Grocery retailing in selected countries from Europe
Back to home page
XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
1
Republic of Ireland
Denmark
Netherlands
Belgium
Germany
Poland
France
Portugal
Spain
Italy
Switzerland
Austria
Czech Republic
Slovakia
Hungary
Romania
Greece
Russia
1
For Turkey see Asia.
Republic of IrelandBack to top
General retail economy
Eire has earned for itself the title of ‘Celtic Tiger’ because of its rapid economic growth through the 1990s and early 2000s. Between 1992 and 1999, Irish retail sales grew at an annual rate of 7.8%, accelerating to nearer 8.6% annual growth for 1999. Total Irish retail sales
£IR 4.5 billion in 1991
£IR 11.4 billion in 1999
The independent grocers held about 50% of the grocery market in 2003, mostly as members of chains like Spar, Mace, Super Valu, and Centra (information from Tony Parker, University College Dublin). Major supermarket companies, especially the companies Tesco, Dunnes Stores, and Superquinn, hold the rest, apart from the 5% share of the discounters Lidl and Aldi
Up till the early 2000s, Irish grocery prices have tended to be higher than the UK for several reasons
i) The existence of the ‘Grocery Order’, preventing price-cutting. This legislation was enacted in 1988, but repealed in 2006, see below.
ii) The lack of economies of scale in the Irish market. Ireland has a population of some 5 million, swollen in the early 2000s by considerable immigration from the eastern European countries which joined the EU in 2004.
iii) The relative isolation of the Irish market, protecting incumbent stores’ profit margins.
Between 1995 and 2000 Irish retail grocery prices rose 25%, but Irish farm gate prices rose just 5%. Irish grocery stores enjoy an average retail margin of 33%, one of the highest in Europe. (OECD working paper, ECO/WKP(2006)19, 9 June 2006, by David Rae, Line Vogt, and Michael Wise)
Retail legislation
Legislation limits grocery superstores to a maximum size of 3,500 square metres in Dublin and 3,000 square metres elsewhere. However non-food warehouse retailers like B & Q can have stores up to 6,000 square metres; IKEA, considering expanding into Ireland, is pressing the Dublin government to raise that limit. In 2006 Eire abolished the ‘Grocery Order’; like Resale Price Maintenance in the UK, this had banned discount selling of groceries. The Grocery Order set up in 1988, protected smaller retailers from being undercut by larger supermarkets with superior economies of scale by allowing grocery suppliers to fix a minimum price at which retailers could sell their goods. The Irish Competition Authority estimated that the Grocery Order was costing the average Irish household some 480 Euros per annum (2004), by preventing larger supermarkets from selling foods at ‘below [wholesale] cost’. In 2007 Germany made the opposite move, prohibiting below-cost sales of food by large retailers.
Sunday opening is legal in Ireland but many stores operate limited hours.
Independent retailers
The number of independent grocers in the Republic of Ireland fell from 16,000 to 6,000 from the mid 1960s to 1990.
Retail multiples
Aldi
1999, Aldi entered Ireland, opening stores Dublin and Cork.
9/2004, Aldi had 66 stores in Eire.
2008, Aldi announced major expansion plans in Ireland. 17 new stores are to open over the next year, and another 18 the subsequent year. Before this expansion, Aldi had 61 stores in Ireland, end 2008.
Lidl
1999 Lidl entered Eire
Musgrave
Sales to 12/2004, up 13% to Euro 68.5 million. Pre tax profit up 16% to Euro 3.8 million.
Superquinn
Eire supermarket, head office at Lucan, Dublin.
1960, Feargal Quinn opened his first store in Dundalk, in November.
1973, Superquinn began operating in-store bakeries.
2/2006, 21 stores and 8.5% of the Eire grocery market.
Tesco
1997, Tesco entered Ireland. It bought Power Supermarkets Ltd from Associated British Foods, who operated stores under the Crazy Prices(discount format) and Quinnsworth fascias; Powers was the largest supermarket chain in Ireland. Tesco Ireland was then created. Since 2000 Tesco has aggressively reduced prices on its own-label goods, counteracting a generally high level of prices in Eire for groceries.
Tesco,2005, 91 stores in Eire.
Tesco market share in Eire 10/2007 was 26.1%.
Tesco market share in Eire 4/2009 was 25.7%
Tesco market share in Eire 4/2010 was 26.8%
Tesco market share in Eire 4/2011 was 27.3%, 130 stores.
Denmark Back to top
Retail legislation
Denmark has prohibited superstores from being larger than 3,000 square metres, resulting in Copenhagen having an even spread of smaller grocery stores (‘Convenience Store’, 18/7/2003, p.57). Sunday trading restricted.
