August 13, 2015

Edeka CEO Markus Mosa talks Alidis

Retailer buying alliances in Europe (photo: Beugdesign/Fotolia; Unternehmen; Montage: LZ-Grafik)
Retailer buying alliances in Europe (photo: Beugdesign/Fotolia; corporate sources; montage: LZ graphics)
Around once a decade, retailers seem to become nervous and start joining or changing European buying groups – much like the spasmodic migrations of birds. Usually, some significant development has ignited change, such as the signing of the Single European Act in 1986.

The most recent shuffling of cards, however, doesn't seem to have any such obvious reason. In fact, retail partners have been so frequently jumping in and out of bed with each other of late that one would call them promiscuous had one's maiden aunt not also been a reader of these columns.

What is one to conclude from these increasingly frequent changes in membership? Although the good old fun of bullying suppliers for ever more advantageous terms & conditions may unite retailers for a while, it would seem that they often can't stand life together for any lengthy period. But Markus Mosa, CEO of Germany's largest retailer Edeka, is confident that Alidis and its European buying arm Agenor have a stable future.

Edeka joined the alliance in 2005 which has now been considerably strengthened by the accession of former Rewe partners Colruyt (B), Conad (I) and Coop Schweiz (CH). Together with Eroski (E) and Intermarché (F), Alidis members will combine whopping annual revenues of €140bn in eight countries.

European retailer buying alliances (caricature: Oliver Sebel)
Rival rocker bands: European retailers and their buying alliances (caricature: Oliver Sebel)
Is now Rewe Group CEO Alain Caparros hopping mad about losing three former allies to archrival Edeka, or delighted to be free of the ballast and the nitpicking coordination?

At any rate, he and Michel-Édouard Leclerc, president at the eponymous French retailer, have treated the world to an amusing tiff followed by a surprising reconciliation. Partners in Coopernic as from 2005, they separated in September 2013 citing "insurmountable differences", only to inform the world this year that they are getting back together again.

It is hard to know what to make of this as a humble journalist. Wicked people might infer that their independent members, having relinquished all intellectual and spiritual freedom to two charismatic autocrats, at least expect to be entertained. If this analysis is correct, then both have provided some excellent soap opera.

Edeka CEO Markus Mosa (photo: LZ-Bildarchiv)
Edeka CEO Markus Mosa: "Alidis is the largest alliance of food retailers in Europe" (photo: LZ-Bildarchiv)
Edeka boss Markus Mosa clearly doesn't feel any need for theatre, and there is logic behind his continued adherence to Alidis. As a more thoroughbred retailer cooperative than Rewe, the company has found international expansion far harder to coordinate in the past than even the multiples have.

Former activities in seven foreign countries were finally abandoned in 2010, leaving Edeka alone on a prosperous, but nearly saturated home market in an increasingly globalised retail world.

That Edeka realises this deficit was clearly revealed by its attempt to purchase Dutch retailer C1000 in November 2011. In the end, the Hamburg-based company didn't clinch the deal – much to the relief of some of its 4,000-odd independent members.

However, it is also conceivable that the lost bidding war for C1000, which incidentally has never been explicitly confirmed, has made Edeka more rather than less wary of foreign acquisitions and that it isn't keen on repeating the experience.

Given Edeka's local market share of around 21 per cent, it was no surprise to those not directly involved in the transaction that the German cartel office hasn't chosen to approve Edeka's recent attempt to acquire regional multiple Kaiser's Tengelmann.

The lack of strategic growth options has obviously made alternative solutions such as the European buying group even more attractive. Mosa (48) clearly believes that he has found at least one in Alidis, otherwise he would not have agreed to strengthen the alliance this month.

Now, of course, the litmus test is what the members, young and old, will actually buy together, but we must let the man of the hour tell his own tale...

"It was a historic opportunity"  

Edeka CEO Markus Mosa (photo: LZ-Bildarchiv)
Edeka CEO Markus Mosa (photo: LZ-Bildarchiv)
Herr Mosa, you are ending your presidency of Alidis with a bang. The alliance will now be strengthened by, of all people, three former Rewe cooperation partners who used to belong to buying alliance Core. Apart from a symbolic triumph over a competitor, what does Edeka gain from all this?

The accession of the new members, Coop Schweiz, Conad and Colruyt, makes Alidis the largest alliance of European food retailers. The partners are strong players in core European countries whose total annual revenues exceed €140bn. Alidis is also the most stable alliance and has shown long-term continuity. This is also of particular importance to suppliers at a time when European retailer alliances are in a considerable state of flux.

Why do you think this is?
One important role in all this can be attributed to the renewed strength of discounters, which has forced supermarket, superstore and hypermarket operators to look for new strategies.

What are the advantages?
Our cooperation is not concerned with day-to-day operations, but with the big strategic questions of the future such as the search for synergies, cost efficiencies and subjects such as sustainability. We are convinced that the new members will help us make decisive progress on these questions.

Agenor with its headquarters in Geneva is the operational arm of Alidis. Will the three new members also strengthen purchasing and sales in order to obtain even better terms for Edeka's independent retailers?
When I became the president of Alidis two years ago, we added the extension of the alliance to the agenda because our long-term perspective was also to optimize operational matters such as buying and selling. I am very optimistic that we will now be able to achieve some additional advantages for our independent retailers.

What financial benefit does Edeka currently derive from this international cooperation?
At the moment it's in the lower three-digit million euro range.

And will this amount increase?
At least the foundations have been laid for this. Let me give you an example: Rival alliance Core has concluded framework agreements with brand manufacturers, but, in contrast to Agenor, it was hardly active in the own label arena. We will now be able to offer a considerably broader array of services to international brands.

This is why we did everything we could to gain the former members of Core as allies, when we learned that they didn't want to continue cooperating with Rewe and were looking for new perspectives. It was a historic opportunity which won't come again any time soon.

Lebensmittel Zeitung with digital sister (photo: LZ)
Our German B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: 'Es geht um strategische Grundsatzfragen' by retail newsdesk manager Jan Mende on page 3 of Lebensmittel Zeitung, no. 33, 14.08.2015

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