German retailers considering setting up shop in Greece

Germany’s retail giant Tengelmann, with an annual turnover of 26 billion euros, is preparing to open its first outlets in Greece, according to reports which resurfaced recently and are causing a certain amount of concern to established retailers. The concern is caused not only by the sheer size of the German chain but also by its purported plan to become active in the discount sector of the market, which – after the appearance of Lidl, another German chain – has grown into a thorn in the side of the main supermarket chains. But Tengelmann is said not to be the only one; the list of prospective foreign retailers in the Greek market is said to include two other large German discounters, Aldi and Rewe. Talk about the entry of foreign retailers into the Greek market had rather abated since the establishment of France’s Carrefour and Lidl, until about two months ago, when the first reference to Tengelmann was first heard. According to the latest information in the sector, Tengelmann plans to launch its chain in northern Greece. Rumors have it that senior staff of existing operators have been approached and the business plan envisages 50 outlets, which will mainly sell own-branded products and only the category leaders among other brands. Tengelmann sells a wide range of clothing items and household goods besides food. The group has a presence in 15 countries, with more than 7,000 shops. In the discount segment, it operates the subsidiary chains Plus and Zielpunkt in seven countries, with 3,518 outlets and combined sales of 8 billion euros, according to the study «Discount Retailing in Europe 1992-2002» of research company M+M Planet Retail. Aldi and its affiliate Hofer is active in 10 European countries with 5,762 outlets and annual sales of 34.1 billion euros. However, so far there has been no strong evidence of its rumored intentions to set up shop in Greece. Rewe operates a number of chains – Penny, Mondo, XXL Mega, Discount and Netto in seven countries – totaling 2,905 outlets and combined sales of 7.8 billion euros. Its CEO, Ernst Dieter Berninghaus, said recently, «Rewe’s expansion in Europe has not yet stopped.» Irrespective of the extent to which the rumored plans for the above chains will materialize, the Greek discount supermarket sector is still able to accommodate new operators, with the combined market share of existing ones being at around 4 percent. Large retailers are focusing their strategy on super- and hypermarkets, as well as cash&carries. Although discount chains are not directly competitive with supermarkets, senior staff say that any new initiative is bound to affect existing balances and be a source of concern. Supermarket operators, who regard the present market climate as stagnant, held a meeting with representatives of 25 suppliers’ companies at the end of last month to discuss issues.

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