REWE GROUP IN RETAILING (WORLD)

January 2016
SCOPE OF THE REPORT

Scope

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exchange rates. Much of the information in this
briefing is of a statistical nature and,
All future values expressed in this report are in US dollar terms, using a fixed while every attempt has been made
to ensure accuracy and reliability,
exchange rate (2015). Euromonitor International cannot be
held responsible for omissions or
2015 figures are based on part-year estimates. errors.
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calculated from unrounded data and
discounted. Conversely, all historical data are expressed in current terms; may not sum. Analyses found in the
inflationary effects are taken into account. briefings may not totally reflect the
companies opinions, reader
discretion is advised.
Retailing
Despite challenging
Despite environments in
a challenging
select markets, Rewe
environment Group was
in its domestic
Grocery Retailing Non-Grocery Retailing Non-Store Retailing able to maintain stable sales thanks
market, Germany, Rewe Group
to its presence in more dynamic
was able to maintain stable
Hypermarkets Home Improvement and Eastern European markets and
Internet Retailing sales thanks to its presence
experimenting with new formats both in
Gardening Stores
more dynamic Eastern
in its domestic and international European
Supermarkets Parapharmacies/ markets,
markets. Russia
Facing in particular,
declining sales,
Rewe Group
and its exited
brand the electronics
repositioning in
Discounters Drugstores and appliance
Western channel
Europe. and shut
Facing
down Billa stores
declining sales,inRewe
Italy and Penny
chose to
Convenience Stores stores in Bulgaria,
exit the as well
electronics andas
experimental formats such as MADE
appliances channel, a step back
by Rewe, which are steps back for
Food/Drink/Tobacco Specialists forcompany.
the the company,
However however this
this can allow
allows Rewe to concentrate
Rewe to more effectively manage its
more oninitsthe
resources grocery businesses
long term.
Chained Forecourt Retailers in the longer term.

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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
DOMESTIC STRATEGY
INTERNATIONAL STRATEGY
MULTI-CHANNEL STRATEGY
BRAND AND PRIVATE LABEL STRATEGY
OPERATIONS
OPPORTUNITIES AND RECOMMENDATIONS
STRATEGIC EVALUATION

Key company facts

Rewe Group is primarily a grocery retailer, Rewe Group

operating supermarkets and discounters, among
other formats, but is also present in other Headquarters: Germany
channels, such as home improvement and
gardening. Rewe operates stores in Western and Regional Western Europe, Eastern
Eastern Europe; however, its domestic market, involvement: Europe
Germany, accounts for the majority of its sales.
Major channel Grocery retailers, non-grocery
Rewe Group reported that its sales increased by involvement: retailers, internet retailing
2.4% to reach 51.1 billion in FY2014, driven by
the groups operations in Germany (+2.8%), while World retailing value
international growth was more moderate (+1.4%). 0.3% (2015)
share:
International organic expansion, in particular in
emerging markets within Eastern Europe, remains
one of companys main strategies for growth.
The group includes grocery brands such as
Rewe, Penny Markt, Nahkauf and Billa, and non-
grocery stores such as Toom (home improvement
and gardening) and Bipa
(drugstores/parapharmacies).
Total sales reported by Rewe Group include the
turnover from activities outside Euromonitor
Internationals definition of retailing, such as travel
and tourism, and are therefore higher than sales
reported in this report.

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STRATEGIC EVALUATION
SWOT: Rewe Group
STRENGTHS
Multi-channel presence International presence
Rewe is present in most Rewes presence
grocery channels, and
offers a large brand
portfolio. This enables it
to appeal to different
customer segments.
OPPORTUNITIES
Eastern European
expansion
As Eastern Europe is set
to see stronger growth
than Western Europe,
Rewe could further
expand in its existing
markets and enter new
Eastern European
markets, such as Belarus.
Euromonitor International
WEAKNESSES
Over-reliance on its Risky brand reinvention
domestic market
Rewe has a presence Rewes brand reinvention
outside Germany, in outside Germany. to make itself more of a
particular in emerging However, in 2015, 63% of premium brand is risky,
markets, is a Rewes retailing value as it is also trying to fix its
competitive advantage, sales still came from price image. Rewe risks
which allows for Germany, making the alienating price-sensitive
diversified geographic company vulnerable to German customers in the
risk. fluctuations in this market. process.
THREATS
Growing grocery internet Slow growth outlook in Strong competition in
retailing in Germany domestic market discounter channel
Food and drinks internet The maturity and flat Rewe will continue to
retailing in Germany, outlook of the German face growing competition
Rewes biggest market, retailing market, in Germany from giants
is set to post a CAGR of including both grocery Aldi, Lidl and Edekas
18% over 2015-2020. and home and garden Netto but also
Rewe Group has the channels, could lead to internationally, as Lidl is
opportunity to capitalise stagnant sales and increasingly present in
on this growth. profits for the company. Eastern Europe.
RETAILING: REWE GROUP PASSPORT 5
STRATEGIC EVALUATION

