Food prices, own brands, self-service checkouts and delivery service: In an interview with the dpa, the Rewe boss talks about various topics – including the special shopping behavior in Germany.
Rewe boss Lionel Souque is cautiously optimistic about economic development in Germany. In his opinion, consumer sentiment has recently improved. “Since inflation has fallen, people are buying more organic products again. I think that’s because they can afford more expensive items again,” he told the German Press Agency. Last year, when inflation was high, many people would have done without. In an interview with the dpa, Souque spoke about other current topics. An overview:
What makes a good supermarket?
“The basics have to be there, the products have to be super fresh, there has to be a wide selection, the service has to be good, the prices have to be right and cleanliness is also important,” says Souque. This requires as few queues at the checkout as possible and friendly and competent employees. “That sounds simple. But doing that from Monday to Saturday and from early in the morning until late in all the markets in Germany is harder than you think.”
How are food prices developing?
The Rewe boss does not expect food prices to continue to rise overall. However, price increases are possible for individual products. “You can’t plan every harvest. In addition, there are price developments for raw materials on the world market, such as cocoa and orange juice, where raw material prices have risen sharply recently.” Prices for other products have fallen. It is therefore difficult to make a reliable statement about how things will develop overall. According to Souque, prices at Rewe have recently stopped rising on average, but have actually fallen.
How does Rewe react to the popularity of private labels?
Consumers have been increasingly turning to the cheaper own brands when shopping for some time. “Inflation has led to many people starting to do this. They have noticed that the quality and price are good and are now staying loyal to the products,” says Souque. Rewe has expanded its own brand range. “We have expanded our entry-level brand ‘Ja’ from 600 to more than 1,200 items,” says the Rewe boss. According to the company, an average Rewe store has around 15,000 items in its range, around a third of which are own brands. Their share of sales has recently grown more than that of the manufacturer brands, says Souque.
The branded products remain important for the supermarket chain, however, in order to differentiate itself from the discounters. The Rewe boss would like the large food manufacturers to be more creative in their development. “Branded products must have added value. People are not prepared to pay twice as much just because of the brand. They expect a product to taste better, be healthier or to offer something new.” In his view, there is a lack of innovative spirit. Exciting new products therefore come more often from small companies or start-ups. “I do expect the large corporations with their huge innovation centers to bring a few interesting, new things onto the market. Customers are happy about that,” says Souque.
Do people shop differently in Germany?
Souque was born in France. Is consumer behavior different there from here? “People in Germany are very price-sensitive when shopping, more so than in other countries. That’s because the German market is very much dominated by discounters,” he says. “Many people in Germany have no problem paying three euros for an espresso, but when cheese costs 10 cents, it becomes difficult.” According to the Rewe boss, however, a lot has changed in Germany in recent years. More and more people are interested in cooking and healthy eating, in ingredients and animal welfare. Many are also prepared to spend more money on quality and sustainability.
What’s happening with the self-service checkouts?
They can already be found in many supermarkets, and in the future Rewe wants to rely even more on self-service checkouts. “By the end of the year we want to increase the number of supermarkets that are equipped with them from just over 1,000 to 1,800. Then there will be self-service checkouts in almost half of our stores. There will certainly be more in the next few years,” said Souque. The self-service checkouts are doing well and are used by a quarter of customers.
In his view, the so-called self-checkout systems, with which customers scan their items themselves, have one main advantage: “The checkouts save time. Nobody wants to queue in the supermarket.” Normal checkouts will continue to exist, but their number will be reduced. “We are not interested in cutting jobs, but rather in giving our employees more time for what is important: contact with customers and maintaining shelves,” says Souque.
What is Rewe planning with its delivery service?
Rewe supplies households in 90 cities with groceries; the supermarket chain is the market leader in this area. Competitors such as Picnic are currently expanding rapidly and are increasing the pressure on the company. Souque can imagine expanding the delivery service if customers want it. However, it is difficult to make money from delivering groceries. The employees have to take on things that the customer would otherwise do, such as selecting the products in the store and transporting them.
“One delivery can easily take over 30 minutes of staff. But the sales prices are the same as in the store,” says Souque. The margin on food in Germany is comparatively very small anyway. This is also reflected in a low return on sales of one to three percent. Why does Rewe still offer the service? They want to give customers the opportunity to shop the way they want. “We are investing in customer relationships and image,” says Souque.
Source: Stern
