Grocery Retailing in Europe – Private Brand Stars?

Reportlinker.com announces that a new market research report is available in its catalogue: Grocery Retailing in Europe: Market Size, Retailer Strategies and Competitor Performance

Introduction
The grocery market in Europe has rebounded from a severe downturn with total grocery spend growing by 2.2% in 2010, driven by an improvement in consumer confidence along with rising food prices. However, as recovery remains weak and the market is becoming increasingly saturated, slow growth will prevail, prompting grocers to diversify into new products, channels and locations to gain market share.

Features and benefits

  • Benchmark your company’s performance by accessing profiles of leading grocery retailers including key financial details and market shares.
  • Make informed strategic decisions based on our assessment of new initiatives being adopted by sector players.
  • Assess the potential of new markets by uncovering trends in grocery expenditure, specialist sales and store numbers across the EU27 region.
  • Boost sales by diversifying your brand into our recommended store formats, locations and product categories.
  • Enhance footfall and grow market share in saturated markets by uncovering the most effective strategies to develop your online operations.

Highlights
Competition in the grocery market is intensifying across the region. Consequently, retailers are diversifying into new types of products. High awareness of Tesco’s F&F clothing Private Brand in central Europe has prompted the retailer to open a stand alone F&F store in Prague, Czech Republic with more to follow, including one in Warsaw, Poland.

Developing online operations is becoming an effective means for grocery retailers to boost sales with minimal expansion costs. Although online shopping remains underdeveloped in Germany, Rewe launched its Rewe Drive service in Frankfurt in March 2011 to attract commuters in the area and save costs on home delivery.

Grocery expenditure in eastern European countries, such as Bulgaria and Slovakia grew at above average rates in 2010 and is forecast to grow strongly between 2010 and 2013. Consumer spend rebounded quickly in the region and foreign players continue to invest in the area, leading to market consolidation and a boost to grocery spend.

Your key questions answered

  • Which grocery players command the largest shares of grocery expenditure and specialist sales in the EU27 region?
  • What are the key drivers for growth in grocery spend in each of the EU27 countries and what are the recent key developments in each market?
  • Which European markets should I consider entering? Which markets performed the best in 2010 and which will grow the most until 2013?
  • How can I improve my online operations to drive footfall and continue to grow market share? What are my competitors’ activities in this channel?
  • What products and services should I develop to improve my margins and sales densities? How can I diversify my non-food range to drive profitability?

KEY FINDINGS

  • Grocery expenditure is starting to recover after a slump in 2009
  • Intense competition is leading to a slowdown in sales growth
  • Accelerated expansion by the leading players is pushing independents out of the market
  • Stable growth will resume in most markets after 2011
  • Eastern Europe offers strong prospects for future growth
  • Discounters continued to thrive in the post-recessionary environment
  • Retailers are diversifying their store formats to penetrate new locations
  • A multichannel approach is helping retailers boost sales densities
  • Grocers are continuing to develop and extend their value private label lines
  • Leading players’ turnover is being driven by international expansion
  • Carrefour, Tesco, and Rewe each account for 5.8% of total specialist sales in the EU
  • Group sales at Auchan and Tesco grew at the fastest rate out of the top 10 retailers in 2010

ACTION POINTS

  • Target emerging markets, such as China and Brazil, for future expansion
  • In Europe, focus on expansion in eastern countries
  • Enter new catchment areas by launching new store formats
  • Branch out into food-to-go to meet growing customer demand
  • Consider developing successful instore brands into standalone brands
  • Offer a click and collect service alongside online delivery
  • Allow customers to order non-food items from an instore terminal
  • Introduce complementary services to improve the instore experience
  • Introduce services that prolong time spent instore
  • Invest in developing your non-food offer to diversify your product range
  • In mature markets, diversify into new services
  • Enhance your private label ranges to encompass both entry-level and premium lines

MARKET CONTEXT AND OUTLOOK

  • EU grocery expenditure has fallen by 0.5% since 2008
  • Rising food prices will fuel growth in grocery expenditure
  • Specialist grocery sales growth is outpacing grocery expenditure
  • Market consolidation is driving grocery store numbers down across Europe