Key strategic objectives and challenges

Right sizing formats and geography Online retailing

Rewe Group is continually working to develop a
network of stores of the right format and size in the
right regions.
Eastern Europe is of particular importance to Rewe stores, which suffered strong competition from online
Group as it offers high growth opportunities for its
supermarket (Billa) and discounter (Penny Markt)
brands. The region is significant to Rewe given the
limited growth opportunities in its domestic German
market.
Internationally, Rewe continues strategically to exit Europe, but is growing in line with rising online sales
certain formats in selected countries to focus its
efforts on more promising markets and formats.
Finding the ideal format, size and location will help
the company maximise profits by enabling the most
profitable use of its resources.
Rewe Group was slow to pick up on the shift
towards internet retailing, and it was forced to close
its ProMarkt electronics and appliance specialist
players. Rewe is now making sure it is present and
active in the online channel with its other brands
within DIY and grocery, with an early presence for
grocery.
Grocery internet retailing is only in its infancy in
generally. It is important that Rewe develops a
sustainable distribution chain to meet demand, and
is prepared to adapt its premises for click-and-collect
and offers affordable delivery prices.
Online grocery expansion offers large growth
potential for Rewe, and will help the company
remain competitive amongst current competitors as
well as possible entrants to the market, such as
Amazon Fresh.

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STRATEGIC EVALUATION

Key strategic objectives and challenges

Premiumisation of the company Experimenting with new formats

Rewe Group continues to work on premiumising its Rewe Group is experimenting with new formats to
brand. Through improved customer service, better meet customer demand.
increased customer engagement, store Rewe has divested ProMarkt, its electronics and
modernisation and improved private label offerings, appliance specialist brand, as well as Made by
Rewe is aiming at changing its brand as well as price Rewe, a bistro-style restaurant attached to its
perception among German consumers, while seeking supermarkets, but continues to experiment with
to offer better value for money. other formats.
The retailer is improving the quality of its private These experiments include a move towards smaller
label products with its Rewe Regional, Frei Von and store formats. Rewe has recently partnered with
Bio ranges, reflecting its new slogan Rewe. Live Shell in Czech Republic and Aral in Germany to
Better and moves towards healthier nutrition. move into smaller, more convenient store formats.
Rewe is also expanding its premium organic This enables busy customers to shop for groceries
supermarket brand, Temma. The upscale brand while they stop by for fuel. The move to smaller
encourages customer engagement and a unique formats also better positions the company to
shopping experience. penetrate inner city areas.
However, price will remain key for European
consumers, Rewe will face strong competition from
discounter giants, such as Aldi and Lidl, as well as
supermarkets with attractive price positions, such as
Spar in Austria.

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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
DOMESTIC STRATEGY
INTERNATIONAL STRATEGY
MULTI-CHANNEL STRATEGY
BRAND AND PRIVATE LABEL STRATEGY
OPERATIONS
OPPORTUNITIES AND RECOMMENDATIONS
COMPETITIVE POSITIONING

Rewe continues to underperform despite slight economic recovery

A B
C

A: Rewes sales are hit by
recession and continue to slow
down until 2012 mainly due to flat
performances in both Germany
and Austria, Rewes core
markets. The companys exit from
Poland, as well as more
moderate growth in its Eastern
European markets, with the
exception of Hungary, also
contribute to the companys
slowdown.
B: In 2013, Rewe posts faster
growth thanks to its domestic
performance, which represents
the majority of its total sales.
Expansion through store
acquisitions in Eastern Europe
also contributes to Rewes
improved performance while
ProMarkts decline, its electronics
and appliance fascia, negatively
impacts the company overall
performance.
C: Over 2014-2015, Rewe posts
slower growth, as it exits selected
channels in countries such as Italy
and Bulgaria, and experiences
currency difficulties in Russia, one of
its key markets, due to political
circumstances, including sanctions
imposed over the Ukraine crisis. The
exchange rate fluctuations have hurt
the company, despite the growth it
has achieved in terms of local
currency.

