Edeka Builds on Its Competency

Global Retail BrandsThe following is the first in a series of guest posts from the latest issue of Global Retail Brands and this is my contribution to the magazine. Throughout the week we will feature one article a day from the new publication – please take a few minutes and click-through to the site – read the entire article and see what the rest of the world is up to.

Edeka Builds on Its Competency
By / Matthias Queck, Research Director, Planet Retail

German co-operative grocer Edeka is seeking to invest EUR1.6 billion (USD2.1 billion) in modernisation as well as the extension of its store network and retail infrastructure, CEO Markus Mosa has announced. This is 10% more than in 2012.

Leading German grocer Edeka continues to build on its food competency, for example by developing vegan private label products such as this ‘SoYes’ soy-based organic pasta sauce. In its financial and calendar year 2012, Edeka posted sales of EUR44.8 billion (USD57.6 billion), up 3.8% on the previous year when adjusted for the divestment of its 25% stake in Dansk Supermarked’s Netto. The group’s net income reached EUR168.6 million (USD216.7 million), up 19.7%.

Turnover generated by the co-operative’s independent shopkeepers climbed 6.4%, up to EUR21.3 billion (USD27.4 billion). Its corporate-run full-range retail division saw sales slip 0.5% to EUR8.3 billion (USD10.7 billion), mainly due to store privatization. During the year, 83 company operated outlets were handed over to independents. Its Netto Marken-Discount discount arm accounted for sales of EUR11.3 billion (USD14.5 billion), up 5.2%, whereas the wholesale business grew 3.0% to EUR1.9 billion (USD2.4 billion). Third party sales fell 14.8% to EUR1.3 billion (USD1.7 billion).

A safe pair of hands
The announcement of very robust results for 2012 has come at a time when Markus Mosa is sitting as firmly in the saddle as ever before. Just a couple of days earlier, his contract as the co-operative’s CEO was extended by another five years. The other two members of the executive board, Michael Wulst and Martin Scholvin, only joined in January this year, when Dr Reinhard Schütte, previously in charge of Finance, IT, Logistics and other areas, left the company “at his own request”.

Implications >>

  • Edeka’s strong performance has proved again that retail business is local business. Thanks to its leading position at home (and its membership in Agenor/Alidis), it does not need international ambitions to be successful.
  • Edeka’s independent structure, combined with the need for differentiation and localisation, offers manifold opportunities for smaller suppliers and specialists in Europe’s largest market.
  • Edeka’s investments in IT, alongside its general efforts to centralise sourcing, will result in greater visibility of conditions, which means standardised terms for suppliers.
  • The relative independence of Edeka’s shopkeepers will make it particularly difficult to coherently tackle common challenges, such as online shopping and an all-encompassing loyalty scheme.
  • Edeka’s investments in verticalisation may become an increasing threat for suppliers.

Read the entire article.