STRATEGIC ISSUES

  • New grocery store formats are emerging
  • Retailers are having to adapt their store formats to enter new catchment areas
  • Compact hypermarkets help retailers improve sales densities and enter new locations
  • Grocers are placing greater emphasis on growing their c-store networks over their hypermarket estates
  • Stores focusing on the food-to-go segment are increasingly being launched by grocery players
  • The online channel provides a profitable avenue for growth in mature markets
  • The rising relevance of the internet means that online shopping is set for strong growth
  • Offering online shopping and delivery has become standard to many large grocery retailers’ propositions
  • Retailers are offering the click and collect model to drive traffic to their sites
  • Casino Proximity’s AlloCLivré offers home delivery to convenience store customers
  • Instore terminals are being installed to boost sales but maintain sales densities
  • Instore services and events are helping retailers combat the rise of online shopping
  • Adding instore services gives customers added reason to enter the store and helps maintain sales growth
  • Complementary services help retailers emphasize expertise in certain categories
  • Food services are being added to improver grocers’ food quality credentials
  • Product and brand diversification is helping retailers expand their market shares
  • Grocers are developing profitable non-food brands to expand in mature markets
  • Carrefour is placing greater emphasis on its health and beauty ranges
  • Sainsbury’s and Ahold are partnering with existing non-food brands to improve their instore proposition
  • Tesco is launching standalone F&F-branded stores in Eastern Europe
  • Grocers’ private label lines continue to increase in prominence
  • Grocers are extending their premium own brand food lines to improve profitability
  • Value own brand lines remain central to many grocers’ product development strategy