Retail multiples
Aldi
1989, Aldi had 50 stores in Denmark
Fakta
2009, Fakta had 360 stores in Denmark
Lidl
2009, Lidl had 60 stores in Denmark
Netto
Netto is part of the Dansk Group, itself part of the Maersk Group, which also runs Maersk Shipping. Therefore Netto is able to import foods to its UK supermarkets at reduced rates.
1960 Dansk Supermarkets (owner of Netto) founded.
4/1981 Netto opened its first store, in Copenhagen
2001 Netto has 280 stores in Denmark. The parent group Dansk also owns two of Denmark’s largest grocery chains, Bilka and Fotex.
2009, Netto had 400 stores in Denmark
Foreign portfolio
UK– entered 12/1990 (Leeds); 1995=50 stores; 2002=130 stores (130th at Pendlebury, Manchester); 2004=134 stores; 2006=145 stores.
2010, Asda (subsidiary of Wal-Mart) announced plans to buy Netto’s UK stores.
Sweden – entered 5/2002; 2005=59 stores
Germany – entered 9/1990
Poland – entered 8/1995
NetherlandsBack to top
Retail legislation
.Planners aim to have supermarkets located at public transport junctions (from 1990), but this rule partially relaxed after 1996.
Retail multiples
Ahold
Supermarket format = Albert Heijn
1887 The first Albert Heijn local grocery store opened in The Netherlands.
1998, Turnover was US$ 24.1 billion
2004, Turnover was Euros 44.5 billion. Gross profit was Euros 9.212 billion
2005, Turnover was Euros 44.5 billion. Gross profit was Euros 9.206 billion
2006, Turnover was Euros 44.9 billion
1988 Ahold bought Finmast (formerly US-owned company)
3/2004 Ahold exited from Asia
12/2004 Ahold sold its Spanish stores
2005, Ahold exited from the USA
Aldi
1989, Aldi had 200+ stores, trading under the Combi fascia
BelgiumBack to top
General retail economy
2008, Discounters have a 13% market share.
Retail legislation
1994 Royal Decree permission required for any new supermarket over 1,500 square metres in densely populated areas, or over 600 square metres elsewhere.
Retail multiples
Aldi
1988, Aldi had 150 stores in Belgium
Carrefour
1999, Carrefour had 483 stores in Belgium. It then also had a 27.5% stake in GB, a Belgian grocery retailer, as a result of Carrefour’s purchase of Promodes.
(GB or Grand Bazaar was founded in 1958)
In 2000 Carrefour boiught the remaininng 72.5% of GB. This brought the Nopri and Unic chains into Carrefour ownership. In 2001 Nopri and Unic were rebranded as Carrefour; the GB logo was retained on Carrefour’s Belgian stores, as there was strong consumer loyalty to the GB brand.
Colruyt
The Belgian discount chain Colruyt is gaining market share at the expense of Carrefour and other large chains as the credit crunch hits consumer spending power (Economist, 16 August 2008, p.59).
Delhaize
1998, Turnover was US$ 11.5 billion
2005, Turnover was Euro 18.3 billion
2006, Turnover was Euro 19.2 billion
2008, bought Plus Hellas in Greece
2008, bought La Fourmi, 14 stores, in Romania.
GermanyBack to top
General retail economy
Shop opening hours are more restricted than in most other European countries. German retailers were not allowed to open after 6.30pm on weekdays, and could only open on one Saturday a month, until 2.00pm. In 1996 these restrictions were partially eased to allow a further 10 hours a week opening, e.g. on all Saturdays until 4pm. This of course applies to large and small shops. Sunday opening is still (2008) rare. By contrast in the UK supermarkets can open all day Saturday and for up to six hours on Sunday. Hence in Germany there are less economies of scale open to the supermarkets. The German retail market is dominated by indigenous discount stores.
2008, discounters had a 29% market share – the 2nd largest share in Europe, exceeded only by Norway’s 30%. (The Grocer, 28/6/2008, p.4, sated that ‘In Germany, discounters occupy more than 40% of the market’).
Germany is not an easy environment for large multinational retailers. Retail labour costs are high and this has deterred retail investment. German shoppers find themselves faced, frequently, with a choice of discount stores offering a rather basic shopping environment. Retail volume growth rates in Germany are also rather low.
During the 1990s there was reduced economic growth in Germany due to the costs of reunification. The German economy also suffered from the changeover from the Deutschemark to the Euro, and since 2007 has endured the effects of the global Credit Crunch.
Retail legislation
Planners generally allow supermarkets in designated industrial areas (Retail Strategy, p.82), if under 1,200 square metres. This limit was reduced to 800 square metres in 1995 across most of Germany. Hence many small towns in Germany have their main supermarket, usually a discounter such as Aldi or Lidl, not in the populated area but a few hundred metres away in an industrial estate.
