Sluggish consumption and high food prices will also have a negative impact on business in 2023. Nevertheless, things went better than the previous year. One area in particular stood out.
Due to people’s increased desire to travel, the retail and tourism group Rewe has significantly increased its profits. Last year, the retail giant recorded an annual profit of 736.2 million euros, an increase of 46 percent, as the company announced. Independent Rewe retailers and associated companies are not taken into account here.
The group’s tourism division, which includes brands such as Dertour, ITS, Clevertours and Jahn-Reisen, saw particularly strong growth. Sales climbed by almost 25 percent to 7.2 billion euros. “On the one hand, the pent-up demand for travel continues after the pandemic. On the other hand, many people have made the decision to treat themselves to their vacation and, if necessary, prefer to save elsewhere,” said Rewe boss Lionel Souque to the German Press Agency.
Noticeable consumer restraint
Sales in the travel division had plummeted due to the pandemic. In 2022, the pre-pandemic level was reached again. Souque nevertheless gave a less than optimistic forecast last year. He expected that many people would forgo traveling because of tight budgets.
The financial year, which was once again marked by wars, price increases and a slump in consumption, did not leave the Rewe Group unscathed. Total sales rose – favored by high inflation – by almost nine percent to 92.3 billion euros. In its core business, the food trade, the company continued to be confronted with the noticeable uncertainty and thriftiness of consumers. The high price sensitivity has influenced purchasing behavior, said Souque. People increasingly turned to offers, own brands and entry-level products. This had a negative impact on Rewe and Penny’s business.
Inflation for food has recently fallen
Sales in the markets in Germany rose by 7.8 percent to 40.4 billion euros. However, as in the previous year, growth was once again significantly lower than price increases. Food inflation determined by the Federal Statistical Office was 12.4 percent in 2023. The year before it was 13.4 percent.
Market research data from Consumer Panel Services GfK shows: Many people changed their shopping behavior because of the high price increases for food. They bought more private labels and fewer manufacturer brands – and went to discount stores more often. They were able to increase their sales more strongly in 2023 (+10.3 percent) than full-range retailers like Rewe (+6.2 percent) and gained market share.
Rewe: Invested millions to limit price jumps
According to Rewe, business in supermarkets was slightly better in 2023 than in the previous year. Nevertheless, the company says it has again invested a three-digit million amount in order to keep the price jumps for customers within limits. Recently, food price increases have weakened. In March they slipped below the level of the same month of the previous year for the first time since February 2015. Food prices were 0.7 percent lower than a year ago and thus well below the inflation rate of 2.2 percent.
“This has effectively made going to the supermarket cheaper. This is the icing on the cake of the positive inflation trend,” said VP Bank chief economist Thomas Gitzel last week. This also corresponds to the trend at Rewe. “There is currently no more inflation in our product ranges across all of our markets; weighted prices are actually falling,” said CEO Souque. Rewe employs 389,270 people worldwide.
Source: Stern
