July 24, 2009

Aldi defends its prices

Aldi Süd logo (photo: LZ-Archiv)
Law of economics: Aldi will always assert price leadership on its home market (photo: LZ-Archiv)
Like big bad Lee Roy Brown, Aldi is not someone you should mess with lightly. It is one of the unwritten rules of German retailing that you don't try to undercut Aldi. Even Walmart learned this to its cost. For a while, Aldi will take some cheek from its smaller rivals. Then, when the reply does come, it takes away all hope anyone ever had of making a margin. So, like a giant sleeping junk yard dog, Aldi is best left unprovoked. Although the status quo remains unchanged, we have witnessed some strange happenings in H1. In a way never seen before, Aldi has reduced its prices every month this year. German price tracker Preiszeiger.de records 135 price reductions at Aldi South and 110 at Aldi North between January and June. Many of these were KVIs. Usually, these moves by Germany's dominant hard discounter equate to increased customer footfall, market share and increased longer-term revenues. Surprisingly, however, this does not seem to have been the case.
July 17, 2009

Lekkerland takes a hit

Stefan Punke, CEO Lekkerland (photo: Lekkerland)
Stefan Punke: "We're not happy, but we're mastering the situation" (photo: Lekkerland)
Despite his smile for the camera, Stefan Punke, CEO of Lekkerland Germany, can't be a happy man. After all, the German convenience sector is going through profound structural changes. The leading delivered wholesaler is also deeply affected by developments on its home market which contributes a fifth of Lekkerland's European revenues (€6.7bn). Declining food sales are Punke's bugbear and they are already "significantly" lower than in 2008. He sees a number of reasons for this most unwelcome development, but the two main ones both begin with a "D": discount and department stores.
July 17, 2009

1st European convenience store conference

1st European Convenience Store Conference (photo: The Conference Group)
Premier event: The 1st European Convenience Store Conference will be held in Wiesbaden on 1st-2nd September (photo: The Conference Group)
This is a must if you are into convenience. The 1st European Convenience Store Conference will be hosted on September 1-2, 2009 in the elegant town of Wiesbaden, near Frankfurt. Under the motto "Growing through the crisis – new opportunities for convenience concepts in Germany and Europe!" this inaugural event hosted by The Conference Group, will address the most important questions and strategies for success in the trade. Keynote speakers include Lekkerland CEO Christian Berner, Hank Armour, CEO of The Association for Convenience & Petroleum Retailing (NACS), Martin Orterer, executive sales director of Rewe Group, and Jacek Roszyk, CEO of Zabka Polska. Other international guests at the two-day international conference are Dr. Gordon Campbell, CEO of Spar International, Markus Laenzlinger, executive director of Migros-subsidiary Migrolino, Mike Greene, CEO of HIM UK, and Coca-Cola food service marketing manager Thomas Novak. See you there!
July 15, 2009

Delhaize bids adieu to Germany

Delhaize in Cologne (photo: Georg Lukas)
Very long test: After six years of losses Delhaize has finally thrown in the towel in Germany (photo: Georg Lukas)
Few could honestly claim they were surprised at the news. Belgian retailer Delhaize Group has sold its four supermarkets & convenience outlets in the Cologne/Aix-la-Chapelle region for an undisclosed price. The buyer: Germany's second-largest food retailer Rewe Group. Thus, Delhaize joins a dozen-or-so major international retailers who have failed to make it in Europe's strongest economy over the last few decades. The Delhaize stores were moderately attractive, but weren't able to generate enough customer footfall to compensate the generally low-price environment in German retailing. Only last year, our newspaper asked Delhaize Group CEO Pierre-Olivier Beckers what was the logic behind entering a discount-dominated market ruled by a retail oligopoly. His reply: "Our starting point was to look for growth potential in areas where the geographical proximity to Belgium can leverage our store presence, scale, buying and systems etc. So, we first turned to Luxembourg and then looked at the western side of Germany." So a case of trial & error?
July 13, 2009