Opening hours were strict; closing was enforced at 6.30 pm Monday to Friday and at lunch time on Saturdays, none on Sunday. From 1996 hours were extended to 8pm on weekdays and 6pm on Saturdays.
In 2007 the German Government approved a law to protect smaller retailers by prohibiting retailers from selling foods below the wholesale price they paid for them. In other words, Germany has just gone exactly the opposite way to the Republic of Ireland, which in 2006 rescinded its Grocery Order, forbidding large retailers from selling below cost price (source, Eurofood, 2/5/07, p.22). German retailers will still be able to cut the prices of seasonal or near-sell-by-date foods.
Independent retailers
The number of grocery stores in Germany fell from 160,000 in 1971 to 80,000 in 1984, even as total sales space rose 50% over this period. There is even a German word – ‘Greisslersterben’ – meaning ‘death of the grocer’, to describe the decline of their independent shops.
Retail multiples
Aldi
Year – reporting dateDecember / Profits (pre tax) / Sales
Million Euro / Million Euro *
1954/5 / 15
1974/5 / 3,000
1984/5 / 8,500
1985/6
1986/7
1991/2 / 6
1992/3 / 11
1993/4 / 12.1
1994/5 / 13.3 / 14,800
1995/6 / 14.8
1996/7 / 17.4
1999/2000 / 19,000
2001/2 / 25,000
2003/4 / 26,100
2006/7 / 27,000
2007/8 / 43,000
*Figures converted into Euro at 2000 rates –estimates only
Year / Store numbers - Germany / Store numbers - worldwide1955 / 100
1974 / 1,000
1988 / 2,000
1995 / 3,000
2000 / 3,350
2003 / 5,000
2007 / 7,500
Aldi - history
In 1946 the Albrecht family’s small grocery store in the industrial town of Essen was taken over by the two sons, Theo and Karl. By 1950, they had opened a further 12 stores, focussing on low prices, and limited range (Gerhard, 2005). By the 1960s they had around 350 stores. They divided the business into two in the 1960s after a dispute over cigarette sales; Aldi Nord, run by Theo (headquarters, Essen), and Aldi Sud, run by Karl. Karl had been reluctant to stock tobacco products as he believed it would attract shoplifters. The Aldi fascia first appeared in1962 in Dortmund, a contraction of Albrecht and discount. The UK stores come under Aldi Sud.
1988, Aldi had 2,000 of the 6,000 discount stores in Germany.
2002, market share, Germany, was 7.8%
Wal Mart
1997, Wal Mart entered Germany, buying 21 Werkauf supermarkets. In 1998 Wal-Mart bought 74 Interspar stores in Germany. Wal-Mart encountered problems with its expansion in Germany caused by that country’s strict planning laws and shortage of suitable sites for new stores. These factors reduced the economy of scale Wal-Mart could obtain in Germany. Competitors to Wal-Mart, chiefly discount chains such as Aldi and Lidl, operated on low margins and could match Wal-Mart’s prices, and it is illegal to sell groceries below buying cost in Germany. Cultural factors also ate into Wal-Mart’s performance; Germans generally have much smaller fridges and less storage room in their homes than do Americans. Wal-Mart also tried to apply strict US standards of management to its German workforce, and met with resistance and loss of employee morale. By 2000 Wal-Mart had only achieved a market share of 2.0% in Germany.
Lidl
1998, Turnover was US$ 10.4 billion
2004, Turnover was Euros 9.7 billion
2007/8, Turnover was Euros 35 billion
1930s, Lidl and Schwarz Grocery Wholesale founded in Germany (owned by the Schwartz family).
1973 First Lidl store opened, in Germany.
1974, Lidl had 10 stores in Germany
2000, Lidl had 2,000 stores in Germany
5/9/2006. Lidl is to experiment with selling cut-price flights (with Air Berlin) at its UK checkouts. Lidl claimed there would be a natural match between cut-price grocery shopping and cheap flights; other rival airlines said air travellers would tend to look for good flight deals on the Internet, not at a supermarket.
Foreign portfolio
UK – entered 1994 (40 stores)
Ireland
Norway – entered 2004; EXITED 3/2008
Finland – entered 2002
Spain
Metro
Metrowas established in 1964. It owns the Real fascia. It owns the former Wal-Mart stores, bought when Wal-Mart exited Germany in 2006. Metro entered China in 2011 and planned to have 100 stores there by 2016 – however Metro was forced to pull out of China because of cheaper and better ranges available online.
1997/8, Sales were US$ 34.5 billion
2001/2, sales were Euro 32,022 million; market share was 9.7%
2002/3, sales were Euro 53,561 million
2003/4, Sales were Euro 56,400 million
2009/10, Sales were US$ 89,100 million
Rewe
Owned by Toon.
