July 30, 2010
No frills: Aldi Nord's Spartan stores reflect founder Theo Albrecht's belief in thrift (photo: Carsten Milbret)
Theo Albrecht, who passed away last Saturday at the age of 88, has inspired some moving comments from Germany's top retail management both past and present. Theo Albrecht was a revolutionary pioneer in retailing. The secretive billionaire may have been one of Germany's richest entrepreneurs, but he was also probably the most modest. With his older brother, Karl Albrecht (90), he took over the management of the family delicatessen store in 1946 and co-founded what eventually became the Aldi empire, stretching from the United States to Poland. Much has been written about Theo Albrecht in Germany over the last few days. Presumably, however, the question foremost in the minds of those who supply or compete with Aldi is whether his decease will mean a change in the way the hard discounter does business.
July 23, 2010
Flight from Mount Olympus: Aldi will exit Greece this December (photo: Stavros Tsouroukidis)
Aldi has announced its intention to exit the troubled Balkan country only two years after entry. This represents the first time in Aldi's long history of international expansion that it has ever abandoned a foreign market. The wording of the low-profile, privately-run company's press release this week was characteristically terse: "The Aldi South group is ending the business operations of its 38 stores in Greece. Talks regarding the sale and future operation of these outlets are being conducted with several interested parties." Aldi will now "devote itself increasingly to expansion in all the other nine countries, where the company successfully runs more than 4,200 outlets". The clear implication here is that Aldi Greece had not been running successfully although the stores always seemed to be busy. Even more counter-intuitively, the decision to pull out was apparently not dictated by the country's current macroeconomic woes or by any fear that consumer spending power would be radically reduced in the foreseeable future.
July 15, 2010
Only a matter of time: Starting out from its huge distribution centres, Amazon is on a relentless march to conquer European food retailing (photo: Carsten Milbret)
Amazon Germany, which posted revenues of €15.2bn and earnings of €514m last year, now offers tech-savvy locals more than 40,000 food lines. The offer is composed of dry goods and big packs. Spaghetti, for instance, was only available in 2,500-gramme packs (5 x 550g) at €6.45. Our newspaper tested the US online giant's new German service by ordering a litre of organic long-life milk, a honeydew melon, a bottle of wine, half a dozen bananas and spaghetti. One weakness was quickly revealed: 'Your order has been divided into four units.' This sounds harmless enough until you find yourself paying four sets of shipping fees. These exceeded (€20.50) the cost of goods (€19.21). We discovered a number of other teething problems, but in an exclusive interview Ralf Kleber, CEO of Amazon.de, provides a robust defence.
July 8, 2010
Hans-Otto Schrader: "With the right concept we can do in Germany what Tesco.com does in the UK" (photo: Carsten Milbret)
Direct mail order giant Otto Group is considering having another go at selling food online. If the company returns to this arena, it has the clout to move the whole German market. CEO Hans-Otto Schrader is well-known for his bullish, can-do attitude, and Otto is already on a wave, particularly after the bankruptcy of traditional rival, Quelle. Schrader frankly admits that he has been inspired by the success of Tesco.com in the UK which posted online revenues of €2.5bn last year. Otto Group has a lot going for it. Last year, the company, which operates in 19 countries on three continents, posted revenues of €10.1bn and an ebit of €34m. Its retail internet division is second only to that of US titan Amazon. During peak periods, around 25m customers a month visit its main internet platform, Otto.de. The Hamburg-based company also has considerable IT know-how and runs its own logistics operation, Hermes. Schrader is, however, realist enough to know that the family-owned group needs to partner with a "strong national food multiple" because it lacks buying power and assortment competency in food.
July 6, 2010
It's all in the box: eStore offers all P&G's 2,300 lines with a standard charge of only $5 for shipping, regardless of order size (photo: P&G)
Fmcg giant Procter & Gamble is clearly at pains to downplay the significance of its new digital commerce initiative, eStore. This particularly applies to the potential for the project to disrupt relations with retailers. The US company has given an extraordinarily defensive interview to our newspaper in which it continually emphasises learning over sales potential. Admittedly, online sales accounted for less than 1 per cent of P&G's global revenues ($79bn; €99.4bn) last year. But, eStore, which offers Pantene shampoo, Pampers baby products, Gillette razors, CoverGirl cosmetics, Tide detergent, and Crest toothpaste etc., will surely power corporate online sales. At the very least, eStore will bring Procter into direct competition with the online propositions of major retail customers such as Walmart, Target, CVS or Walgreens.