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COMPETITIVE POSITIONING

Rewe to increasingly gain from its wide geographical spread

Competition from domestic players remains strong, with Rewes main competitors, Edeka Zentrale,
Schwarz Beteiligungs and Aldi Group all outperforming Rewe in 2015 (in terms of market share). Rewe
ranked fourth both in the German modern grocery retailers channel as well as in the Western European
modern grocery retailers channel (only including Austria, Italy and Germany, as they are the three Western
European countries in which Rewe Group operates).
Although Rewe is not a leader in any of these markets, Eastern Europe offers significant long-term growth
opportunities, and the companys strategy of expanding further into Eastern Europe should position it better
for long-term growth, particularly compared to Edeka Zentrale, which is reliant solely on the German
market.

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COMPETITIVE POSITIONING

Rewe remains just outside top 10 global grocery retailers

Globally, grocery retailing is a very Grocery Retailers: Leading Global Companies by Value Share
fragmented market, with Wal-Mart and Ranking 2011-2015
Stores leading with a 6% value share,

2014
2012
2013

2015
2011
while the next largest grocery retailer 5-yr 2015
Company (GBO name)
had a share of less than 2% in 2015. trend % share
Only two companies saw a growing
Wal-Mart Stores Inc. 1 1 1 1 1 6.1
trend over 2011-2015: Kroger Co, which
was boosted by acquisitions in 2014 Carrefour SA 1.8
(Harris Teeter) and 2015 (Roundys); 2 3 2 2 2
and Albertsons Inc., which was also Kroger Co 1.7
boosted by acquisitions in 2013 6 6 6 4 3
(SuperValu) and 2015 (Safeway). Seven & I Holdings Co Ltd 3 2 2 4 4 1.6
In contrast to Edeka Zentrale (one of
Rewes main competitors), which is Schwarz Beteiligungs GmbH 5 4 4 3 5 1.5
focused entirely on Germany, Rewe
Group is a regional player with a Tesco Plc 4 4 5 4 6 1.4
presence in Western Europe but also in
Aldi Group 6 6 6 7 7 1.3
emerging Eastern European markets,
where growth opportunities are Auchan Group SA 1.1
promising. 6 6 8 8 8
Currently ranked 12th globally, Rewe Albertsons Inc. 62 65 27 26 8 1.1
Groups efforts to modernise its stores, Royal Ahold NV 9 9 9 9 10 0.9
improve its brand image and expand its
online presence should help it to gain Edeka Zentrale AG & Co KG 9 9 9 9 10 0.9
share and eventually join the top 10 Rewe Group 11 11 11 11 12 0.7
global grocery retailers.

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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
DOMESTIC STRATEGY
INTERNATIONAL STRATEGY
MULTI-CHANNEL STRATEGY
BRAND AND PRIVATE LABEL STRATEGY
OPERATIONS
OPPORTUNITIES AND RECOMMENDATIONS
DOMESTIC STRATEGY

Strong presence in Western and Eastern Europe

Rewe Group is the fourth biggest retailer in its domestic market, Germany, after Edeka Zentrale AG & Co
KG, Schwarz Beteiligungs GmbH and Aldi Group. In contrast to Edeka, Rewe is a multinational company
that has established a presence across several Western and Eastern European markets, including a
number of dynamic emerging markets. In this respect, it is better positioned for long-term growth than
Edeka, which relies entirely on the mature German market for growth.
Nevertheless, Rewe is highly reliant on its domestic market, which accounted for approximately two thirds
of its total retail sales in 2015. Germany is set to post a CAGR of 1% over 2015-2020 and a strong
performance in this market remains of major importance to Rewe's overall performance. It is also the
revenue generator that enables Rewe to pursue its international expansion activities, specifically in Eastern
Europe.

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DOMESTIC STRATEGY

The German retailing market offers limited outlook

Retailing in Germany is expected to offer limited growth over 2015-2020, with a CAGR of 1% in constant
value terms. Aiming at gaining share and benefiting from what growth there is, Rewe will focus primarily on
grocery and, in particular, the modernisation and organic expansion of its Rewe supermarkets.
The company faces fierce competition from its competitors in the mature German grocery market. Within
channels that Rewe is involved in, only supermarkets (2%) and convenience stores (%) are expected to
post CAGRs higher than 1%.
Rewe is working hard at changing it image and positioning, and has also reinforced the modernisation of its
stores by revising its private label and launching strong communication and promotion campaigns to ensure
a positive change in its price image among German consumers, who are extremely price sensitive. In order
to differentiate itself from its local competitors, Rewe is being innovative in diversifying its store formats.
Examples of this include Rewe To Go (its convenience store format) and Temma (its organic supermarket
fascia). The retailer is also expanding the services it offers, as well as its online presence.

