STORES - September 2010 - (Page 66)

POSTSCRIPT endc a p Herculean Battles in Greece BY MILOS RYBA Milos Ryba is a retail analyst for Planet Retail. tions with suppliers. Therefore, it is likely that Carrefour will remain a strong competitor to discounters like Lidl. Aldi struggles with price image Aldi entered the Greek discount scene in late 2008 with plans to open up to 400 stores and six logistic centers. But after facing problems similar to those of Tengelmann, Aldi was operating only 35 stores in 2009. It has used a strategy of opening stores next to Lidl’s, but could not match Lidl on price. Like Dia Hellas, Aldi’s pricing has not lived up to consumers’ expectations and it gained the image of a more expensive retailer. Aldi limited the number of SKUs to 1,000 with the aim of increasing store efficiency, and offered branded products in an attempt to turn its fortunes around. It halted construction of its distribution center in Patra this year, sending a signal that it was considering exiting the Greek market. And such a move might prove wise. Aldi has been struggling since the outset in Greece: It would cost vast sums to finance its non-profitable expansion, and the ROI can’t be expected anytime soon, given the current state of the Greek economy. Given the difficult economic situation Greece is currently facing, discount retailers would be expected to thrive. As recent activity there has shown, however, this has not been the case for everyone – even some of the world’s largest retailers. Whereas Schwarz Group’s Lidl has fared well, Aldi has withdrawn from the market and Carrefour is converting its Dia Hellas discount stores to other formats. With around 200 stores in operation, Schwarz Group is by far the leading discounter in Greece, and its importance may increase with a recently announced change of development strategy. Previously, Lidl had opened stores on green fields on the outskirts of towns. Now it plans to adapt to more of a convenience store format, as it has done in other central European markets. Locating in residential areas and city centers which will definitely suit the habits of Greek consumers, who tend to visit grocery stores at least twice a day. New format, same strategy Delhaize Group entered Greece as a premium retailer, but over the last few years it has emphasized price cuts on branded products and the launch of the 365 and AB private label lines. This extensive range of private label products will give Delhaize a solid foundation for development of its new discount format, Lion Food. Lidl is likely to remain the leading discounter in Greece because it has managed to create a solid customer base and a clear profile among consumers. The leading retailer in Greece, Carrefour, may provide stiff competition, thanks to its private label range and massive purchasing power, which allows sharp pricing of brandname products. Still, Greece does not present as a market promising flourishing revenues and profits in the short term. A country teetering on the edge of bankruptcy will need a few years before consumer spending returns to pre-crisis levels. WWW.STORES.ORG Confused customers Dia Hellas initially offered a wider range of private label products (accounting for 90 percent of annual sales), but it has gradually been adding brands to the point that they now make up half of the total product range. This unclear strategy was confusing for many consumers, and the retailer’s poor logistics resulted in a decline in revenues due to out of stocks. Carrefour recently decided to rebrand Dia Hellas units to its Carrefour Marinopoulos supermarkets and 5’Marinopoulos convenience stores. This might appear to be an unimaginative decision in the current economic climate, but Carrefour’s Greek units generate twice the revenues of Schwarz Group or Delhaize Group, which will help it in negotia66 STORES / SEPTEMBER 2010 http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES - September 2010

STORES - September 2010
Table of Contents
Editor's Page
President's Page
Retail People
Favorite 50
Retail Showcase
Customer Retention
Social Shopping
Gift Cards
Business Intelligence
Networking & Communications
Customer Centricity
Payments & Credit
Return Fraud
Green Issues
ARTS Update
Point of View
NRF News
Retail Industry Calendar
End Cap

STORES - September 2010