Europe's top-dog retailers
Even the most cursory glance at this fascinating snapshot, compiled by Edge Retail Insight, demands an answer to a number of questions.
Why, for instance, does the largest retailer on the continent still make hardly more than one per cent of its annual sales online when Amazon is already snapping at its heels? Or why are there still no retailers from Central & Eastern Europe in the Top 10 – thirty years after the collapse of the Soviet bloc?
Success machine Schwarz Group
This is not only impressive in absolute terms. Estimated sales gains this year of 12.3 per cent compare favourably even with the high past growth rates for 2017 (6.3 per cent), 2018 (6.7 per cent) and 2019 (7 per cent) computed by other market researchers.
Schwarz Group's Achilles heel
So omnipotent owner Dieter Schwarz and his demi-potent right-hand man Klaus Gehrig – two venerable gentlemen in their seventies viz. eighties – are clearly not that impressed by the cyber age.
Mind you, Schwarz Group still manages far more online sales than archrival Aldi Group (Aldi North and Aldi South), which are still miniscule.
Aldi and Lidl in online denial
Of course both discounters are renowned for their cost-efficiency and will have run a slide rule over the economics of home delivery and the dreaded 'last mile' to the consumers' doorstep. In retrospect, however, their numerous half-hearted and rapidly concluded tests in this direction often smack of potentates who never wanted to go online in the first place.
By contrast, many full-assortment supermarket operators swear that the future of retailing can only be 'multi-channel'. A lot of them have greatly profited from the same in this Covid year of lockdowns, home office and furlough.
Certainly, Tesco in the UK, Ahold Delhaize in the Netherlands, Rewe Group in Germany, and even heavily-indebted Casino in France look far more well-balanced in this respect than the two discounters.
Young man, don't go east
Turning eastwards, it is instructive that no retailer from Central & Eastern Europe has managed to reach the Top 10 yet.
Might one also add, without mentioning any specific names, that commodity-rich oligarchs and money laundering machines are not so efficient providers of capital as good-old western stock exchanges and shareholders?
Ominous minus signs
On the negative growth side, a few tell-tale minus signs in front of the estimated sales figures for 2020 are as conspicuous as they are disconcerting.
These are principally found at leading German Cash & Carry wholesaler Metro (-22 per cent) and Spain's largest department store operator El Corte Inglés (-12,1 per cent) as well as French retailer Auchan (-9,2 per cent) and UK grocer Asda (-3.1 per cent) who both specialise in Big Box hypermarkets.
Surely these point to the structural decline of the Cash & Carry, department store, and large hypermarket concepts?
Doubtless CEO Olaf Koch will again invoke the mantra for investors that Metro has been trimmed down under his aegis to a mean and lean Cash & Carry operation. The successive closure of operations in dynamic country markets overseas and the increasing saturation on mature markets in Europe do not bode well, however, for a concept that is so well advanced along its store life cycle.
The fact that Czech investor Daniel Kretinsky now has a minority stake in Metro and would like to gain a larger one is not necessarily a comfort. After all, the man's past investment strategy could be interpreted as one that engages in dying sectors which most punters shun and which are therefore undervalued. In other words, the beast is dying, but its death agonies will last longer than many had thought.
No surprise, then, that the vultures of private equity and billionaire oligarchs from Central & Eastern Europe are circling over western Europe's bricks & mortar retailers. The Issa brothers have just made a successful bid for Asda; Kretinsky has also invested in troubled French retailer Casino, and Mikhail Fridman already has his hands on Dia in Spain.
It is surely more than significant that none of these investors seem happy to provide much detail as to how they intend to turnaround the businesses they have acquired. Long live the asset stripper!
Regardless of whether you agree or not with the above interpretations, posters of the Top 50 retailers in Europe will soon be on sale. You can then make your own conclusions...
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