Europe Grocery Report 2018

Europe Grocery Report 2018


Release date: September 17th, 2018 (288 pages)
PDF/Powerpoint format. Price: GBP1,999.00

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