07 Mar 2008


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Discounters to take 50% share in Germany

Discounter retailers

Aldi

Lidl

Netto

Germany

Verdict Research

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Discounters poised to grow in UK, says Verdict 07 Mar 2008

Source : Verdict Research
Discounters such as Aldi and Lidl are predicted to take one Euro in every two in Germany by 2012, according to a new report from Verdict Research.

The study, Retailing in Germany 2008, shows the main discount players – Aldi, Lidl, Netto, Norma, Penny and Plus – already hold a combined 42% share of Germany's €13bn grocery market.

Aldi and Lidl are trading from an inherently strong position in Germany, says the report.

Aldi is currently twice the size of Lidl but the latter is closing the gap, especially since its started to introduce branded products into its stores.

Plus is also set to be re-invigorated, says Verdict. Grocery market leader Edeka acquired the business from Tenglemann at the end of last year. Edeka is poised to expand the chain once the stores have been converted to its Netto fascia.

Edeka's Netto chain is not connected to Netto in the UK, which is owned by the Danish group AP Moller-Maersk.

Edeka's rival Rewe, which missed out on the Plus deal, will now turn its attention to the Penny fascia, says Verdict.

It has recently suffered from sluggish sales and the parent will be determined not to let its rivals enjoy all the glory.

According to researchers, Rewe will “demonstrate its commitment to the discounter with a sizeable investment to ensure it benefits from the juicy growth prospects for this segment”.

Verdict anticipates further consolidation in Germany's grocery market too.

This was kick-started by Metro's Wal-Mart acquisition in 2006 and followed up with the race for the Plus chain, which was won by Edeka.

Rewe, the Germany number two, responded by acquiring Metro Group's Extra stores.

Retailers in other sectors such as clothing and health and beauty have followed suit, says the research company.

Consolidation, it adds, has been fuelled by the discount boom, which has spread from grocery to other retail sectors along with a 3% rise in VAT to 19% in 2007.

Verdict has identified three opportunities for retailers in Germany:

• A move away from low pricing to a 'price plus' position. Aldi, for example, has recently been passing on price increases, forced by rising food prices and cost inflation

• Pharmacy liberalisation with grocers creating dedicated health zones comprising pharmacies and health and wellbeing centres in-store

• Growth in organic groceries

By Fiona Briggs