COUNTRY FOCUS

  • Germany’s rebounding economy has helped to drive growth in the grocery sector
  • The success of the hard discounter in Germany is keeping growth in specialist sales low
  • Sales from the top four grocers account for 65.3% of grocery expenditure in Germany
  • German consumers’ price-consciousness favors the growth of the hard discounters
  • Food-to-go is a growing store format in Germany
  • Online is a relatively underdeveloped channel in Germany
  • France is dominated by hypermarkets, but this format is contributing to low sales growth
  • Despite high unemployment, growth in grocery spend picked up to 1.5% in 2010 in France
  • France is an extremely mature grocery market, home to four of Europe’s largest players
  • The hypermarket is the most prominent store format in France in terms of sales
  • The Loi Raffarin favors the expansion of smaller grocery stores over hypermarkets
  • The online channel is developing at a fast rate in France
  • Italy remains the most fragmented grocery market within the top five
  • Unemployment in Italy is forecasted to rise in 2011, hampering grocery sales growth
  • Italians’ preference to shop at small independent grocers has slowed the consolidation of the market
  • Hypermarkets are suffering in the Italian grocery market due to poor sales in non-food
  • Italy’s Bersani Law limits the number of large grocery stores in many regions
  • Grocers’ diversification away from food has boosted specialist sales in the UK
  • In euro terms, the UK grocery market benefitted from one of the highest growth rates in the EU27 region
  • The UK grocery market is highly concentrated, with the top four players accounting for two thirds of sales
  • The growing focus on non-food is resulting in larger grocery stores in the UK
  • Online is a rapidly growing sales channel in the UK, offering a new means to grow market share
  • Grocers are opening c-stores to capitalize on demand for top-up shopping
  • Spain continues to suffer from the impact of the recession, benefitting food discounters
  • A rise in VAT and extremely high unemployment has kept the Spanish grocery market weak
  • The top four grocery players in Spain account for over a third of total grocery expenditure
  • Discounters are playing an increasingly larger role in the Spanish grocery market
  • The Euro 2012 tournament in Poland will help to boost grocery retail sales
  • Although the Polish economy grew strongly in 2010, unemployment remains high
  • Many small independent players in Poland are being protected by franchise chains such as Žabka
  • The discount and convenience store formats are growing at the fastest rates in Poland
  • Both Tesco and Auchan plan to launch online stores in Poland by the end of 2011
  • The stability of the Dutch economy ensured continued growth in grocery expenditure
  • Growth in grocery spend in the Netherlands will mainly be driven by inflation
  • The Dutch grocery retail sector is led by local player Ahold
  • Hypermarkets are a rare feature in the Dutch grocery retail landscape
  • Rising unemployment and wage cuts in Greece are hindering recovery in grocery spend
  • The Greek economy is continuing to contract, leading to a further decline in grocery spend
  • The Greek grocery market is led by French retail giant Carrefour
  • Hard discount players are taking advantage of rising demand for low-price products in Greece
  • Store openings in Greece can be a slow process, impacting grocers’ ability to expand rapidly
  • Belgium was one of the strongest performing grocery retail markets in the EU27 region
  • High unemployment in Belgium will keep grocery sales growth subdued
  • The leading domestic players in Belgium are facing stiff competition from an influx of foreign players
  • The weak performance of hypermarkets in Belgium has impacted Carrefour’s sales
  • Grocery players in Belgium are attempting to compete on price with the hard discounters
  • The online channel is underdeveloped in Belgium
  • Sweden and Finland have shown above average growth rates in grocery sales in 2010
  • The grocery market in Finland and Sweden is forecasted to grow by double digits between 2010 and 2013
  • Discounters are growing quickly in both Sweden and Finland
  • Store numbers are growing at the fastest rate in Finland and Sweden out of the EU27 countries
  • ICA To Go is one of the first urban convenience formats in Sweden
  • Grocery spend in Austria rose by 4.1% in 2010, driven by German retailers’ expansion
  • Austria proved to be a very resilient grocery market as low unemployment kept spending on the rise
  • Austria has become the gateway to Eastern Europe for German grocery retailers
  • Urban city center locations remain untapped in Austria
  • Romania’s grocery spend fell heavily in 2010 but is expected to rebound quickly
  • Weak consumer spend and high inflation led to a 6% fall in Romanian grocery spend in 2010
  • The rapid expansion of foreign grocers in Romania is contributing to a consolidation of the market
  • Lidl’s recent entry into Romania has made owner Schwarz Group the leading player in the country
  • Smaller grocery stores are becoming more prevalent in Portugal
  • Sonae has opened a new supermarket format in Portugal
  • Smaller convenience stores have become the core focus for Sonae and Jerónimo Martins
  • Low prices and convenience are key sales drivers for grocers in the Czech Republic
  • Grocers in the Czech Republic are starting to penetrate the online channel
  • Demand for low-price ranges is growing
  • Spar has tended to roll out smaller stores over hypermarkets
  • Although grocery sales grew weakly in Denmark, discounters continued to expand
  • Danish consumers’ propensity to trade down in their grocery shop led to slow grocery sales growth in 2010
  • The convenience store segment is only just emerging in Denmark
  • Grocers in Hungary face weak consumer demand and added retail taxes
  • Grocery expenditure is forecasted to decline in Hungary between 2010 and 2013
  • The Hungarian government has introduced a retail tax to cut the budget deficit
  • Lack of consumer confidence in Ireland is benefitting hard discounters in the country
  • Discounters are reaping the benefits of low consumer expenditure in Ireland
  • Superquinn has been taken over by Musgrave
  • Grocers in Ireland are promoting local produce to protect local jobs
  • New hypermarket and convenience formats are being introduced in Bulgaria
  • Lidl has recently entered the Bulgarian grocery market
  • Mercator is rolling out its Roda hypermarket format in Bulgaria
  • Maxima launched the T-Market Express convenience store format in Bulgaria
  • Tesco and Billa are extending their brand presence through new formats in Slovakia
  • Tesco has introduced the Tesco Extra large format store to Slovakia
  • Rewe has opened a downsized Billa supermarket in Slovakia to fit into high footfall locations
  • ICA is strengthening its position in the Baltics through lower prices and a loyalty scheme
  • Retailers are lowering prices and enhancing private label ranges to attract customer spend
  • Rimi Baltic has launched its Mano Rimi loyalty scheme in the Baltic region
  • Slovenia’s Mercator hopes to widen its reach across the Balkan region
  • Slovenia’s leading grocer Mercator plans to gain dominance in the Balkan region
  • Grocers are entering Cyprus and Malta to reach tourists familiar with their brands
  • Lidl has a limited presence in Cyprus and Malta
  • Holland & Barrett has entered Cyprus
  • Luxembourg is in a prime location for new grocery players to enter
  • Ahold could potentially open in Luxembourg following its entry into Belgium

