Europe Grocery Report 2018Release date: September 17th, 2018 (288 pages) PDF/Powerpoint format. Price: GBP1,923.00 |
Abstract
The EU 28’s grocery markets are a €1.0trillion sector, a barrier that was broken for the first time in 2015.
Despite decades of EU integration, national grocery markets remain quite different from each other. But there are strong commonalities too – one is the rise of German hard discount.
The discounters will become the biggest retailers by sales in the EU. Schwarz Gruppe, Lidl’s parent, is already the number 1 in the EU. Total turnover including Kaufland reached €96.9bn (+7.4%) in 2017 (YE Feb 2018). For comparison, Carrefour 2017 sales stood at €88.2bn (EU and ROW), with the retailer struggling for growth. Aldi sales were not far behind.
To understand what’s in store in other markets one should look to their domestic market. And currently there is nothing short of a revolution going on at Aldi in Germany.
After years of Lidl’s growth outperforming the sector, the discounter has run out of steam and radical change is afoot. Once again Lidl acts as a trailblazer innovating in the supply chain, logistics and store design, but now against a backdrop of Aldi flying high.
As all major players have pledged record investment levels into their store estate and digital transformation, German grocery looks likely to become a beacon for store design and in store as well as store format innovation for years to come.
With €186bn in sales France has become the biggest grocery market in the EU. 2017 saw significant changes in the sector with E.Leclerc becoming the biggest grocer and toppling Carrefour of its perch.
Regarding online, the drive boom is now over, due to legislation and saturation, so that the rate of openings has significantly slowed. Moreover there is a shopper behaviour shift towards ultra fast deliveries (hence the Ocado/Monoprix or Amazon/Casino deal) and most of the big players are pushing innovative partnerships with logistics start ups to speed up same day deliveries.
In the UK consumer spending is under enormous pressure. Prices are rising, wage growth is flat and interest rates are on the up. At the same time, retailers face increasing cost pressures from online, rate rises, minimum wage rises and input cost inflation.
The structure of the market is changing, with both Tesco buying into wholesale (Booker) and Sainsbury’s into non food (Argos) and … the competition (Asda).
Looking ahead, Aldi and Lidl could more than double their market share to as much as a quarter of the market over the next 3-5 years. If it comes to a no deal Brexit then the damage to the sector would be immense. The big 4, Tesco, Sainsbury, Asda and Morrisons would suffer for years to come.
In a clear sign that the crisis in Spain is now well and truly over, Mercadona is ramping up the SKU counts in stores again (easily done as it controls its inter providores suppliers) and investing heavily in brighter new store outlets (as well as online) – as Spanish shoppers have finally more disposable income to spend again. The move to downscale in 2007/8 and speedy reaction to changed realities on the ground is credited with the retailer gaining market leadership in the country.
While negotiating its transition after the death of its founder, Italy’s Esselunga remained the most efficient grocer in all of the EU in 2016 with over €16,000 of sales per square meter. To put this figure in context, market leader Coop reported sales of €6,700 per square meter – or almost €10k less. Looking ahead, the market will be shaken up by the entry of Aldi and the investment pledged by Lidl.
