Here are the surprises from Lidl, Aldi, Eurospin, Penny Market
A profound change is underway in the large-scale retail trade. Customer needs, innovation and service quality have been neglected for a long time. This is why when inflation drops to physiological levels, both large-scale retail trade and IDM will have to be able to find new balances. The point of Mario Sassi, author of the Blog-Notes on work
I am convinced that if the Rewe Group had let Bernardo Caprotti do his thing in 1994, we would have had a Brianza-German hybrid in Italy twenty years early, capable of charting an innovative trajectory even in the discount sector. And to compete on an equal footing with what Lidl and Aldi are today. Or other national discount brands. Lidl had arrived only two years earlier (1992) in Arzignano in the province of Vicenza. Aldi, at that time, was thinking of the USA. Eurospin had opened the year before (1993) and MD was preparing to launch its business in the south. The Germans at Rewe, through their discount store Penny, had clear ideas: to enter Italy by involving the best on the market: Esselunga.
Bernardo Caprotti himself had probably understood the potential of the business or in any case the need to not limit himself to the role of simple spectator. Otherwise he wouldn't even have received them. For the Germans Bernardo Caprotti was a myth. Its presence in the Penny Market project would have guaranteed success on the Italian market. Later they also tried to buy Esselunga itself since they appreciated the work it had done. The CEO of Rewe was Hans Reischl, a son of farmers from Passau in Lower Bavaria who had obtained his high school diploma in an evening high school in Cologne and then studied economics at the University of that city. Reischl, in thirty years, transformed the cooperative group into a modern commercial group. A sort of Francesco Pugliese from North Rhine-Westphalia. Kicked out of the German group 6 months after retirement on charges that later ended in nothing. I only met him once during the preliminary stages of the acquisition of Standa. A man certainly able to get along with Bernardo Caprotti. Unfortunately, the 50/50 joint venture could not function for long. The German managers were too jealous of the commercial management of the discount store and Bernardo Caprotti, who knew our market well, was too independent and egocentric to accept a subordinate role. However, it lasted 5 years. In 1999 Rewe took back the entire company.
According to Giovanni Arena, CEO of the Group of the same name, “Discount is a word to forget”. A Largo Consumo , in an interview some time ago, rightly declared that discount stores are simply convenient supermarkets, each with its own different strategy. Our model – continued Arena – is to develop the private label: we have changed our DNA from a premium supermarket, that of Decò, into a convenience supermarket starting from the design of the point of sale, which must immediately communicate to consumers the fundamental aspects such as essentiality , clear and low prices, and depth of assortment in the fresh and very fresh, which are our strengths". With the SuperConveniente brand, the Group offers selected products that compete with discounters. Founded in Valguarnera Caropepe (EN) in 1976 by the brothers Gioachino and Cristofero Arena, today with a network of over 180 points of sale under the Supermercati Decò, Maxistore Decò, Superstore Decò, Iperstore Decò, Gourmet Decò, Local Decò, SuperConveniente, IperConveniente and NonSoloCash brands and over 2,500 collaborators, is the absolute leader in the Sicilian territory. And it covers all formats because they are calibrated to the customer.
Consumption models have transformed over the last thirty years. The space to manage that format too is shrinking because the actors are now all in the field. This is why Conad's wait-and-see attitude doesn't convince me. Control Todis which was founded in 1994 with national ambitions. IGES Srl, the company that owns the brand, is part of the PAC 2000A Group (Cooperative of retailers belonging to the Conad National Consortium). Todis is already present in 10 Italian regions. It would therefore be time to take advantage of the possibilities offered by the market and make another important qualitative and quantitative leap. Conad still doesn't seem to have recovered after the release of its number one. It must demonstrate that it is capable of proceeding despite a renewed expansion strategy. And that the internal unity of cooperatives is not just a facade. MD is one of the options on the table. The owner Patrizio Podini is too far-sighted to bet all his cards on the generational transition that is currently underway.
The Conad discount brand closes 2022 on a growth note, surpassing the milestone of one billion euros in sales and opening 23 new stores, surpassing the 280 supermarkets in Central-Southern Italy. Its private label reached record levels with 75% share. (from the Todis website). MD of Podini is the third largest discount chain by turnover in Italy (after Eurospin and Lidl) and second in Italian capital with 800 points of sale. it closed 2022 with a turnover exceeding 3.4 billion euros, revenues growing by 11%. A marriage would lead Conad to compete first and foremost with Lidl which in 2022 closed with 5.9 billion in turnover. And secondly directly with Eurospin controlled with equal shares of 25% each by the Dao cooperative (since 2004, in partnership with Conad), Shop (of the Pozzi family, through Dugan Supermarkets), Migross (of the Veronese Mion family) and the cooperative Vega which with its over 8 billion (2021 data) is the first in the sector.
However, they are still far from the turnover of the major international retailers. So continuing to grow is essential. The discount store of the future will therefore be a hybrid. A new and different product from what discounts and small supermarkets are today. The crisis, the modification of consumption models, inflation, possible innovation, the need to monitor differentiated offers, albeit in the wake of convenience, are defining the new perimeter. Those who fear its success are only those who are not preparing for the change.
In and around 1994, when discounters appeared on the Italian market, many retailers underestimated them, believing them to be unsuitable for our market. The same happened with another company that was born in Seattle in those years and that many snubbed. It was called Cadabra.com and its owner Jeff Bezos opened it on July 5, 1994 and launched it in 1995 as Amazon. Nobody believed it. It arrived in Italy in 2010. Same welcome. Today there are those who, on the contrary, fear exponential growth for both. Indeed, a problematic future for the traditional sector and for the consumer goods industry in general.
A profound change is underway in the large-scale retail trade. Customer needs, innovation and service quality have been neglected for a long time. When inflation drops to physiological levels, both large-scale retail trade and IDM will have to be able to find new balances. Otherwise the hybrid that is taking shape, part discounter and part supermarket, will undermine the system's delays and inefficiencies.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/il-futuro-dei-supermlidl-aldi-eurospin-penny-market/ on Sun, 17 Sep 2023 05:24:45 +0000.