COMPANY COMPARISONS
Carrefour leads the grocery retail market in the EU, followed by Rewe and Tesco

AHOLD

  • Retailer summary ” Ahold has a strong base in the US alongside its European operations
  • Stores ” Ahold has entered the Belgian market and increased its domestic network
  • Recent key developments ” Ahold has launched non-food lines and eco-friendly food ranges
  • Ahold has entered Belgium
  • Ahold has launched a “socially responsible” private label brand, AH puur&eerlijk
  • Albert Heijn has started to stock a comprehensive non-food range
  • Financials ” Sales in the Netherlands remain strong and profitability is improving
  • Outlook ” Overseas expansion is key to Ahold’s growth strategy
  • Ahold will make further expansion overseas
  • Ahold will reduce its reliance on the US market and strengthen its position in Europe

ALDI

  • Retailer summary ” Aldi stores follow the original hard discount grocery store model
  • Aldi has expansive store networks in the US and Australia as well as in Europe
  • Aldi keeps tight control of its operational costs through operating sparsely decorated stores
  • Aldi predominantly sells own brand goods
  • Stores ” Germany continues to dominate Aldi’s store portfolio
  • Recent key developments ” Aldi Süd is considering further international markets
  • Aldi’s co-founder Theo Albrecht passed away in July 2010
  • Aldi has withdrawn from Greece
  • New Zealand is a potential new market for Aldi SÃ
  • Financials ” International store sales are now outperforming its domestic network
  • Outlook ” Aldi’s may have to adapt its model to remain competitive
  • Aldi is no longer able to attract new customers through its lower prices alone
  • Aldi’s overambitious expansion strategy may lead it to exit other markets
  • Retailer summary ” Auchan mainly operates large format stores across Europe and Asia
  • Stores “The majority of Auchan’s stores are supermarkets situated outside of France
  • Recent key developments ” Auchan is diversifying its operations to cater to urban shoppers
  • Metro has partnered with Auchan to help it develop its private labels in France
  • Auchan has launched its first Auchan City neighborhood store chain in France
  • Auchan’s Chronodrive has been extended to cater for pedestrians and cyclists
  • Financials ” stable food sales have helped to shore up Auchan’s flagging hypermarket sales in France
  • Outlook ” Auchan is making a greater effort to target consumers seeking convenience
  • Auchan will have to achieve greater penetration into the convenience market

CARREFOUR

  • Retailer summary Carrefour is Europe’s largest retailer by turnover
  • Carrefour is expanding aggressively and is present in 34 countries worldwide
  • Carrefour operates a multi-format single brand strategy
  • Carrefours Tex clothing label is one of the top clothing brands in France
  • Carrefour’s private label ranges have been ramped up
  • Stores Smaller store formats are growing rapidly in Europe
  • Recent key events Carrefour is streamlining both its product range and store banners
  • Dia has been spun off as a separate business
  • James McCann, head of French operations, has left the company
  • The retailer has partnered with Boots to enhance its health and beauty proposition
  • Carrefour has opened a cash and carry store in India
  • Carrefour has launched a new hypermarket concept in Europe
  • Financials Poor European performance is dragging down sales
  • Outlook Carrefour will diversify its strategy according to region
  • Hypermarkets will become the growth vehicle in emerging markets
  • There is greater room for the growth of non-food in emerging markets
  • The Dia spin-off strategy was a controversial move

E LECLERC

  • Retailer summary E Leclerc operates across a wide range of sectors alongside grocery
  • Stores E Leclerc opened its first store in Andorra in late 2010
  • Recent key developments Lithuania will be the next market entry for E Leclerc
  • E Leclerc entered Andorra in late 2010
  • The grocer plans to open a store in Lithuania
  • E Leclerc’s price transparency site has been extended to organic ranges
  • Financials  international sales growth has been driven by store expansion
  • Outlook  E Leclerc’s specialist stores and Drive sites are making their mark in France
  • International expansion has been accelerated and will contribute strongly to growth
  • E Leclerc is further diversifying its range of non-food specialist stores to improve purchasing power
  • The Leclerc Drive format will help to boost hypermarket sales