Table of contents
Executive summary | p21 |
Millennial shopper | p25 |
Millennial shopper: an introduction | p26 |
Millennial shopper: (1) Green, health & wellness | p27 |
Millennial shopper: (2) Craft/artisanal | p28 |
Millennial shopper: (3) Digitalisation, social media, voice | p29 |
Millennial shopper: (4) Urbanisation challenges | p30 |
The future of Grocery Retail | p31 |
Grocery retail: Five theses for the future of retail | p32 |
Grocery retail: (1) the age of store based foreign expansion is over – unless you’re a discounter | p33 |
Grocery retail: (2) Discounters will become the biggest EU retailers by sales | p34 |
Grocery retail: (3) Vertical integration in grocery retailing will continue | p35 |
Grocery retail: (4) Winning strategies: convenience, fresh and foodservice | p36 |
Grocery retail: (5) digitalisation and innovation logistics, loyalty and in store | p37 |
The future of FMCG | p38 |
FMCG: (1) Ingredients splitting three ways | p39 |
FMCG: (2) all growth from small scale start ups | p40 |
FMCG: (3) almost all innovation from small scale start ups | p41 |
FMCG: (4) cost cutting & M&A, (5) Silicon Valley | p42 |
FMCG: a new golden age for CPG? Not likely for the small players | p43 |
GDP & Population, EU 28 | p44 |
GDP: EU28 2014, 2015, 2016 in €, ranked by size | p45 |
GDP & Population: analysis and explanation | p46 |
GDP: EU28 2016 in €, ranked by size, Germany – Finland | p47 |
GDP: EU28 2016 in €, ranked by size, Portugal - Malta | p48 |
Population: EU28 2017, ranked by size | p49 |
GDP: EU28 2016, in €, per capita, ranked by size, Luxembourg – Spain | p50 |
GDP: EU28 2016, in €, per capita, ranked by size, Malta - Bulgaria | p51 |
EU28 Retail, On a rebound | p52 |
Retail: EU28 2014, 2015, 2016, in €, ranked by size | p53 |
Retail: EU28 2016, in €, ranked by size, France – Finland | p54 |
Retail: EU28 2016 in €, ranked by size, Greece - Malta | p55 |
Retail sizes: analysis and explanation | p56 |
Retail: % share of GDP, EU28 2016, ranked by size | p57 |
Retail: EU28 2016, in €, per capita, ranked by size, Luxembourg – Cyprus | p58 |
Retail: EU28 2016, in €, per capita, ranked by size, Spain – Romania | p59 |
Grocery Retail, Defensive sector in transformation | p60 |
Grocery Retail: EU28 2015, 2016, 2017, in €, ranked by size | p61 |
Grocery Retail: EU28 2017, in €, ranked by size, France - Denmark | p62 |
Grocery Retail: EU28 2017, in €, ranked by size, Finland - Malta | p63 |
Grocery Retail sizes: analysis and explanation | p64 |
Grocery Retail: % share of Retail, EU28 2016, ranked by size | p65 |
Grocery Retail: EU28 2017, in €, per capita, ranked by size, Sweden - Estonia | p66 |
Grocery Retail: EU28 2017, in €, per capita, ranked by size, Greece – Romania | p67 |
EU28 Retail, Growth | p68 |
Grocery Retail: EU28 2012 - 2017, in €bn | p69 |
Grocery Retail: EU28 2013 - 2017, in y-o-y % | p70 |
Grocery Retail: EU28 2012 - 2017, 5 year growth rate in %, ranked | p71 |
Grocery Retail Growth: analysis and explanation | p72 |
Country profiles: France – the EU’s biggest grocery market | p73 |
Executive summary: France | p74 |
Market shares and profiles, the leading players | p76 |
France Grocery Retail: shares, in %, ranked by size, E.Leclerc – Aldi | p77 |
France: E.Leclerc winning number one spot, Carrefour multichannel transformation | p78 |
France: E.Leclerc store format pictures, drive pieton, drive, express | p79 |
France: Carrefour job losses to come, Intermarché operates most drives | p80 |
France: Carrefour reflets de France, Carrefour BIO, store formats pictures | p81 |
France: Casino the multichannel champion, the Cdiscount master stroke | p82 |
France: Casino Cdiscount non food cooperation in store, execution pictures | p83 |
France: Auchan, still the hypermarket operator with the highest sales density | p84 |
