gary Swindells (54), the Canadian manager who runs the show for Costco in France, on the first anniversary of operations there...
June 28, 2018
Step inside love: Makro wants to sweetheart lost customers back and to win the hearts and wallets of new ones
It has been great fun teasing the top brass of Metro AG since the demerger of Dusseldorf-based Metro Group in July 2017. But this belies the efforts of a solid stratum of middle managers, supported by many surprisingly loyal employees, who keep the company going from day-to-day. Metro enjoys a variety of fortunes within its international portfolio. Despite some withdrawals in recent years, this still numbers an impressive 25 countries. One of the most challenging is Belgium where the group continues to haemorrhage money. With net sales stagnating at €846m, losses jumped to €107m in the business year to September 2017– the third decline in a row. Metro Belgium runs six 'Makro' and eleven 'Metro' cash & carry stores focussing on the end consumer and professional HoReCa, respectively. The problem child is Makro where the company has just announced a relaunch with a "new commercial approach" aimed at gaining 45,000 new customers annually. This 'Value Creation Plan' is all very well, but there have been numerous such experiments in the past. So why should this one be any more successful? Country manager Vincent Nolf is sanguine...