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DOMESTIC STRATEGY

Grocery in Germany is highly competitive

In 2015, Rewe Group ranked fourth within the

modern grocery retailers channel in Germany. The
company is struggling to gain share as it faces
strong competition from discounters such as Aldi
and Lidl, which are seeing growing success.
Leading player Edeka competes in a number
channels where Rewe is present: supermarkets,
discounters and hypermarkets. While Aldi and
Metro specialise in discounters (and cash-and-
carry), Schwarz is present in the hypermarkets and
discounters channels.

In supermarkets, Rewe ranks second after Edeka,

which accounts for 56% of the German market. In
discounters, Rewes Penny Markt brand ranks fourth
behind giants Aldi and Lidl, as well as Edekas Netto
brand. In hypermarkets, Rewe ranks fifth, after
Schwarz, Metro, Edeka, and Globus Holding.
As such, although some growth opportunities
continue to exist in this mature and highly competitive
market, Rewe Group will be less able to benefit from
the moderate growth in the German modern grocery
retailers market than larger local rivals.

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DOMESTIC STRATEGY

Home improvement and gardening stores to stagnate

Although Rewe Group was previously present in the electronics and appliance specialists channel, the
company was forced to close a number of its ProMarkt stores in late 2013, due to its poor performance and
continued declining sales. In FY2013, the business unit was discontinued. Rewes CEO, Alain Caparros,
referred to competition from online retailers as one of the main factors for the failure of ProMarkt. Referring
to this experience as Rewes shock therapy Caparros has been emphasising the importance of expanding
Rewes online presence for its other business units.
Consequently, in non-grocery channels in Germany, Rewe will concentrate solely on the home
improvement and gardening stores channel, although this is expected to experience minimal growth in
Germany between 2015 and 2020.
Within in this category, Rewe ranked third in 2015, following The Tengelmann Group and Bauhaus GmbH,
holding an 11 % value share with its Toom Baumarkt brand. The brand targets non-professional customers
who seek services and advice in stores, while its B1 Discount Baumarkt brand is orientated more towards
professionals.
While Rewe mainly focused on, and invested in its grocery stores in 2015, it continued to develop its Toom
Baumarkt brand by improving its services in stores, changing store operating hours and offering consumers
advice online, while also making DIY project ideas available on its website. The brand seeks to stand for
reliability, competitive prices and high quality.

Source: Company websites

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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
DOMESTIC STRATEGY
INTERNATIONAL STRATEGY
MULTI-CHANNEL STRATEGY
BRAND AND PRIVATE LABEL STRATEGY
OPERATIONS
OPPORTUNITIES AND RECOMMENDATIONS
INTERNATIONAL STRATEGY

Rewe closes Billa and Penny stores in select markets

In 2013, in Italy, the challenging supermarket environment led Rewe Group to shut down several Billa
stores. In autumn 2014, the company made the decision that Billa would exit the Italian market completely.
Some of the Billa stores were sold to competitors such as Conad and Carrefour. Stores continued to be
sold off during 2015.
Rewe was unsuccessful in gaining share in the supermarket channel in Italy (where it only captured
approximately 1% of the market) with strong competition from Conad and others. Billas exit from the Italian
supermarket market will enable Rewe to focus its efforts in the country on Penny, its discounter brand,
which continues to be a stronger player in Italy, with an 8% category share.
In late 2015, Rewe announced that Penny, the companys discounter brand, with nearly 50 store locations
in Bulgaria, will be exiting the country. As of October 2015, all Penny stores ceased operations in Bulgaria.
Schwarz Beteiligungs is the leader in the Bulgarian discounters category, with a 73% market share.
Rewe remains committed to expanding its Billa brand in Bulgaria, currently with around 100 stores. The
company is looking to expand the Billa store count in the country to 150 in the next three years. Some
Penny outlets are planned be transformed into Billa stores. Pennys exit from Bulgaria will enable Rewe to
focus on its discounters operations in other countries, such as Austria, Czech Republic, Hungary, Italy, and
Romania, as well as the Bulgarian supermarket channel, where Rewe Group is the leader, with a 26%
market share.
Rewe Group is strategically exiting certain markets to focus on strengthening selected channels in its
various markets.
Additionally, in December 2015, Carrefour announced plans to acquire Billa Romania. The acquisition will
include 86 Billa supermarkets in Romania.

