Summary
Key Market Trends
* Slowdown in spending: Since the onset of the recession in Germany, retailers have seen falling real incomes. Consumers have increased their savings rate due to high unemployment levels and structural readjustments in companies. With squeezed consumer spending, the retail sector in Germany has seen the rise of hard discount retailers, with both Aldi and Lidl outperforming general retailers. The year 2008 also saw near collapse of the biggest department store Karstadt, and the withdrawal of Wal-Mart from the German market.
* Continuation of consolidation: The consolidation that was going on in the German retail industry continued during 2008. However, the pace of consolidation slowed down during 2008. During 2007-08, the notable acquisitions were the takeover of Ihr Platz and Kloppenburg by A Schlecker AG and Dirk Rossmann KG respectively. The expansion of Rewe Group and Edeka Zentrale AG & Co KG grocery retail groups are continuing to sideline small independent retailers. In the overall German retail market, the highest levels of consolidation were seen in grocery retailing, health and beauty retailing, DIY, home improvement and garden centers, leisure retailing and home shopping. Consolidation is expected to continue, especially in the highly fragmented furniture and pharmacy market.
Key Channel Trends
* Discounters gain share from supermarkets: In the sluggish retail environment, supermarkets are losing market share to discounters. Discounters witnessed growth in turnover, selling space and number of outlets whereas supermarkets were hardly able to maintain their selling spaces. Leading discounters such as Aldi and Lidl are taking sales away from traditional supermarket chains such as Edeka and Rewe, while other leading retail groups such as Tengelmann and Metro Group are struggling to maintain their positions.
* Growth in online retailing: The German online retailing is growing at double-digit rates each year. With the consumers becoming more and more technology savvy, more purchases will be made through the internet. Online retailing grew at a CAGR of 15.1% during 2004-09 and is expected to witness double digit growth in the future. German consumers are expected to spend €33.2 billion (US$48.9 billion) online in 2009 and are predicted to further rise to about €56.6 billion (US$83.2 billion) by 2013. The store based retailers are, thus, introducing online shopping to cash on the opportunity.
* Vending sales decline: In Germany, the vending machine channel generates majority of its revenue from the food & grocery category, which includes tobacco. Vending channel sales have been more or less stagnant in the year 2008. This was mainly due to a legislative age control on tobacco sales via vending machines. Consumers now prefer to buy stocks of cigarettes while shopping or refueling to avoid the potential hassle with vending machine purchases, thus increasing the share of supermarkets and forecourt retailers.
Table of Contents
Executive Summary
Introduction
Market Environment
Channel Analysis: Germany Retail Market
Channel Analysis: Discount Retailers
Channel Analysis: General Retailers
Channel Analysis: Specialist Retailers
Channel Analysis: Online Retailers
Category Analysis: Germany Retail Market
Category Analysis: Apparel, Accessories & Luxury Goods
Category Analysis: Books, News & Stationery
Category Analysis: Electricals & Electronics
Category Analysis: Food & Groceries
Category Analysis: Furniture & Floor Coverings
Category Analysis: Home & Garden Products
Category Analysis: Music, Video & Entertainment Software
Category Analysis: Sports & Leisure Equipment
Company Profile: Metro AG
Company Profile: REWE Group
Company Profile: Schwarz Beteiligungs GmbH
Company Profile: Edeka Zentrale AG & Co. KG
Company Profile: Aldi GmbH & Co. oHG
Company Profile: Celesio AG
Company Profile: Arcandor AG
Company Profile: Tengelmann Group
Deal Analysis
Appendix