France: Auchan Velizy, new click & collect system pictures | p85 |
Discounters, Lidl dominates the French market | p86 |
France: Lidl leads the market in growth terms, Aldi Nord refreshes its stores | p87 |
France: Lidl France store pictures, Aldi Nord refreshes its stores, pictures | p88 |
Online, The French contribution of le drive | p89 |
France: the country of the drives, but home delivery is coming | p90 |
France: the non food marketplaces integration and opportunities | p91 |
Buying alliances, More potential synergies to come | p92 |
France: buying alliances, trying to avoid supervision of Loi Sapin 2 | p93 |
Organics boom, Chiming well with French cuisine | p94 |
France: halal boom, local artisanal products, private label developments | p95 |
France: Organic specialists expanding, Biocoop, Naturalia and La Vie Claire | p96 |
France: Data, organic market 1999-2015 in €m | p97 |
France: NatureO – the French organic specialist | p98 |
Outlook | p99 |
Outlook: Grocers preparing for the Amazon Fresh onslaught | p100 |
Country profiles: Germany – the land of the discounters | p101 |
Executive summary: Germany | p102 |
Market shares and profiles, the leading players | p104 |
Germany Grocery Retail: shares, in %, ranked by size, Edeka – Globus | p105 |
Germany: Edeka sales bigger than €50bn, investments, Budni partnership | p106 |
Germany: Edeka integration of Netto, Tengelmann, Bringmeister | p107 |
Germany: Edeka and Bringmeister, online strategy | p108 |
Germany: Edeka, Netto, Bringmeister store pictures | p109 |
Germany: Rewe, strong growth through acquisitions in 2017 | p110 |
Germany: Rewe raises funds to invest in its future, redesigns click & collect | p111 |
Germany: Rewe digital moves away from pick from stores, scalable IT infrastructure | p112 |
Germany: Rewe’s discounter Penny starts online service | p113 |
Germany: Rewe’s outlook, store remodeling, online | p114 |
Germany: Rewe’s click & collect, Rewe 2020 store, Penny store pictures | p115 |
Discounters, The birthplace of Aldi and Lidl | p116 |
Aldi: The original – split into two, an organising principle to manage complexity | p117 |
Aldi: Figures 2011 - 16, Sued & Nord in €m, international vs domestic | p118 |
Aldi: Benchmarks, sales densities, Sued ahead of Nord, profits and margins | p119 |
Recent developments - Aldi Nord and Sued 2017 | p120 |
Germany: Aldi Nord revival gathering steam, record sales per store | p121 |
Germany: Aldi Nord closes and Aldi Sued opens stores, while both grow sales | p122 |
Germany: Henkel lists its Pril brand at Aldi Sued | p123 |
Germany: Aldi Nord opens new pilot store in Germany | p124 |
Germany: Aldi Nord’s new pilot store in Germany | p125 |
Germany: Aldi Nord’s new pilot store in Germany - store pictures | p126 |
Germany: strategy change from pureplay private label to FMCG A brands listings | p127 |
Germany: Aldi uses tactical promotions for FMCG A brands | p128 |
Germany: Aldi Sued lists another Henkel brand, Schauma | p130 |
Germany: Aldi logistics, innovation testing and optimisation | p131 |
Germany: Amazon lockers at Aldi Sued | p132 |
Germany: Nivea is ramping up presence at both Aldis | p133 |
Germany: Aldi Sued lists more beer brands | p134 |
Germany: Aldi advertising coordination between Nord and Sued | p135 |
Germany: Aldi starts non food B2C deliveries | p136 |
Germany: Aldi considers discounting and moving away from EDLP | p137 |
Germany: Aldi Nord is planning €bn store investments | p138 |
Germany: Aldi lists Jacobs coffee capsules, targeting Nespresso users | p139 |
Germany: Aldi seeks to raise synergies in pan European buying of brands | p140 |
Germany: Aldi Nord lists more Mueller brands | p141 |
Germany: Aldi Sued showcases new Frankfurt store | p142 |
