June 7, 2019

Shanghai welcomes Aldi!

Aldi Shanghai, store front (photo: Andrew Meredith)
Store front
Thought our readers would like to see some photos of Aldi's first two stores in the People's Republic of China, which opened this morning in Shanghai. We also managed to glean a few statements from country manager Christoph Schwaiger in between paring the cheese, counting the olives, and swabbing down the counters. Meanwhile, if you go shopping there, don't forget to drop us a line...
May 29, 2019

Aldi gets physical in China

Aldi Shanghai at Jingan Sports & Fitness Center (photo: LZ Archiv)
Upmarket location: Aldi is celebrating its debut in China as a tenant at the Jingan Sports & Fitness Center
In only days from now Aldi will be starting business in the People's Republic of China. The German discount giant's first store will open in Shanghai on June 7. According to information obtained by Lebensmittel Zeitung, a further nine outlets will follow there soon. The first two sites, one of which includes a tenancy in the Jingan Sports & Fitness Center, are in noticeably prosperous neighbourhoods. Although Aldi is said to want to proceed cautiously during the pilot phase, our newspaper expects the medium-term store count to reach 50 to 100 in order to obtain the necessary economies of scale. Persons who claim to be familiar with the concept describe it as "more modern than company stores in Europe". Under the slogan 'Everyday value – Handpicked for you', the global discount pioneer will be offering a considerably more up-market proposition than at any of its other foreign markets. The convenience-oriented assortment will apparently feature many import goods from Europe, including the dairy products and cosmetics much loved by Chinese consumers. This represents a major departure from long-established company practice.
April 17, 2019

LZ Retailytics ranks Europe's Top 50 retail stars

Winner of the trophy (photo: Annette Shaff_Shutterstock)
Who won the European retail cup in 2018?
If this were football, Schwarz Group would be FC Barcelona, Real Madrid or ManUnited. The owner of German discounters Lidl and Kaufland has again won the European retail cup, as compiled by Frankfurt-based analyst platform LZ Retailytics, with whopping annual gross sales of €113bn in 2018. French giant Carrefour is still runner-up, but has continued to lose ground to Aldi. UK grocer Tesco, supercharged by the purchase of leading local wholesaler Booker, stays number four. German supermarket giants Edeka and Rewe thrive in fifth viz. sixth place. With the exception of Metro, whose sales were burdened by currency rates in Mother Russia, all eight German players in the Top 50 league have continued to grow, with five of them among the Top 10. In an industry that has become, for better or worse, a game of large numbers, this isn't particularly remarkable. Germany is, after all, the biggest market in western Europe. So were there no surprises in all this sexy trade data?
April 4, 2019

Lidl culls its bigwigs, but can't stop growing

You're fired! (photo: ojogabonitoo/iStock by Getty)
It used to be fun being one of the boss men, but not if you work at Schwarz Group these days. Klaus Gehrig, the mighty figure of power running the German retail giant founded by secretive entrepreneur Dieter Schwarz, seems to revel in home-made creative disruption. In increasingly frequent purges the 70-year-old corporate veteran regularly gives his top brass the chop, regardless of their sales achievements. No one is sacrosanct and no one is spared, if they question the general partner's structural changes. In an unmistakable power shift from operations to the consultative committee headed by Gerd Chrzanowski (47) at HQ in Neckarsulm, top managers are often obliged to vacate their offices so abruptly that no immediate replacement can be found. Only three weeks ago, Patrick Kaudewitz, CEO of hypermarket subsidiary Kaufland, had to make his goodbyes; now it is the turn of Jesper Højer, CEO of discounter Lidl, to say his sad farewells. Ignazio Paternò, a former head of Lidl Italia and currently deputy director of purchasing at Lidl Foundation in Neckarsulm, will assume Højer's role on an interim basis. The new supervisory body Schwarz Treuhand (SUT) is expected to make this arrangement permanent as early as this spring. But, at the current rate of survival, Paternò will last only two or three years. We all love to moralise and journalists more than most people. It would be immensely satisfying to write how the arbitrary ruthlessness of Klaus Gehrig is ruining the company for good and all. But this would create a false causality. In fact, with sincere apologies to both idealists and the tender-hearted, the very opposite would seem to be the case...
March 12, 2019

Could this be Brexit breakthrough week?