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INTERNATIONAL STRATEGY

Eastern Europe remains key to Rewes expansion strategy

Although Rewe is already present in the Czech Republic,

Romania, Russia, Hungary and Slovakia, among other countries, it
is expected to continue to enter new markets in the region, as
expansion in Eastern Europe is a central part of the companys
growth strategy.
Eastern Europe is a region that offers significant long-term growth
opportunities for retailers. Modern grocery retailing in the region is
expected to reach US$253 billion by 2020, with Russia being the
biggest contributor, accounting for 46% of sales.
However, as the company does not occupy a leadership position
in a number of channels and markets within Eastern Europe, it will
not benefit from growth opportunities to the same extent as some
of its rivals.
Rewe is only present in food retailing in Eastern Europe. Attractive
growth opportunities exist in the region, and the Russian grocery
market continues to be a growth target for the company. Rewe has
already recorded a significant turnover increase in Russia, thanks
to its local acquisitions, and has room for further growth, as it still
remains a small player in supermarkets in Russia.
Romania is another promising market for Rewe. Despite selling
Billa at the end of 2015, the company will still be present in the
discounters channel, which is expected to grow.

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INTERNATIONAL STRATEGY

Opportunities in both Western and Eastern Europe for discounters

There is potential for discounters in several Eastern European markets as these emerging markets
outperform more mature Western European markets. As such, the region provides strong opportunities for
Rewe and its Penny Markt banner to grow sales. Penny Markt has established itself among the top
discounter brands in all the countries in which it operates. Rewes strategy is to adapt its product offer to the
local market by offering a large proportion of local products.
Looking at the markets where Rewe operates, Hungary is expected to record the highest growth for
discounters over 2015-2020, with a CAGR of almost 6%, with absolute value growth of US$660 million.
Other Eastern European markets still have untapped growth potential, such as Albania and Ukraine, where
there are no discounters. This format could be introduced by Rewe and give the retailer a competitive edge
when this format becomes more popular in these countries.

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INTERNATIONAL STRATEGY

Room for development: Supermarkets in Russia

The top 10 supermarkets in Russia amassed less than a

Supermarkets in Russia: Leading Companies
30% value share in 2015, with leading player X5 Retail
Group holding 18% and no other retailer with over 2% of by Value Share (US$ billion) 2015
value. This very fragmented market could be an
opportunity for Rewe, which ranked 12th in this channel in Ranking Company Value share
2015, with a modest 1% share. 1 X5 Retail Group NV 17.6%
Russia is the most important Eastern European grocery
market, with sales of US$171.9 billion in 2015. Internationale Spar
2 2.0%
Supermarkets, which are Rewes main channel of activity, Centrale
represented the great majority of modern grocery sales in 3 Element-Trade OOO 1.6%
Russia in 2015, at 62%.
In 2012, Rewe acquired 12 stores in the greater 4 Auchan Group SA 1.6%
metropolitan area of Moscow and converted them into Billa 5 Maria Ra PKF OOO 1.5%
supermarkets. This acquisition strengthened the
companys position in the Russian supermarket channel. 6 Intertorg TD OOO 1.5%
Russia is a large market with significant growth potential, 7 Holiday GK 1.1%
particularly in the Moscow area, where consumers have 8 Magnit OAO 1.1%
higher purchasing power. As of 2015, Rewe had
approximately 100 Billa stores in Russia. The company 9 Gorodskoy Supermarket 1.0%
seeks continued growth in the Russian market and has 10 Sedmoi Kontinent OAO 0.9%
plans to double the store count in the next five years.
11 Dixy Group OAO 0.8%
That said, increasing store concentration in Moscow could
reach saturation point. Retailers such as Rewe could 12 Rewe Group 0.8%
therefore consider expanding in other Russian cities. St Kirovsky Supermarket
Petersburg, for example, offers similar potential to 13 0.6%
ZAO
Moscow, while its retailing environment is not as saturated. 14 Others 67.9%

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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
DOMESTIC STRATEGY
INTERNATIONAL STRATEGY
MULTI-CHANNEL STRATEGY
BRAND AND PRIVATE LABEL STRATEGY
OPERATIONS
OPPORTUNITIES AND RECOMMENDATIONS
MULTI-CHANNEL STRATEGY

Wide channel coverage in Western Europe

Rewe Group operates in three Western European markets: Germany, Austria and Italy. In this region, the
retailer is present in a large number of channels across grocery and non-grocery retailing. Grocery
channels dominate, with supermarkets representing 54% of the retailers total value sales in 2015, and
discounters accounting for 26%.
Room for growth continues to exist in forecourt retailing in the region. Of Rewes channels of activity,
forecourt retailing is expected to be the channel seeing the strongest growth over 2015-2020, with a CAGR
of 2%. As the fourth largest player in the channel in this region, Rewe may be able to capitalise on the
growth opportunities, but will face competition from other leaders in the channel, such as Koninklijke Shell
Groep/Royal Dutch Shell Group, ENI SpA and OMV Tankstellen AG.