Germany: Aldi Sued remodeled store of the future Frankfurt | p143 |
Germany: Aldi Sued Frankfurt store pictures | p144 |
Germany: Aldi Sued also announces record investments | p145 |
Germany: Aldi Sued is relaunching its private label ranges | p146 |
Germany: Aldi Sued in convenience stores push, to trial new format | p147 |
Germany: Aldi discounting permanently listed FMCG A brands in promotions | p148 |
Germany: Aldi Sued entry label private label umbrella brand, pushing organics | p149 |
Germany: Aldi Nord is building residential mixed use schemes in Berlin | p150 |
Germany: Aldi Nord Berlin store pictures | p151 |
Germany: Aldi widens ranges, SKU count almost on Lidl level | p152 |
Germany: Aldi’s new bake off stations, flexibility, price leadership | p153 |
Germany: Aldi and bake off, the footfall driver par excellence | p154 |
Germany: Aldi extending SKU range to record levels | p155 |
Lidl - Schwarz’ jewel in the crown | p156 |
Lidl: the copy cat overtaking Aldi, the original | p157 |
Lidl: OSA, Warendruck, operational independence for Lidl and Kaufland – until now? | p158 |
Lidl: category management, acting as the second mover | p159 |
Schwarz: sales 2010 -17, total & domestic growth, domestic share of total | p160 |
Lidl: strong growth essentially lfl, pan EU presence, big bang expansion | p161 |
Lidl: store upgrades, premiumisation, bake off stations, vertical integration | p162 |
Recent developments: Lidl 2017 | p163 |
Germany: both Aldi and Lidl partner with SAP systems and mine big data | p164 |
Germany: Lidl logistics and robots, going automated | p165 |
Germany: Lidl abandons online grocery in Germany and starts cutting costs | p166 |
Germany: Lidl becoming a tech pioneer | p167 |
Germany: Lidl cuts back more – further savings rounds | p168 |
Germany: Lidl attacks Amazon suppliers | p169 |
Germany: Lidl starts using Salesforce, Lidl’s meal kit Kochzauber hits stores | p170 |
Germany: Lidl is pushing vertical integration | p171 |
Germany: Lidl is expanding into conurbations with its convenience concept | p173 |
Germany: Lidl takes groceries offline and only focuses on nonfood and meal kits | p174 |
Germany: Lidl expands Kochzauber in stores, varies the business model | p175 |
Germany: Lidl’s recycling and plastics reduction drive, the plastics strategy | p176 |
Germany: Lidl starts operations at new online DC in Germany | p177 |
Germany: Lidl’s metro store, pictures | p178 |
Online: State of play | p179 |
Germany: Online state of play, AmazonFresh effect minimal – so far | p180 |
Convenience stores, more potential synergies to come | p181 |
Germany: the remaking of the convenience store market | p182 |
Organics: Structural change in an established market | p184 |
Germany: structural change in the sector as the majors pile in | p185 |
Germany: dennree, Alnatura, Basic store pictures | p186 |
Germany: Organic boom continues, sales over €10bn for the first time | p187 |
Outlook | p188 |
Outlook: Amazon? Aldi comes back with a vengeance | p189 |
Country profiles: UK – from innovator to laggard thanks to Brexit? | p190 |
Executive summary: Sector in thrall to Brexit uncertainty, discounters, Amazon | p191 |
Market shares and profiles, the leading players | p194 |
UK Grocery Retail: shares, in %, ranked by size, Tesco – Iceland | p195 |
UK: Tesco recovery, cutting subsidiaries, countries and jobs | p196 |
UK: Tesco’s Booker merger/acquisition | p197 |
UK: Tesco Booker, supplier opportunity, synergies, store in store concept | p198 |
UK: online grocery opportunity with Booker, still much to do for Tesco | p199 |
UK: Tesco’s vegan range, store pictures | p200 |
UK: Sainsbury’s – is the Argos acquisition turning sour? | p201 |
UK: Sainsbury’s, job cuts, the failed Nisa tie up | p202 |
UK: Sainsbury’s Nine Elm’s store pictures | p203 |