1998, Turnover was US$ 26.6 billion
2001/2, group sales rose 8.4% to Euros 37.5 bn. Growth in Germany was just 3%, due to poor economic conditions, giving 2001/2 sales of Euro 22.86 bn. Growth outside Germany was 25% up on the year, giving sales of Euro 7.65 bn.
2002, Rewe is to close 150 of its 7,300 stores. This comes on top of closures of 300 stores in Germany in 2001. Market share 2002 was 8.9%
2006, market share was 13.2%
2011/12, Sales were Euro 66.38 bn (groceries Euro 50.05 bn); Rewe had 15,700 stores in Germany and 12 other countries.
Wal-Mart
12/1997, Wal-Mart entered Germany, buying an upmarket chain, Wertkauf, in 1997 (21 supermarkets).
31/12/1998 Wal-Mart bought Inter-spar (owned by Spar-Handel AG), with a further 74 outlets. See 2006 for reasons for exit from Germany.
1999, Wal-Mart had 95 stores in Germany
2005/6, Wal-Mart made losses of £360 million (Euro 528 million) on sales of £1,750 million (Euro 2,560 million) in Germany, in 85 supermarkets. It had a 1.5% market share in Germany in 2006.
7/2006 Wal Mart announced it would exit from Germany. Its 85 stores were sold to Metro, trading under the Real fascia. This cost the company US$863 million. Wal-Mart had suffered nine consecutive years of losses on its German operation, of 85 hypermarkets. The company was not used to having major chains such as Aldi and Lidl undercut its position as cheapest retailer, and it misunderstood the German consumer culture. For example it had greeters at al its stores to smile at all visitors. This antagonised German shoppers who like to look for bargains unmolested by shop assistants.
The restrictive nature of German shop opening hours (Ladenschlussgesetz = law on shop trading hours), with almost no Sunday trading, thwarted efforts to gain economies of scale. Worse, Wal-Mart never came close to gaining a significant market share of the German retail grocery market, with just 85 stores in the country.
It also appointed a head of the German operation who spoke no German, and insisted that his managers also conducted business in English. This head was then replaced by another who tried to run the operation from England (Economist, 5/8/2006, p.54). Contrary to what many linguistically-lazy English speakers think, not everyone in Germany can speak English.
PolandBack to top
General retail economy
Poland presents an especially attractive market to western European supermarket chains seeking to enter the territory laid open by the collapse of the Soviet Union at the start of the1990s. Poland was one of the wealthier per-capita Warsaw Bloc countries and also the largest, giving a potentially prosperous market with good economies of scale. Poland also has a more youthful population profile than do countries in western Europe, which promises an expanding grocery market, unlike the static food market in western Europe.
The Austrian chain Billa (owned by the German retailer Rewe) set up the first supermarket in Poland, in Warsaw in 1990. By 2001, large-format stores (hypermarkets, malls, and discounters) accounted for 11% of Polish retail sales and 25% of Polish food sales.
By September 2004 Poland hosted 198 hypermarkets run by eight different western European companies. Tesco entered Poland in 2005. Germany’s Metro AG chain is strong in Polish retailing generally, especially in DIY and electronics. Also of German origin is Kaufland, a subsidiary of the Lidl and Schwarz Company. Kaufland entered Poland only in 2002 and by 2004 had 25 stores there. Kaufland operates discount stores, with low prices but a limited range.
Tesco is fighting for market share (2009) against discounters such as Biedronka, (a Portuguese-owned discounter, with a 13% market share), and Martins, with its 6% market share matching that of Tesco.
Retail legislation
As small Polish shops are threatened by an influx of foreign supermarkets, Poland has enacted its own version of the French Royer law (Economist, 19 May 2001, p.89). Local authorities can veto new shopping centres, there are restrictions on new supermarket developments of over 2,000 square metres, and the Polish government is being urged to stop ‘predatory pricing’, supermarket prices deliberately set low so as to force local small shops out of business. However many superstore operator saw this veto coming and got planning permission for new store sites before it was implemented.
Independent retailers
Poland suffered an economic recession between 2000 and 2003, which made shoppers more careful with their money and boosted the share of any supermarket able to undercut the prices of Poland’s estimated (2004) 100,000 independent ‘corner’ grocers, shops with under 100 square metres sales space. However Poland’s small independent shopkeepers are starting to set up buying groups akin to Spar or Londis in the UK.
There were still some 150,000 independent small shops in Poland in 2010, a third of these family-owned. In 2010 independent shops had 40% of the Polish grocery market, almost equal to the 42% held by supermarkets and discount chains. In 2010 around 25% of Poles still shopped at local stores every day for their groceries.
Retail multiples