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MULTI-CHANNEL STRATEGY

Focus on grocery in Eastern Europe

In contrast to Western Europe, Rewe only focuses on grocery retailing in Eastern Europe. It is present
across all key grocery channels, although supermarkets and discounters remain its key areas of activity.
While growth prospects are looking relatively flat in the Western European countries in which Rewe is
present, all the channels in which it operates in Eastern Europe offer stronger growth opportunities. Looking
at the main channels in which Rewe is present, discounters and convenience stores are forecast 5% and
2% CAGRs, respectively, over 2015-2020.
The company is also in a good position to benefit from the growth opportunities offered in the much larger
supermarkets channel, where it has established itself as the third largest player in the region, after Russian
giant X5 Retail Group and Internationale Spar Centrale BV. Rewe is much less significant in hypermarkets,
a channel led by Auchan, Schwarz and Tesco, and it only has a presence with a small number of outlets.
The channel is not a priority for Rewe in the region, and with continued positive growth prospects in its main
channels of discounters and supermarkets there is no urgent need for Rewe to actively explore the
potential for hypermarkets.

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MULTI-CHANNEL STRATEGY

Continued online presence remains a top priority for Rewe

With sales of US$1 billion in 2015, food and drink internet retailing remains small in
Germany when compared with other neighbouring markets such as France (US$4.4 billion) or the UK
(US$8.9 billion). That said this channel is expected to continue to increase, at a CAGR of 18% over 2015-
2020. It is, therefore, important for the company to develop its online presence in order to avoid lagging
behind its competitors, as was the case with its electronics and appliance specialists brand ProMarkt.
In Germany, Rewe offers online grocery services through click-and-collect and home delivery via the Rewe
Lieferservice shop. It has recognised the potential for online grocery retailing, and seeks to become the
largest online food retailer. Like other grocery delivery models, Rewe is looking to solve the last mile
problem. For home deliveries, customers can select a date up to three weeks in advance and change their
baskets until the day before delivery. Delivery and click-and-collect services was initially offered in six
cities, but has since expanded to 35 locations, servicing nearly 70 towns.
Internationally, a number of Rewes brand are also online. In Austria, the company operates several online
stores with its different retail brands: a Billa supermarket online store has been present since 2008, the
discounter Penny Markt entered internet retailing in 2010 and Bipa launched its online store in 2011,
offering over 10,000 products. In 2015, the company confirmed that it would continue to expand its online
operations.

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MULTI-CHANNEL STRATEGY

Rewe increases its mobile and social media presence

Mobile internet represents 19% of total internet sales in

Germany in 2015 and is forecast to represent 23% in 2020.
However, as food and drink internet retailing remains minor in
Germany, so does mobile commerce in grocery. However, the
popularity of smartphones is rising rapidly among consumers,
and with this the opportunities for m-commerce will continue to
grow.
Offering a smartphone application or being present in social
media, such as Facebook, which Rewe joined in 2012, can
also encourage consumer loyalty and represents a way for
retailers to reach new consumers.
Rewe offers a smartphone application to assist its customers
grocery shopping in stores. German consumers can access a
range of features for planning their shopping trips, including in-
store help and a recipe feature which adds all the ingredients
from a chosen recipe to users shopping lists.
As Rewe claims to be the most innovative supermarket
operator, another novelty from the German retailer is the
launch of mobile payment in its Rewe stores, in partnership
with Yapital, a subsidiary of Otto Group. Since November
2013, consumers can use their smartphones to pay at Rewe
supermarket check-outs, using QR codes.
Rewe remains active on Twitter, Facebook, Instagram,
LinkedIn and other social media outlets. Source: Rewe app

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MULTI-CHANNEL STRATEGY

Rewe shuts down MADE by Rewe and tests new formats

Following its campaign for healthier nutrition, REWE.