EDEKA

  • Retailer summary Edeka is the leading grocer in Germany
  • Stores The Netto hard discount chain has grown by 169% since 2009
  • Recent key developments Edeka continues to grow through acquisitions
  • Edeka is aiming to expand its Netto chain to 5,000 stores in Germany
  • Edeka has acquired 11 Ratio stores in Germany
  • Financials Independently operated Edeka stores outperformed the Netto network in 2010
  • Outlook Edeka’s Netto chain has become a credible rival to hard discount leader Aldi
  • Edeka will become a formidable hard discount player through the Netto chain
  • Edeka should consider entering new markets

ITM ENTERPRISES

  • Retailer summary ITM Enterprises’ grocery stores operate an EDLP proposition in France
  • Stores ITM Enterprises’ stores in Spain are now being bought by hard discounters
  • Recent key developments ITM is targeting consumers seeking speed and convenience
  • Intermarch has launched an own brand non-food discount range in partnership with My Fab
  • Intermarch has launched an iPhone application
  • Intermarchis rolling out its Express and Netto formats
  • Financials  Intermarch is losing market share in France
  • Outlook Slow GDP growth in France means that Netto stores will continue to prosper
  • The Netto discount chain will be core to ITM Enterprises’ continued growth in France

REWE

  • Retailer summary  Rewe has a retail presence in 11 European markets
  • Reweâ involvement in a variety of sectors has allowed it to expand its presence to 17 European countries
  • Rewe has differentiated its domestic and international store banners
  • Rewe is able to increase its buying power through its membership of the Coopernic alliance
  • Stores A strong acquisition strategy is boosting Rewe’s network growth in Germany
  • Recent key events New formats have been key to attracting new demographics
  • Rewe has launched a new Rewe to Go store format
  • Rewe has launched its click and collect Rewe Drive format in Frankfurt
  • The new Billa Box and Temma formats are gradually being expanded
  • Financials Sales growth is being driven by aggressive store expansion
  • Outlook Rewe will maintain growth through format diversification and acquisitions
  • Rewe’s network growth will continue to be driven by the acquisition of small networks
  • Format diversification plays a large part in Rewe’s growth strategy

SCHWARZ GROUP

  • Retailer summary Schwarz operates from two main fascias
  • Lidl has a very prolific presence across Europe, while Kaufland has been expanding more tentatively
  • Stores Lidl continues to enter new markets across Europe
  • Recent key events Acquisitions across Europe are aiding the group’s expansion
  • Lidl is to acquire Aldi’s stores in Greece
  • Lidl has joined the Kaufland chain in Bulgaria
  • Kaufland has made several acquisitions of small grocery chains in Germany
  • Lidl has launched the Biotrend organic private label in Italy
  • Financials A rise in sales is being fuelled by rising food inflation in Germany
  • Outlook Discounters will continue to reign but will have to adjust their proposition
  • Rising inflation in Germany will lead to price hikes
  • Austerity measures and price inflation will continue to drive customers to hard discounters

TESCO

  • Retailer summary  Tesco leads the UK grocery market
  • Despite over 60.0% of its sales coming from UK stores, Tesco is the third largest global retailer
  • There are four core types of Tesco stores around the world
  • Tesco has diversified its business to include retail services
  • Stores The UK remains Tesco’s largest market but overseas is growing quickly
  • Recent key events Tesco is making great efforts to improve its green credentials
  • CEO Sir Terry Leahy has stepped down
  • Tesco’s Vin Plus store in Calais has been closed as alcohol prices have dropped in the UK
  • Expansion of the online offer has been ramped up
  • The Tesco Extra format has been introduced to Central Europe
  • Financials  Growth is slowing in the home market but is vital for global expansion
  • Outlook  Tesco is minimizing its dependence on food sales and its domestic market
  • Tesco is in a prime position to open up in new sales channels
  • Business diversification is playing an increasingly larger role at Tesco
  • Maintaining profit growth in the UK is vital for Tesco to be able to fund overseas expansion

To order this report: Supermarket and Hypermarket Industry: Grocery Retailing in Europe: Market Size, Retailer Strategies and Competitor Performance



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Christopher Durham

Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan).

Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s.
Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago.

Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.