European retailers' growth strategies in 2013

Date : 07 February 2013

We look at the strategic priorities for leading European retailers - Carrefour, Lidl & Schwarz (Schwarz Group), Tesco, Auchan and Aldi - in 2013's difficult economic environment, and how they are driving growth.  

Carrefour: will 2013 be a year of stabilisation?

Carrefour’s new management team has launched initiatives to turn around its performance, including selectively exiting international markets (Colombia, Malaysia and Indonesia).  This will raise questions about its long term presence in Romania, Poland and Turkey, but is enabling Carrefour to invest in growth, especially in its core markets in Europe. 

In France, investing in EDLP to boost its price perception with shoppers, and expanding the Drive concept rather than Carrefour Planet, boosted performance in Q4.  Expansion is still on the cards this year.  Franchised convenience is a success for Carrefour France with 350 new stores planned for 2013 and, during 2012, Carrefour enjoyed a turnaround in Belgium.  This reversal could herald a more sustainable period of growth in Europe.

Schwarz Group: dual brand strategy to help retailer win

The group's recent strong sales growth has made it one of the fastest growing retailers in Europe.  Germany is still Lidl's biggest market, but slowing growth here is being offset by expansion in Bulgaria, Romania and Spain. 

The Kaufland compact hypermarket format is being expanded beyond Germany, especially in eastern Europe.  Kaufland is increasingly being allied to competitive pricing and a strong fresh food offer, helping it to buck the trend for the hypermarket channel. 

Tesco: UK expertise to aid European business

Tesco renewed its focus on ‘keeping the UK strong and growing’ following a profit warning at the beginning of 2012. By the end of the year the retailer had delivered new success in its home market, with like-for-like sales up 1.8% in the six weeks to 5 January.  Tesco’s UK performance was boosted by strong growth in food sales, supported by a better performance for general merchandise and clothing. Online helped, with food and non-food sales up 18% and 16% respectively. 

In the rest of Europe, Tesco said results were impacted by reduced consumer spending. The company’s large-scale presence in the hypermarket channel could hinder growth if consumer spending remains under pressure. However, its focus on improving the convenience offer will go some way to offset that.

Auchan nearly doubles size in Russia

Auchan's acquisition of Real in eastern Europe will add nearly 100 hypermarkets and €2.6bn in sales, transforming the French retailer into a more forceful competitor in Poland and Russia.  In western Europe, Auchan will need to focus on refining and enhancing its hypermarket concept, given its reliance on the format in markets like France and Spain. 

Aldi to target new shoppers by adding brands

Slowing growth in Germany will cause Aldi to review its strategy, especially as Edeka and Schwarz Group get stronger.  The review will see the closure of unprofitable stores, investment in store modernisation and a revamping of the product range.  To this end, Aldi is selectively adding market-leading brands to drive performance.  This has seen the introduction of many branded products in eastern Europe, but fewer in Belgium and the Netherlands. 

To grow further, Aldi will invest in new product development and in adding smaller stores closer to shoppers, blurring boundaries with convenience. It will also boost its advertising and social media presence to build brand equity.

Find out more...

Check out our new Special Analysis, Europe In Focus, in which we review the factors driving sales at the start of 2013 and give more detail on the implications surrounding these growth strategies.  You can also visit the global retailing trend page for the latest news and developments.