UK: Asda new boss, Walmart dividend, finally turned a corner? | p204 |
UK: the former Netto stores are still struggling, the runaway success of George | p205 |
UK: Asda job cuts | p206 |
UK: Asda click & collect pick up tower, George concession pictures | p207 |
UK: Morrisons rebounding, partnering with Ocado and Amazon | p208 |
UK: Morrisons – vertical integration as template to emulate for big 4, job cuts | p209 |
UK: Morrisons store pictures, Alexa skill | p210 |
Discounters - Aldi and Lidl transforming UK grocery retail | p211 |
UK: Aldi and Lidl revolutionising UK grocery, Aldi’s declining profits | p212 |
UK: … as Aldi sales accelerate, Aldi store opening plans | p213 |
UK: Aldi Christmas record, breaking the £10bn in sales barrier | p214 |
UK: Lidl fastest growing grocer for Christmas in UK, store expansion plans | p215 |
UK: why Tesco’s discounter attempt will simply not work | p216 |
UK: cannibalisation, Capex, buyer set up, product quality, store footprints | p217 |
UK: multichannel (incl discounter) vs focused discount operation, poor track record | p218 |
UK: too expensive to launch and dubious results | p219 |
UK: Aldi UK, Lidl UK store pictures, PL specially selected, deluxe pictures | p220 |
Online, UK is the leading EU online grocery market | p221 |
UK: the country of home delivery, Tesco champion, Ocado leapfrogging the rankings | p222 |
UK: Asda’s online basket size, Waitrose decline, Morrisons and Amazon | p223 |
Brexit impact, What would happen to food & grocery under a no deal scenario? | p224 |
Food & Grocery: drivers of food price inflation | p225 |
Food & Grocery: our estimates for food price inflation | p226 |
Food & Grocery: no deal impact on price, up to a third more for everyday food | p227 |
Food & Grocery: no deal impact on availability | p228 |
Food & Grocery: animal products and BIPs | p229 |
Outlook, Brexit – the worst case scenario | p230 |
Food & Grocery: growth 2010 – 16, forecast, inflation, volume for 2017-9 | p231 |
Food & Grocery: in £bn 2010 – 19f, skyrocketing inflation, in no deal scenario | p232 |
Food & Grocery: relative winners, hard discounters, vertically integrated Morrisons | p233 |
Food & Grocery: panic buying, collapse of Irish trade, devastation of UK farming | p234 |
Asda/Sainsbury merger - the implications for grocers and suppliers | p235 |
Asda/Sainsbury: the implications of the merger | p236 |
Asda/Sainsbury: lower prices and threats to suppliers | p237 |
Asda/Sainsbury: synergies and where they come from | p238 |
Asda/Sainsbury: non food and other opportunities | p239 |
Asda/Sainsbury: UK’s big 4 will become the big 3, but there is still Aldi & Lidl | p240 |
Asda/Sainsbury: will it move towards one brand in future? | p241 |
Country profiles: Italy | p242 |
Executive summary: Italy - a tale of two opposites | p243 |
Executive summary: Italy – dominated by the cooperatives | p244 |
Market shares and profiles, Italian Grocery market | p245 |
Italy Grocery Retail: shares, in %, ranked by size, Coop – Lidl | p246 |
Italy: the cooperatives dominate, Esselunga the standout operator | p247 |
Italy: Conad challenges for leadership | p248 |
Italy: Esselunga store format pictures | p249 |
Italy: Esselunga – transitioning after death of founder | p250 |
Italy: Esselunga private label pictures | p251 |
Italy: Esselunga operator with the highest sales density | p252 |
Discounters | p253 |
Italy: Aldi Sued enters the market belatedly | p254 |
Italy: …and Lidl invests €350m to update its store concept | p256 |
Italy: Aldi store pictures | p257 |
Online | p258 |
Italy: online grocery pioneers | p259 |
Italy: Online, Esselunga leads the market | p260 |
FICO: Italy | p261 |
Italy: FICO Eataly, pictures | p262 |
Italy: FICO Eataly, the Disneyworld of food | p263 |