Brexit jigsaw (photo: destina_fotolia_109198388_M )
Brexit jigsaw puzzle
If all goes to chaotic plan, we are now only days away from a potential 'hard' Brexit. This will bring either freedom or Armageddon depending on your point of view. Many retail managers didn't want to talk about such a divisive subject for their customers and staff even off-the-record. This is understandable as much of the UK's current torment is completely out of their hands. Although we are convinced that Theresa May, Boris Johnson and Jeremy Corbyn are secret readers of Lebensmittel Zeitung, we also couldn't find a British politician who wanted to chat. This is most unusual for a generally loquacious breed, and we even offered them tea and scones. On the eve of three House of Commons votes this week, we therefore turned to a prominent legal-eagle in the hope of some enlightenment. One well-known commentator in both media and academia is Thom Brooks, Professor of Law & Government at Durham University. So we asked him to get out his intellectual machete and hack a path through the Brexit jungle for our readers...
March 7, 2019

Everyone wants to save Spanish retailer Dia

Spanish fire brigade (photo: Frantic00/Shutterstock)
Emergencia: L1 Retail evidently sees itself as part of Spain's retail fire brigade
Let us take a Ukrainian-born Russian oligarch and call him Mikhail Fridman. Let this self-made man set up an investment holding in London (LetterOne) with a retail arm in Luxembourg (L1 Retail). Let him invest €700m for a minority stake in Spain's fourth-largest grocer, Dia. Then watch the share price of this soft discount-proximity retailer crash by more than 90 per cent on the Madrid stock exchange within a year. How happy would you be, dear reader, if you were he, and what would you do to extricate yourself from this mess? Why, it's simple, stupid: Tell L1 Retail to make a bid for Dia, propose a rights issue of €500m, and replace the existing Board with the best international retail talent that money can buy. Then give your new dream team five years to effect a turnaround and wait for your paper losses to turn into profit. Sounds good, doesn't it? But life can be complicated, even for the rich and ruthless. There are shareholders and fiscal authorities to woo, stubborn board members to oust, and bankers to placate who could pull the plug on huge corporate debts. Worst of all, competitors, such as Lidl, Carrefour, Mercadona or Sonae, might make a counter-offer and start a bidding war. As Dia, whose 6,157 stores in Spain, Portugal, Argentina and Brazil posted €9.4bn in gross sales last year, awaits its AGM on March 19 & 20, will Stephan DuCharme, managing partner at L1 Retail, be able to fulfil his master's wishes?
March 1, 2019

A little peep at Ocado's proprietary technology

Robot carries parcel (photo: kirill_makarov Fotolia)
The future is already here...in Erith!
No, it's not Star Wars. Luke Jensen, CEO of Ocado Solutions, may be master over an army of robots. But, instead of going over to the dark side, these hard-working chaps will commission your online food orders in just a couple of minutes at one of the online retailer's three highly-automated giant warehouses. Our sky-walking reporter Sabrina Schadwinkel jumped on her space buggy for a short hop from Frankfurt to Erith, just a tad south-east of London, to have a look at Ocado's latest and largest so-called Customer Fulfilment Centre. Its two hives are each the size of three football pitches. When fully ramped up, they will have 750,000 storage locations managed by a swarm of more than 3,500 robots. The Erith site, with its chilled, ambient and frozen temperature zones, is expected to achieve annual sales north of £1bn. Nearly a third of this capacity will go to Morrisons, the UK's fourth-largest grocer by revenues. Given that Ocado has also just agreed a joint venture with British retail icon Marks & Spencer, let's have a chat with Mr Jensen on why international retailers should buy all this classy high-tech...
February 28, 2019

CEO Frans Muller talks Ahold Delhaize

Love birds ascend towards the sky (photo: JackQ./Stock.Adobe.com)
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

Korean retail giant Homeplus goes European

Homeplus CEO Il-Soon Lim (photo: Bert Bostelmann)
Brainbox behind the Big Box: Il-Soon Lim
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 Il-Soon Lim, 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

Seeking an exit to Brexit

Brexit caricature (photo: Alexandra Thompson_Fotolia-109809567S)
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.