Besser leben, the company launched a new
foodservice concept in Cologne, in September 2013:
MADE by Rewe. The bistros were attached to Rewes
supermarkets, and were designed to present customers
with a different shopping experience. The foodservice
format was aimed at offering high quality products,
improved customer service and an environment for
consumers to socialise in.
However, as of late 2014, the supermarket-bistro format
had not met expectations and Rewe announced it would
Source: Rewe website
shut down both MADE by Rewe locations.
The retailer continues to experiment with new formats.
In mid 2014, Rewes Billa partnered with Shell to grow
its presence in the forecourt retailing channel,
specifically in the Czech Republic. The first Stop & Shop
store opened in Prague in 2014 and as of late 2015
there were plans to expand to 42 locations (up from
five). The goal is to offer customers the option to
purchase fresh food in smaller, more convenient
locations while they are already stopping for fuel. As of
2015, Rewe had Rewe ToGo stores in Germany through
a similar partnership with Aral. Source: Shell website

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MULTI-CHANNEL STRATEGY

Rewe to launch more premium organic supermarkets

In Germany, Rewe operates eight organic supermarkets under the brand Temma. The company markets
its Temma stores as the modern interpretation of the corner shop, offering organic products with a
marketplace display and services such as a bakery, deli and caf in stores. The company aims to offer
consumers a new form of market rather than a supermarket. Rewe presents Temma as a place where
customers can shop for products of organic quality in a mom-and-pop store atmosphere. Temma stores
encourage customers to have conversations with employees to learn more about the products.
In 2013, Rewe operated four stores, but had expanded to eight stores by December 2015. Temma
competes against healthfood shops, for example Biolden, Reformhuser and Naturkostfachlden, and
also against mainstream grocery channels (including Rewes own banners, such as Penny Markt), which
also offer a wide range of organic products but at much lower prices.
While specialist retailers remain important for organic food and beverage sales in Germany, they have
been losing share, in particular to discounters. Indeed, the rapid driving down of prices, especially due to
discounter involvement, will make the future success, or even survival, of Germany's long-standing
specialist retailers that much harder. Temma has the advantage of being part of a major grocery retailer.
The strong focus on consumer foodservice and on ambience should help it attract wealthier consumers
whose purchasing decisions are much less driven by price and more by the quality of product on offer.

Source: Temma website

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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
DOMESTIC STRATEGY
INTERNATIONAL STRATEGY
MULTI-CHANNEL STRATEGY
BRAND AND PRIVATE LABEL STRATEGY
OPERATIONS
OPPORTUNITIES AND RECOMMENDATIONS
BRAND AND PRIVATE LABEL STRATEGY

A vast brand portfolio

Rewe has a large portfolio of brands, a result of its acquisitive expansion strategy over the last few
decades. For example, Billa, Merkur and Bipa became part of Rewe's brand portfolio in 1996, with the
acquisition of Austrian BML Group. This also represented the company's first steps in Eastern European
expansion, as Billa had already established a presence in several Eastern European markets.
Managing multiple brands can distract from the need to present a clear and distinctive offer, and comes
with higher costs. Rewe has taken steps to unify smaller brands under the Rewe umbrella in Germany, but
could take further measures in grouping more grocery retail brands (eg Toom and Globus) under the Rewe
umbrella. Internationally there is some indication that Rewe is looking to streamline its portfolio as it
discontinued the Italian Standa and Iperstanda brands in 2010, integrating the stores into the Billa network.

Rewe Group: Category Presence and Brands 2015

National
full range stores
International
full range stores
National and
international discount
stores
National
specialist stores
Others
Source: rewe-group.com

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BRAND AND PRIVATE LABEL STRATEGY

Expansion of private label brands

Private label is key to Rewe Group. The company operates a large brand portfolio, and its private label
strategy differs according to the brand and the market in which it is present. For example, Rewe continues
to add to Best of Romania, its Romanian private label line, while its Ja! Naturlich, an organic private label
brand, continues to thrive in the Austrian market.
Rewes private label strategy relies on product diversification to increase its sales of private label products
and consequently profits, as well as a value-added offer, with an emphasis on premium products, organic
ranges and regional products.
Rewe is adding to the premiumisation of the company by adding private label brands such as Naturgut, an
organic private label brand, as well as continuing to invest in Rewe Feine Welt, its premium private label
brand. Additionally, in 2015, the Ja! brand underwent a relaunch and was repositioned with a simpler
design to portray quality. Although Ja! Is an economy brand, the relaunch of the brand to signal quality
reflects Rewes efforts to premiumise itself.
Rewe also aims to significantly expand its non-food private label. In 2014, Rewe continued to add products
to its Toom high quality range. Many Toom products have the TUV Exclusive Seal, which indicates that the
product has undergone a series of tests to guarantee factors such as durability and resilience.

