October 4, 2018

Siberian discounter plans German entry

Arctic snow scene (photo: Shchipkova Elena/stock.adobe.com)
From Russia with love: German consumers could soon enjoy super-cool prices (photo: Shchipkova Elena/stock.adobe.com)
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, 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?
August 16, 2018

Burn, baby, burn – retail & shareholder money

Burning money (photo: noskaphoto/stock.adobe.com)
From Arthur Brown's song 'Fire': "You fought hard and you saved, but it's all going to burn" (photo: noskaphoto/stock.adobe.com)
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 marketing professor Marcel Corstjens to talk us through this yardstick and what the Bloomberg figures really mean for retailers, managers and shareholders.
July 19, 2018

Joyeux anniversaire Costco France!

Gary Swindells, President Costco France (photo: Costco)
Gary Swindells, President Costco France, at the US company's first warehouse club in Villebonne-sur-Yvette (photo: Costco)
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

Shop like a pro at Makro C&C in Belgium

Makro Belgium (photo: Metro AG)
Step inside love: Makro wants to sweetheart lost customers back and to win the hearts and wallets of new ones (photo: Metro AG)
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...
May 10, 2018

The Sainsbury-Asda merger musical

Mike Coupe, CEO Sainsbury's (photo: Sainsbury's)
He's in the money: Sing along with Mike Coupe (photo: Sainsbury's)
You don't have to look very far to be amused in retailing. The proposed mega-merger with Asda in the UK has thrust self-effacing Sainsbury's CEO Mike Coupe temporarily into the limelight. In an unguarded moment, while waiting for an interview with British broadcaster ITV, he was caught singing "We're in the money. The sky is sunny. Let's lend it, spend it, send it rolling along" from the musical 42nd Street. We shall never know whether Coupe's slightly off-key rendering of this catchy little tune was inspired by the thought of future bonuses in relation to the deal. Our enquiry to Sainsbury's press office regarding the same was neither acknowledged nor answered. Sainsbury's and Asda are not the only quiet ones, however. The British Retail Consortium, the Food & Drink Federation, and the Competition and Markets Authority (CMA) only wished to make the briefest of statements. So we asked INSEAD Marketing Professor Marcel Corstjens for his expert view on what could be the largest event in the history of UK retailing.
April 26, 2018

Europe's 50 top-dog retailers

Ranking podium (source: EFKS/shutterstock)
Ranking podium (source: EFKS/shutterstock)
Life is not easy when you are in the business of selling data. You obviously need to market your assiduously collated material or you won't make any money. But, if you publish it for free, everyone will take it, use it and, who knows, even sell it on. Therefore it was generous of retail data analyst platform LZ Retailytics to allow us to publish an exclusive excerpt from their new European Grocery Retail Ranking 2017. The team has also let this blog have an exclusive look at the full ranking table for the purposes of commentary. So what do the figures reveal to the critical eye?
March 15, 2018

Aldi talks online in China

Aldi China online (photo: screenshot)
Aldi celebrates the Chinese New Year (photo: screenshot)
The Year of the Dog could be a lucky one for Aldi South in China. Germany's most profitable discounter went online there only last April. But that's a long time in cyberspace, and Aldi seems to have used it well. The low-profile retail giant does not publish sales figures or customer numbers, but numerous indicators point to rapid growth in the People's Republic. Staff count at the Shanghai-based operation has already passed 100 and is growing rapidly; the highly-curated and keenly-priced offering on Alibaba B2C platform Tmall Global has nearly doubled to 200 lines; and cooperation has been extended with this local colossus to Tmall Classic, China's largest online marketplace. Of course the question burning in everyone's mind is whether Aldi sees this distant e-commerce adventure as a prelude to opening physical stores in the Middle Kingdom. We are convinced that Aldi is not on a slow boat to China and that a start will be made within the next two or three years, probably in Shanghai. We also understand that they are looking for local management and beefing up their expansion team. So we asked country manager Christoph Schwaiger...
February 14, 2018

Aldi starts in bella Italia

Store sign at Aldi in Castellanza (photo: Mike Dawson)
Aldi sta arrivando! (photo: Mike Dawson)
Under the marketing slogan "una nuova idea di spesa!" (a new shopping idea), Aldi Süd (Aldi South) revealed its plans for the conquest of the Italian market today. After two years of planning via its Austrian arm, Hofer, the retail giant will open ten outlets on March 1 in five northern Italian regions. The stores, with sales surfaces of 1,000² to 1,400², will be in Bagnolo Mella, Cantù, Castellanza, Curno, Peschiera del Garda, Piacenza, Rovereto, San Donà die Piave, Spilimbergo and Trento. All will be served by the company's first DC in Oppeano, near head office in Verona. Germany's most profitable discounter has ambitious plans for national coverage and intends to open "more than 45 outlets" as well as nearly double staff headcount from 880 to 1,500 by the end of the year. On its website Aldi Italia is looking to open stores in all eight regions of northern Italy as well as in Tuscany. This is a fine start. But isn't Aldi coming a little late to the party?
February 5, 2018

Why Lidl should stay in the USA

A Lidl store in the US (photo: Lidl)
Back to the roots: Lidl's "glass palaces" on the East Coast of America could soon be succeeded by a more homely discount format (photo: Lidl)
It's intriguing. Klaus Gehrig, the Big Boss of parent company Schwarz Group, has indicated to the German media that Lidl is facing strong headwinds in America. The discount giant is working "flat out" to modify the store concept it launched in Virginia last June. Sales surfaces are to be reduced from around 2,000m² to 1,400m² and expansion slowed. Lidl's US stores are also likely to more strongly reflect the solid discount virtues which have led to success in 30-odd European countries. All this would be perfectly normal for a Plc that has already invested an estimated €2bn in a land where many top international retailers have come a cropper. It would be called giving guidance to shareholders. But Lidl is a privately-run company. So why has Herr Gehrig sounded the alarm bell?
December 22, 2017

Retail pundits predict 2018 and beyond

Young lady with augmented reality (photo: 20franz12_20shutterstock)
Disruptive technology: A triumph of human creativity expanding our mental horizons or a further step towards dystopia? (photo: 20franz12_20shutterstock)
In 2017 venerable retailers Sears and Toys 'R' US were pushed into bankruptcy, while online giant Amazon bought organics specialist Whole Foods for $13.7bn. These events seem very much like harbingers of the future. Last year our panel of retail experts looked ahead and were concerned about politics from Trump to Brexit. But even Tesla co-founder & CEO Elon Must thinks they now ought to be worrying more about Artificial Intelligence. Like all technology, machine learning systems can be a blessing or a curse, depending on who employs them and for what purpose. AI could help us to use less fertiliser and revolutionise subsistence farming in the developing world, but it could also begin to control us. So does AI keep the gurus awake at night, or will they prefer to sing the praises of drones and robots?