July 5, 2010
Klaus Gehrig: "Russia: no. China: Twice no" (photo: Lidl)
Schwarz Group boss, Klaus Gehrig, clearly wants to counter any impression that the German discount giant might be flagging. In an exclusive interview with our newspaper, the CEO of the Neckarsulm-based company was at pains to put the record straight. Despite the fact that consolidated revenues virtually stagnated at €54.8bn last year, compared with €54bn in 2008, Gehrig insists that the Swabians are still firmly in expansion mode. Schwarz Group's frontman primarily attributes the lacklustre growth to price "deflation" of 4 per cent at its Lidl hard discount stores and of 2 to 2.5 per cent at its Kaufland hypermarkets. Gehrig claims, however, that this strategy increased sales volumes and maintained customer frequency without a decline in earnings. He also stresses that revenues figures ought to be taken in context.
June 24, 2010
Alexandre Soares dos Santos: "Our joint-venture with Unilever has helped us to think in a consumer-driven and long-term way" (photo: JM)
In this modern world, where false feeling is all too often downloaded like an "app", one hesitates to talk about such old-fashioned human emotions as affection and respect. But Elísio Alexandre Soares dos Santos really does seem to care about his people and they him. The kind eyes and pleasant facial expression of the 76-year-old Chairman of leading Portuguese retailer Jerónimo Martins light up when talking about the well-being of his staff. This is clearly reciprocated. From secretaries and shop staff to top management, employees assume an almost transcendent look at the mere mention of his name. In today's world anything patrician is, given the lessons of history, understandably regarded with suspicion. But, if paternalism was dos Santos, then a lot more people would vote for it. Like most of the better things in life, this exceptional family company has taken some time to mature and is already more than 200 years old.
June 17, 2010
Bert Swartsenburg: "We all have to earn money" (photo: Frank Ootes)
Bert Swartsenburg, MD of European retailer buying alliance AMS Sourcing, is a big man. He is not only tall, but has the shoulders of a heavy-weight boxer. The demeanour of this Dutchman was, however, at least during this interview, that of a gentle giant. Whether this gentleness extends to his bargaining style when purchasing own label for AMS members is, of course, a different matter. That question can only be answered by the many hundred small- and medium-sized suppliers with whom he negotiates. AMS currently has eleven shareholder members: Ahold (NL), Dansk Supermarked (DK), Delhaize Group (B), Esselunga (I), ICA (S), Jerónimo Martins/Filhos/Uniarme (P), Kesko (SF), Migros (CH), Morrisons (GB), Superquinn (IRL), and Système U (F). How does Bert Swartsenburg manage to cope with this Tower of Babel?
June 10, 2010
Pedro Pereira da Silva: "Discount best suits the needs of Polish consumers" (photo: Biedronka)
An American in Paris? O.K. But a Portuguese company that has become Poland's number one food retailer? Now come on! Biedronka CEO Pedro Pereira da Silva may have a highly-improbable tale to tell, but it is a true one. A Lisbon-based family company with no experience of discount has achieved market leadership in far-away Poland in less than 15 years. Last year, its 1,500 "Biedronka" (ladybird in Polish) stores posted zloty-denominated net revenues of around €3.7bn with an ebitda margin of 7 per cent. This gives the Warsaw-based company nearly a tenth (9.6 per cent) of the local retail market. Modestly, but with a quiet sense of pride, da Silva, who is also COO of parent company Jerónimo Martins, explains this unusual international success story.
June 3, 2010
Patrick Ricard: "With spirits the real issue is use or misuse" (photo: Aleksander Perkovic)
Interviewing Patrick Ricard, Chairman of Pernod Ricard, again after seven years is like being in a time loop. In 2003 the Paris-based spirits & wine group was using its strong cash-flow to lower the cost of its debt-financed acquisition of Seagram's wines & spirits business two years before. 2010 is almost a re-take. The family company is again striving to reduce gearing — this time after the purchase of Vin&Sprit, the former Swedish government vodka monopoly, in July 2008 for €5.7bn. In corporate terms that's quite a binge. In 2003 Pernod Ricard had just been delisted by Rewe Group subsidiary Penny for raising its prices; as recently as spring 2009 it had to face a disgruntled Edeka-Gruppe for doing the same. One could almost say 'plus ça change, plus ça reste la même', only Patrick Ricard has further advanced the two goals he set himself when his father's company, Ricard, merged with Pernod in 1975: The creation of an international brand portfolio while retaining French market leadership in anise spirits. But Patrick Ricard hadn't come to Berlin for self-congratulation; he was here because of...expectant mothers.