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STRATEGIC EVALUATION
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MULTI-CHANNEL STRATEGY
BRAND AND PRIVATE LABEL STRATEGY
OPERATIONS
OPPORTUNITIES AND RECOMMENDATIONS
OPERATIONS

Expanding regional centres while promoting sustainability

Coopernic retail alliance Sustainability Logistics

In 2006, Rewe combined its efforts Rewe was awarded the PRO Rewe continued to modernise
with other leading European PLANET Label at the eighth and widen its logistical network in
partners Colruyt (Belgium), German CSR forum, as a result Germany, towards integrated
procurement logistics. Launched
CONAD (Italy), Coop (Switzerland) of Rewes efforts in its delivery
in 2011, the programme aims at
and E Leclerc (France) to form the chain, aiming to offer more combined logistics to run the
Coopernic retail alliance. sustainable products.
control, combination and
Coopernic's goals were to Other sustainable initiatives from synchronisation of the flow of food
exchange know-how, reduce the retailer include its Hallo products from suppliers. In 2012,
logistics costs, increase sales Erde! (Hello Earth!) weeks, Rewe extended the programme to
offerings and develop the during which Rewe focuses on non-food channels.
European retail market. promoting environmentally and The retailer also opened new
socially responsible consumption. distribution centres. In 2013,
In 2013, Rewe ended the alliance,
Rewe is committed to operating Rewe opened its first semi
and Colruyt, CONAD, Coop
more environmentally friendly automated warehouse near
Switzerland and Rewe established
store formats. By 2015, the Frankfurt, as well as a new
a new alliance, CORE.
company seeks to have an central warehouse in Austria,
However, in 2015, Rewe and additional 50 green buildings. aiming to supply around 700
Leclerc decided once again to stores in the region. In 2014,
The companys sustainability
enter a purchase alliance activities are mainly focused on Rewe opened a new 11,000 sq m
(Coopernic), leaving Colruyt, increasing its offer of green logistics centre in Leipzig. The
CONAD and Coop (Switzerland). products, saving energy and logistics centre is specifically
The Coopernic alliance also now encouraging its employees to designed to distribute fresh foods
includes Delhaize and Coop Italia. have a good work/life balance. to the companys regional stores.

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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
DOMESTIC STRATEGY
INTERNATIONAL STRATEGY
MULTI-CHANNEL STRATEGY
BRAND AND PRIVATE LABEL STRATEGY
OPERATIONS
OPPORTUNITIES AND RECOMMENDATIONS
OPPORTUNITIES AND RECOMMENDATIONS
Key recommendations
Expansion in Eastern Europe
to maintain growth
Even though Eastern Europe has
shown some weaknesses in recent
years, due to a poor economic
climate, the region still offers long-
term growth opportunities. Rewe
should continue to invest in the
region, to reduce reliance on the
mature and increasingly saturated
German market, where it is mainly
present.
Rewe should carefully monitor
market conditions in Russia.
Although it is a key market with
large growth potential, the political
conditions may continue to stunt
growth for the company.
While organic expansion is
essential, Rewe could also
consider entering new markets
offering growth potential, such as
Belarus and Serbia.
Euromonitor International
Improve brand image to recruit Augmented online presence is
more customers essential
Rewe has already started to Having an early online presence
change its brand image by and developing its internet retailing
launching new concept stores channel will be important to Rewe,
and offering brands such as following its experience with
Rewe Bio and Frei Von, ProMarkt. Rewe has to be ready in
reflecting the companys new order to gain market share when a
motto Live better. However, larger share of German consumers
Rewe should increase its shift to online grocery shopping.
private label range of products As the retailer offers click-and-
with added value to increase collect services, as well as home
profitability, and also to improve delivery for grocery in Germany, it
consumers perception of the
could develop these services in
brand. other markets to have a competitive
As the company is aiming at a edge on other retailers and create
more premium image, the more multi-channel synergies.
continued modernisation of its Having a social network strategy
stores is essential, supported by would also benefit Rewe, as it would
strong communication strengthen its position with younger
campaigns in all the markets and more affluent consumers, who
where the retailer is present, to are more likely to shop for groceries
offer a consistent brand image. online.
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FOR FURTHER INSIGHT PLEASE CONTACT
Michelle Malison
Retailing Associate
Michelle.Malisoni@euromonitor.com
www.linkedin.com/in/michellemalison
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