Like Rewe, Edeka will also increase its sales in 2021, while discounters will lose market share. Edeka’s boss threatens the industry with harsh price negotiations.
Although Germans have less money to spend due to inflation and real income losses, they obviously don’t skimp on their daily grocery purchases. This is suggested by the balance sheets published so far by the large chains for 2021. Because not discounters, but supermarkets have so far been the big winners from the corona pandemic. Edeka and Rewe also grew strongly in the second year of Corona and seized market shares from cheap competitors, while discount market leader Aldi lost sales according to industry reports.
After the pandemic started two years ago, all the big four (Edeka, Rewe, Aldi and Lidl) grew strongly, people buying more food for home at the office and because of the closure of restaurants. In addition, they bought more textiles and appliances in supermarkets or discount stores, especially during the lockdowns, because the specialized stores were closed. The special Corona-related boom caused record figures in the food trade throughout the industry. It is now surprising to some observers that the two supermarket giants, Edeka and Rewe, have once again been able to make it through the banner year 2020, while the discounters hardly or not at all.
Consumer Researchers See Discount Stores Lagging
Independent merchants Edeka increased their sales by 4.7 percent to 34.7 billion euros, the group announced on Thursday. Independently managed Rewe stores grew by 4.8 percent, as the Cologne group recently announced. Sales at discount chain Rewe, Penny, stagnated, while discount subsidiary Edeka, Netto, rose 0.9 percent. No figures yet for Aldi, Manager Magazin recently quoted less than one percent, citing insider information. At Lidl, the exercise ran until the end of February, the balance is still pending. However, market research institute GfK assumes sales losses for the entire discount industry last year. In 2020, Lidl was able to grow above the industry trend and thus gain market share.
It is also true that huge price increases have boosted sales and higher revenues do not have to mean that Edeka & Co also earns more. At Rewe, the operating profit (Ebitda) fell slightly in 2021, Edeka does not publish profit figures. Ever since the Russians invaded Ukraine, it has been considered polite for industry giants not to pass on all purchase price increases to customers; at least that is what Rewe boss Lionel Souque has now also promised Edeka CEO Markus Mosa. The industry leader spends a lot of money “to keep selling prices as stable as possible, also at the expense of his own margin,” he said. Souque had explained: “We can’t pass everything on to our clients.”
The head of Edeka makes a price war announcement to the industry
Mosa also made a price war announcement to manufacturers: Edeka will use its market power right now and avoid all avoidable price increases through “consistent negotiations”. And the unavoidable cost increases resulting from record energy and raw material prices after the war in Ukraine would have to be distributed throughout the value chain, that is, between producers, wholesalers and retailers, and final consumers. Mosa warned the food industry: “But rising consumer prices should not serve as an alibi for industry groups to maximize their profits with excessive price demands.”
However, even in Edeka there is little doubt as to where prices will head higher in the coming weeks and months. The Russian war of aggression in Ukraine has massive effects on commodity markets, international supply chains and the economy in Germany and Europe, the food market leader emphasizes. Associated with this are “exploding energy prices and a further rise in inflation.”
Record prices and shortages
As usual with reductions, Aldi sets the pace for price increases, Germany’s leading discounter recently announced and implemented unprecedented price increases, especially for dairy and meat products, with the competition following suit as usual . Also, not everything is available: individual products, such as rapeseed and sunflower oil, have not been available in most supermarkets and discount stores for weeks.
The regional association could not say on Thursday how the Edeka markets in the Rhine-Ruhr region were developing, the balance would follow soon, it said when asked by our editors. Edeka’s headquarters in Hamburg said it had gained more market share without quantifying this. The sales figures reflect a head-to-head race with Rewe. While Rewe kept its headcount stable at around 380,000 employees worldwide, Edeka increased its headcount by 2,900 to 405,000 employees.
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