July 26, 2012

Schwarz Group defies crisis

Klaus Gehrig (photo: Schwarz Group)
Klaus Gehrig: "The European economic crisis is also a chance"
Schwarz-Gruppe is bringing home the bacon.

The secretive Big Box discounter wants to hit €66bn in revenues this business year after making €63.4bn to the end of February 2012.

"We are faring well and growing our like-for-likes throughout Europe," says Klaus Gehrig, CEO of group holding SUT.

The operator of Lidl hard discount and Kaufland superstores admits that currency rates have been adverse in some countries.

The thrifty Swabians therefore want to play it safe and will not be expanding into any further countries, such as the USA, for the time being. The one exception could be Serbia.

Overall, however, Neckarsulm-based Schwarz Group has managed to profit from the European crisis as growing numbers of middle-class consumers become more price-conscious and start to shop with discounters.

The trend is their friend

"The crisis is also a chance for us," says Gehrig. Schwarz Group believes that the current trend will generally increase the national food market shares of discounters.

Gehrig also feels that Schwarz Group is faster and more aggressive than many other European competitors. "There is still a lot of potential because there are many companies which can't adapt to the speed of market change."

Although Schwarz Group does not publish results, it claims to be adequately capitalised and that earnings have been "stable" despite rapid international expansion in the past.

A further sign of its self-confidence is the retention of current annual capex levels at €3bn. This is particularly impressive at a time of general economic crisis when many other European retailers are cutting back. Investment will be channelled primarily into modernising existing stores.

New baking stations

Around half of the store base is to be completely renewed. New, more expensive baking stations will also be introduced, and assortments are to be tailored more strongly to national and regional requirements.

In the last two years alone, Schwarz Group has invested around €2bn more than Metro Group and could oust its rival from its ranking as Germany's largest retailer as early as this year.

The canny Swabians know that they hold two trump cards with Lidl and Kaufland over the coming years. That is why they are smiling today, but their European competitors will doubtless be feeling in a less celebratory mood.

 
Related article in German: Lebensmittel Zeitung, no. 29, 20.07.2012, by Hans-Jürgen Schulz, Christiane Ronke and Angela Wisken


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