Migros worried by Lidl in Switzerland

Herbert Bolliger, CEO Migros (photo: Christian Aeberhard)
Herbert Bolliger: "We'll never sell below cost price" (photo: Christian Aeberhard)
Poor old Switzerland! It could all have been such a happy little paradise for those who want to enjoy their gold bullion discreetly and securely. But, however, those horrid German discounters have set up shop and are making the place affordable for Joe Average. Is nothing sacred anymore? One bastion is crumbling after another: first it was banking secrecy and now retailing. Once upon a time, life was so cosy for Migros and Coop Schweiz in Swiss retailing, and the good Swiss burghers were obliged to pay their prices. But now German discounters are spreading throughout the country and ruining the party. Who let the alley cats out and set them among the pigeons? Since Aldi's arrival in October 2005 Switzerland's retail elite has oscillated between demonstrative nonchalance and periodic fits of blue funk when it comes to dealing with hard discounters from over the border. The latest show of nerves comes from Migros CEO Herbert Bolliger.
July 13, 2009

dm chairman Götz Werner speaks out

Götz Werner, Chairman of dm (photo: dm)
Götz Werner: "Customers must feel good about what they buy" (photo: dm)
Professor Götz W. Werner, the founder and supervisory board chairman of Karlsruhe-based drugstore chain dm, is an éminence grise in the trade. He is also one of the thought-leaders in German retailing. Werner's ethical-green-humanitarian stance is reflected in dm's nearly 1,100 first-class stores. His modest lifestyle is complemented by the decent way he is said to treat management and staff. Professor Werner frequently discusses his thought-provoking socio-economic theses in the local media. Surely, these ought to be made available to a wider international audience? At any rate, one opinion of his is water to our mill. Werner criticises the tendency of many German retailers to hide behind a low-profile press & PR policy. Instead, he believes that retailers should be absolutely transparent and open in all their doings. Professor Werner, are you quite sure you are a German retailer?
July 8, 2009

Metro hypermarket boss sees turnaround

Joël Saveuse, CEO Metro Cash & Carry (photo: Georg Lukas)
Joël Saveuse: "We are already in the black" (photo: Georg Lukas)
Joël Saveuse, CEO of Metro Group hypermarkt subsidiary real,-, was virtually dragged back from retirement in 2007 by his employers. The new mission they have set him is certainly a challenging one. The mild-mannered Frenchman must breathe a fresh dose of life into Metro's ailing Big Box format. Saveuse (56) is confident that real,- will achieve revenues of around €12bn by 2010. He also claims that the hypermarket division is already in the black and would have achieved operational profit last year had extraordinary items been excluded. In Turkey, for instance, real,- is capable of achieving annual sales density double the hypermarket average in Germany (€35,000/ft²). But overall the man still faces an unenviable task.
July 5, 2009

Talk with Barilla Chairman Guido Barilla

Barilla pasta train (photo: Barilla)
Pasta è basta: A Barilla pasta train (photo: Barilla)
Guido Barilla, co-owner and chairman of Barilla Holding, arrives unpretentiously at Parma head office in a VW Passat without a chauffeur. His salt & pepper mid-length hair makes him look more like a laid-back clarinettist in a jazz band than a leading Italian pasta & baked goods manufacturer. He is also a straight talker: "I won't vet the text afterwards; I stand by everything I say here." This is brave stuff considering that the fifty-one-year-old executive is also going to have to field questions about the mine-strewn purchase of German bakery chain Kamps and police raids for alleged price fixing.
July 4, 2009

Edeka and Rewe annual conferences

Markus Mosa (photo: Edeka)
Markus Mosa: "Discount is our main business field" (photo: Edeka)
Last week, Edeka and Rewe held their annual get-togethers for their independent members. If any foreign observer wanted a quick insight into German retailing, there would be no better way than to attend these two meetings. Rewe CEO Alain Caparros: "We're not into growth at any price" In fact, it would be particularly instructive as both companies are seriously underreported abroad. Presumably, this is because both groups are not plcs and therefore not open to foreign investors. The lack of media coverage is all the more astonishing when one considers that Edeka-Gruppe is Germany's largest food retailer with a market share of 15 per cent and Rewe Group a strong number two (13.4 per cent).
July 3, 2009

Arcandor stops sale of Karstadt

Karl-Gerhard Eick (photo: Telekom)
Karl-Gerhard Eick: Poker or brinkmanship? (photo: Telekom)
Karl-Gerhard Eick, CEO of insolvent German retail group Arcandor, has told Dr. Eckhard Cordes, the boss of rival Metro Group, to back off. This is an unusual way to treat a potential buyer of Arcandor's Karstadt department stores. But Eick has issued a clear public warning after Cordes had been carrying on a debate in the local media about his plans to buy 60 of the 91 Karstadt outlets. Clearly, Cordes would like to merge them with Metro’s own Galeria Kaufhof department store chain and form a new company, Deutsche Warenhaus AG. So why are these gunslingers facing each other off on the High Street?