January 10, 2013
Thank God, a customer: Most German drive-ins need more frequency to make a profit
Germans make good cars and like to drive 'em fast. They are also big spenders when it comes to consumer electronics. They love their mobile phones, pads and laptops — almost as much as their cars. But your average hard-working Hans or Lieselotte Schmidt doesn't seem nearly so keen on click & collect pick-up points (drive-ins). Dedicated collection points for customer online orders didn't appear at German food stores until November 2010 and there are still only around 40 of them: Edeka runs the most with 23, followed by Rewe (13), real,- (2) and Globus (2). Customer frequency is generally low with focus groups and blogs criticising limited ranges and confusing websites. So why don't Germans shop when they beep?
January 2, 2013
Through the glass darkly: Trade gurus scan the future horizon
Who can look into the seeds of time and say which one will grow? Answer: no one; so it is best to take an educated guess. At the end of each year (cf. 2012 & 2011), we ask international retailing & fmcg experts for their take on the future of the trade. Pundits from banking and private equity to design and advertising were invited to answer the question: "What do you see as the most exciting development in retailing/the fmcg industry and the most important challenge for the future?" As their intriguing and sometimes unorthodox predictions are self-explanatory, we give them below without further commentary and in alphabetical order of surname.
December 27, 2012
Glance in the rear mirror: A retrospective view of German retailing in 2012
Lebensmittel Zeitung closes each year with a review of the most important news stories of the last twelve months in the German trade. However, this does represent a pretty substantial Yule-tide read. Also, it would be a shame to take our English-speaking readers away from their healthy Christmas pudding, beautifully behaved children, and delightful in-laws. Therefore, German Retail Blog summarises and interprets the most compelling events of 2012 so that our readers have more time to devote themselves to the joys of the festive season. The year began with a big surprise. Schlecker, hitherto Germany’s and Europe’s largest drugstore operator by sales, was obliged to file for insolvency. Few ever loved the business model of founder Anton Schlecker, and company critics were legion. However, the sheer speed of the final fall from grace was nothing less than breathtaking. But it’s an ill wind that blows nobody any good. Like the year before, 2012 held rich rewards for insolvency administrators.
December 18, 2012
Virtual reality: A high-tech way to optimise shelf merchandising and sales promotion displays
On an uninspiring industrial estate in a nondescript western suburb of London stands an unpretentious building without a name. Who would have thought that this edifice belongs to the world's largest spirits group and houses something to make even the most hard-bitten retail buyer’s jaw drop? In reality, this is the Western European Customer Collaboration Centre (CCC) of Diageo, the maker of Johnnie Walker, Smirnoff, Baileys, Guinness, and various other high-octane refreshments. After reporting at reception, visitors access the main complex via a long corridor. The walls are punctuated with illuminated display boxes illustrating convivial occasions in the life of the average consumer. These are entitled "Casual Get Together", "Party Time" etc. but, surprisingly, don’t contain any branding.
December 13, 2012
Discounter with Scottie dog: Netto Supermarked makes good money in Germany
Edeka Group's supervisory board meets on Friday, December 14, to decide the fate of its 25 per cent stake in Danish discounter Netto Stavenhagen. The top brass at Germany's largest food retailer are also likely to review its buying cooperation with the Dansk Supermarked subsidiary. Both parties refuse to confirm this story. However, Lebensmittel Zeitung believes that Edeka wants to sell its minority holding in Netto Stavenhagen and to let the joint-buying agreement expire at a still unspecified date. Apparently, Edeka and Dansk Supermarked have not been able to agree a price. The original stake was transferred to Edeka for an alleged sum of €60m in 2005, when French retailer ITM (Intermarché) exited Germany. Why is this happening and why now?
December 7, 2012
Klaus Gehrig: The Schwarz Group frontman wants to put a lid on Lidl's indebtedness
The Swabians are canny people when it comes to money and have been justly compared to the Scots. Hard discounter Lidl wants to reduce its indebtedness to banks. This is partly a cautious reaction by parent company Schwarz Group to the current crisis in the eurozone. However, Lidl clearly also believes that future capex requirements will be lower than in former boom years. Since 2007/08 (February 29), balance sheet debt has jumped by around €2.5bn to €10.1bn (not including France) on net annual revenues of €45bn. This follows an explosion of overall indebtedness from 2002 to 2009 in the wake of aggressive foreign expansion. The vast European empire of the Neckarsulm-based group currently spans 28 countries. The entry of sometimes three new foreign markets a year required an annual capex of up to €3.5bn. Who can wonder that plans to enter new markets have now been scaled back?
December 6, 2012
Object of desire: Netto runs 350 discount stores in Germany
Anonymous sources claim that US giant Walmart is in negotiations with Danish conglomerate Møller Mærsk regarding the purchase of some or all of retailer subsidiary Dansk Supermarked. If this information is correct, it would have a direct bearing on the German trade. This is because Dansk Supermarked holds a 75 per cent stake in Netto Stavenhagen, a discount store joint-venture with Edeka Group, Germany's largest food retailer. Dansk Supermarked denies these negotiations, and Møller Mærsk refuses to comment. No answer has been received from Walmart regarding our enquiry to date. So where's the beef to this story?
November 22, 2012
An Auchan hypermarket in Russia: Expansion in this vast country is a global strategic priority for the French retail giant
Journalists find it frustrating to chase a story where all parties involved refuse to comment, but it does arouse their hunting instincts. Rumour has it that French retail giant Auchan has been finalising negotiations with Metro Group. The aim is said to be the purchase of the German market leader's "real,-" hypermarkets in Central & Eastern Europe (CEE). Apparently, the main stumbling block to sealing the deal for the 100-odd hypermarkets in Poland, Romania, Russia and the Ukraine are the rental contracts. The store owners are said to have tied rent levels to annual sales, which gross around €3bn for the CEE region. As Auchan is believed to be convinced that it can do a much better job than Metro at running the hypermarkets, it fears that future rental costs will explode. Given that Auchan's 120-odd hypermarkets in Hungary, Poland, Romania, Russia and the Ukraine now make around €11bn in gross revenues this sounds plausible, but is it true?
November 15, 2012
Pedro Pereira da Silva: Proud that Biedronka has passed another milestone
Portuguese Jerónimo Martins Group is booming in Poland. With justifiable pride, COO Pedro Pereira da Silva sent Lebensmittel Zeitung an SMS a few days ago. It was simply to say that discount subsidiary Biedronka had passed the 2,000-stores-mark and increased its market leadership. Clearly, Biedronka (Polish for ladybird) is well on the way to achieving its ambitious goal of 3,000 outlets by 2015.Given the doom and gloom at so many retailers in a growing number of European countries, it's good to hear a success story. So we asked da Silva, who is also country manager for Jerónimo Martins in Poland, to update us on progress in this important Central European country.
November 9, 2012
Ranjan Sen: "Cosmetic surgery is not enough"
Smart, eloquent and persuasive, Ranjan Sen is all that one might expect of an executive at a US private equity investor. Talking at Advent International's stylish Frankfurt office overlooking the River Main, the German-Indian Managing Director was surprisingly forthright. After all, his employers belong to an industry which is deliberately "private" and Advent is in the middle of a controversial bid for German retailer Douglas Holding. "We want to hold talks with the management about developing new formats," he says regarding the "Douglas" perfumeries. "Douglas should also use targeted assortments to win the lady customer who doesn't normally shop in a classic perfumery." O.K., sounds plausible, but what else could the Americans be after at the German "lifestyle group"?