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Kaufland has started the construction of its first Australian distribution centre in Mickleham, on the northern edge of Melbourne.

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Schwarz Group released its financial year 2018/19 results, reporting a strong sales increase of 7.4% to €104.3bn. The growth was driven by Lidl and the group’s international operations. Lidl’s turnover increased by 8.8% to €81.2bn while Kaufland’s sales grew by 1.6% to €22.6bn. Tönsmeier Group, the waste disposal company acquired in 2018, generated sales of €500m.

According to Schwarz Group’s CEO, Klaus Gehrig, sales were driven by ‘new stores’ openings and attractive prices’. The group now operates more than 12,100 stores across 30 countries, thanks to 400 stores opening in 2018, of which, most were under the Lidl banner.  

Lidl’s good performance in Germany

Lidl’s sales increased by 5.9% to €22.7bn in its home market. Despite a more competitive environment, especially in terms of consumer’s prices, Lidl’s posted a stronger growth than the previous financial year (+5.2% in 2017/18). The discounter’s investment in remodelling its existing stores, in private labels and the fast expansion of online sales contributed to these overall good results in Germany.

Kaufland’s growth slows

Kaufland posted a growth of only 1.6% in FY2018/19, -1.4pts compare to the 2017/18 growth. The retailer has been affected by a challenging environment for hypermarkets in the markets where it operates. But the group is currently investing in its stores to improve the shopping experience and in its categories to offer more solutions.

Lidl’s international operations driving the group’s growth

Outside of Germany, Schwarz Group sales increased by 9.1% to €67.3bn. In October 2018, the group entered Serbia where it opened 23 Lidl stores. In the US, Lidl acquired 27 Best Market in November 2018 as it looks to build its presence in the market. Lidl sales remained strong in Spain (+11.5% to €4bn), while in Italy it opened its highest number of stores for many years, adding more than 40.

2019: investments to continue and focus on digital

In 2018, Schwarz Group invested €7.5bn, mainly in store upgrades and openings. The group anticipates a similar level of investment for 2019, with strong development plans for Lidl across Europe.

Digital is becoming a focus for the group. Lidl now offers online food or non-grocery in a growing number of countries. In 2018 its online sales grew by 56% globally. Lidl also continues the roll out of its loyalty app, Lidl Plus.

Keep up-to-date with the latest developments of international retailers, sign up for our newsletter. For subscribers wanting to know more about Schwarz Group, please have a look at our Lidl and Kaufland Strategic Outlook for 2019.

If you need some support when building your strategy for discounters and more broadly for international retailers, please get in touch with Milos Ryba, Head of Retail Strategic projects, [email protected].

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Maxime Delacour

Senior Retail Analyst - Discount

If you have a specific business challenge or training requirement we can put together something just for you.

As Lidl continues its rapid expansion across Europe and the US, it is looking to build stronger relationship with its shoppers. As Lidl invests in its stores and expands the ranges and services it offers, identify your opportunities with the retailer as we explore the latest strategic priorities that will influence its future performance.

We visited Kaufland stores in Krakow, Poland, to look at its latest developments in the country. We were impressed by the initiatives it was taking to create a more relevant range for shoppers and to help it differentiate itself from the competition.

1. Retailer partnering with start-ups to develop new products

Kaufland allocated a gondola-end for new product developments from several start-up companies. This is part of its incubator Startup initiative. It illustrates the retailer’s keenness to support new product developments by helping small suppliers launch products in the market. Keeping in line with its sustainability initiatives, the range included eco-friendly laundry detergent, Sansin, bamboo toothbrushes and reusable sanitary products by Loffme.

Source: IGD Research

2. Extending private label lines

The Bevola private label began as a personal care-focused range, but now extends into the baby category. Kaufland has also rolled out standard-priced own brand Favourites in pet care and extended healthy range Take-it veggie and K-free to compete with brands.Source: IGD Research

3. Premiumising its range

The retailer is using both ranging and category management initiatives to improve shoppers’ perception of the quality of its range. One way it is doing this is with a premium dry-aged meat offer at the fresh meat counter. It has also refreshed the whisky category with an aisle design that illustrates a premium ‘look and feel’. It does so by using a black glossy look and digital screens to attract and engage shoppers around brand selection.

Source: IGD Research

4. Support the main shop mission with a wider non-food offer

There is a strategic move to enhance its range to become more of a one-stop shop retailer. It is helping shoppers achieve more from their shopping missions by adding relevant non-food categories, such as eye ware, magazines and electronic accessories. This indicates the retailer’s interest in adding new categories to attract further shopper spending.Source: IGD Research

5. Showcasing the food-to-go and ready meal offer

Placing the food-to-go category near the front of the store means it is one of the first packaged food ranges shoppers come across. Relatively high footfall in this section will help raise awareness of the category. A wide and strong assortment of ready-to-eat and ready-to-cook meals, with local and international dishes, are available.Source: IGD Research

6. Helping shoppers eat and live healthily

The Aleja Zdrowa ‘Healthy Aisle’ and fitness accessories sections are located near each other. Kaufland offers shoppers several free from and organic foods alongside sport supplementary products and apparel. By bringing the ranges in close proximity to each other, it is positioning itself as a health-focused retailer.Source: IGD Research

Subscribers wanting to find out more about retailer’s strategic priorities can look at Strategic outlook for Kaufland.

Kaufland has appointed Richard Umbers as its new CEO.

New CEO at Kaufland

Umbers, who left Australian department store chain Myer 12 months ago as CEO, will be based at Kaufland’s headquarters in Germany. Umbers has previously held management roles at Woolworths Group and was Managing Director at Aldi North West UK & Republic of Ireland.

Preparation to launch in Australia

While Umbers will not be directly involved in Kaufland’s launch into Australia, he will lead international buying and sourcing operations. Kaufland received planning permission for three stores last month and further investment has been secured.

Presentations

08/07/2019
An essential summary of trading priorities, latest developments, and other key commercial insights for Kaufland.
14/06/2019
This in depth-guide to Slovakia explores the key trends in grocery retail and growth strategies of the leading retailers.
10/04/2019
This guide to Germany includes a summary of the country’s economic outlook, an overview of the grocery retail market, insight on the country’s leading retailers and the short-term developments that will drive the market.
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Key presentations

Kaufland is building a more relevant offer for shoppers, which differentiates it from rivals, while maintaining control of costs and driving efficiency. In this report we look at its key strategic aims and the strategies being rolled out in its top four markets.

This in-depth guide to Germany explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

An essential summary of trading priorities, latest developments, and other key commercial insights for Kaufland.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

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