Italy: FICO Eataly, the largest agri-food park in the world, a hotel is coming | p264 |
Country profiles: Spain | p265 |
Executive summary: Spain – the land of vertical integration | p266 |
Executive summary: Spain – the crisis is over as Mercadona ramps up its ranges | p267 |
Market shares and profiles, Spanish Grocery market | p268 |
Spain Grocery Retail: shares, in %, ranked by size, Mercadona – Auchan | p269 |
Spain: hypermarkets and regional chains, the crisis is well and truly over | p270 |
Spain: Mercadona store format pictures, the new store model | p271 |
Spain: Mercadona, the vertical integration champion | p272 |
Spain: Mercadona PL range, deliplus, hacendado, bosque verde, compy | p273 |
Spain: Mercadona’s co innovation and vertical integration strategy and facts | p274 |
Spain: Dia la Plaza store pictures | p275 |
Spain: Dia focuses on digital and 3P partnerships | p276 |
Discounters | p277 |
Spain: all about Mercadona, Lidl growing strongly, but only also-ran | p278 |
Spain: more on Mercadona’s success factors, the large industrial cluster | p279 |
Spain: Lidl strong growth after heavy investments in recent years | p280 |
Spain: Aldi wants to reach more than 300 stores in Spain | p281 |
Online | p282 |
Spain: online – potential to grow, Mercadona is investing | p283 |
Sources | p284 |
A bit more on ResearchFarm | p286 |
Chart 1 GDP: EU28 2014, 2015, 2016 in €, ranked by size | p45 |
Chart 2 GDP: EU28 2016 in €, ranked by size, Germany – Finland | p47 |
Chart 3 GDP: EU28 2016 in €, ranked by size, Portugal – Malta | p48 |
Chart 4 Population: EU28 2017, ranked by size | p49 |
Chart 5 GDP: EU28 2016, in €, per capita, ranked by size, Luxembourg – Spain | p50 |
Chart 6 GDP: EU28 2016, in €, per capita, ranked by size, Malta – Bulgaria | p51 |
Chart 7 Retail: EU28 2014, 2015, 2016, in €, ranked by size | p53 |
Chart 8 Retail: EU28 2016, in €, ranked by size, France – Finland | p54 |
Chart 9 Retail: EU28 2016 in €, ranked by size, Greece - Malta p55 Chart 10 Retail: % share of GDP, EU28 2016, ranked by size | p57 |
Chart 11 Retail: EU28 2016, in €, per capita, ranked by size, Luxembourg – Cyprus | p58 |
Chart 12 Retail: EU28 2016, in €, per capita, ranked by size, Spain – Romania | p59 |
Chart 13 Grocery Retail: EU28 2015, 2016, 2017, in €, ranked by size | p61 |
Chart 14 Grocery Retail: EU28 2017, in €, ranked by size, France - Denmark | p62 |
Chart 15 Grocery Retail: EU28 2017, in €, ranked by size, Finland - Malta | p63 |
Chart 16 Grocery Retail: % share of Retail, EU28 2016, ranked by size | p65 |
Chart 17 Grocery Retail: EU28 2017, in €, per capita, ranked by size, Sweden - Estonia | p66 |
Chart 18 Grocery Retail: EU28 2017, in €, per capita, ranked by size, Greece – Romania | p67 |
Chart 19 Grocery Retail: EU28 2012 - 2017, 5 year growth rate in %, ranked | p71 |
Chart 20 France Grocery Retail: shares, in %, ranked by size, E.Leclerc - Aldi | p77 |
Chart 21 France: Data, organic market 1999-2015 in €m | p97 |
Chart 22 Germany Grocery Retail: shares, in %, ranked by size, E.Leclerc - Aldi | p105 |
Chart 23 UK Grocery Retail: shares, in %, ranked by size, Tesco – Iceland | p195 |
Chart 24 Food & Grocery: growth 2010 – 16, forecast, inflation, volume for 2017-9 | p231 |
Chart 25 Food & Grocery: in £bn 2010 – 19f, skyrocketing inflation, in no deal scenario | p232 |
Chart 26: Italy Grocery Retail: shares, in %, ranked by size, Coop – Lidl | p246 |
Chart 27: Spain Grocery Retail: shares, in %, ranked by size, Mercadona – Auchan | p269 |
Table 1: Grocery Retail: EU28 2012 - 2017, in €bn | p69 |
Table 2: Grocery Retail: EU28 2013 - 2017, in y-o-y % p70 Table 3: Aldi: Figures 2011 - 16, Sued & Nord in €m, international vs domestic | p118 |
Table 4: Schwarz: sales 2010 -17, total & domestic growth, domestic share of total | p160 |