Wholesale Lekkerland Posts Undynamic Sales Growth in Germany
Delivered wholesale company Lekkerland has seen sales grow 4.2% to EUR13bn in 2016, Lebensmittel Zeitung reports. In its home market of Germany, sales edged up slightly by 0.7% to EUR7.7bn. Lekkerland’s international operations saw sales increase 9.7% to EUR5.3bn.
EBIT grew 28.7% to EUR85mn. Lekkerland invested EUR41mn versus EUR43bn in 2015. The wholesaler expects that sales and operational results will remain steady at a comparable level this year.
Denise Klug (Senior Retail Analyst)
Opinion New Challenges in the German Convenience Segment
The German convenience market has always been a tricky one. While in other Western European countries like the UK or neighbouring Netherlands the channel has already made quite an impact, it has only recently gained momentum in the home country of the big discounters. However, the fact that domestic shoppers have always been very price conscious is not the only reason behind the low acceptance of the up and coming channel in Germany. There is a high density of grocery stores in the country, both supermarkets and discounters. In addition, bakeries and snack bars such as kebab outlets have assumed the role of providers for food to go. One could even get the impression that the market also known for its relatively strict opening hours was not well suited for a real boom in the convenience channel.
Back in those days, there was only one outstanding performer in the segment: Lekkerland, which delivered goods to just about all relevant players in that field. From larger chains located at busy train stations, to forecourt stores and small independently run kiosks. However, the fact that Lekkerland has posted only slight sales growth in Germany for 2016 reflects the challenging market environment and that Rewe Group has appeared as a major game changer.
When Rewe Group first tapped into the segment, the retailer was not able to meet its growth expectations. Instead of focusing on expansion, the company refined its convenience concept to adapt it to the market situation, took on board customer feedback, invested in marketing and integrated features perhaps inspired by formats like Albert Heijn To Go. Rewe Group has had the advantage of a centrally managed and standardised Rewe To Go network while Lekkerland relies on the willingness of its clients and partners to implement new concepts and innovations on the sales floor.
Rewe Group’s careful plan that evolved piece by piece like a jigsaw has now borne fruit – and even managed to attract one of Lekkerland’s big clients, Aral, which will help the retailer to expand its To Go chain by up to 1,000 Aral forecourt stores. The first effects of this deal will be fully visible in Lekkerland’s 2017 results. According to Lebensmittel Zeitung, Lekkerland’s CEO is tasked with compensating for the Aral loss by 2018. He spoke about plans to push digitalisation and experiment with click & collect and delivery partnerships.
Currently, Rewe Group is Lekkerland’s biggest threat. However, Edeka is also expanding its Spar Express chain and working on an Edeka Express concept. If this achieves a success rate similar to Rewe’s, Lekkerland will have an even more serious challenge in its home market. This would make it extremely difficult for Lekkerland to grow there via new strategies like the ones mentioned above. For us, the best growth drivers remain its international operations and it would be best if the retailer invested and focused particularly on these instead of trying to roll out new concepts across its patchwork of partners.