News anchor Judith Kolenburg takes a look at the retail landscape and opportunities for private label manufacturers in Central and Eastern Europe.
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Delfim dos Santos, Daymon’s vice president of Europe & Asia Pacific, encourages retailers and manufacturers to show even greater innovation in private label and further strengthen their position.
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PLMA E-Scanner – June 2021

June, 2021
Retailers trial high-tech concept stores

While many retailers offer self-scanning and self-paying to customers, some are taking technology in shopping one step beyond.

In Germany, Rewe has opened a hybrid supermarket that allows consumers to do grocery shopping without a payment process at the counter. It is called hybrid because customers decide for themselves whether to pay at the counter as usual or shop autonomously without a checkout process. The store is called “Pick & Go” and is located in downtown Cologne.

Customers can use a special app to enter the store. They then do their grocery shopping and at the same time bag their items. At the end, they simply walk out of the store and an invoice will appear in the app.

From the outside, the test store looks like a regular supermarket but inside it is full of technology. There are intelligent cameras and sensors on the shelves and all customer movements are detected by computer vision. Rewe has worked on the project for two years and says that its main focus is to enhance the shopping experience of customers while protecting their privacy.

The technology is now being tested by employees and the store will open up for customers in late summer.

In Portugal, Sonae just opened a 100% cashierless store under the Continente Labs banner in Lisbon. The retailer invested more than 1 million euros in its construction, equipment and technology. It is equipped with about 230 cameras on the ceiling and over 400 shelf sensors which associate the products picked up (and returned) from the shelves with each customer, creating virtual shopping carts, with payment being processed automatically via a connected card.

Customers need to download the Continente Labs application and register with an associated bank card. To enter the store, they open the app and scan the displayed QR code in the turnstile area.

The store has a sales area of 150 square meters and will be manned with six employees to receive goods, restock items and ensure hygiene and safety in the operation.

Both Rewe’s and Continente Lab’s concept stores resemble the Amazon Go stores that offer “Just Walk Out Shopping”. Amazon operates more than twenty Amazon Go stores in four cities in the US and this year launched in the UK with 4 stores branded as Amazon Fresh.

Russian Mere advances in Europe

Hard discounter chain Mere is expanding in Europe. The Russian chain, owned by parent company Torgservis, is already in Romania, Belarus, Latvia, Lithuania Ukraine and Poland and has opened its fourth store in Germany. Mere wants to open ten stores in Belgium this year, it has secured its first store locations in Spain and will launch in the UK over the next few weeks. It is said to have plans to enter Italy, Greece and Bulgaria.

Mere stores have a very simple and efficient concept with suppliers deliver directly to stores and products sold from pallets in a warehouse type environment. The assortment is limited to around 1,200 SKUs and priced on average 20% cheaper than the market.

With Aldi, Lidl and other discounters having upgraded their stores and enlarged their assortment in the past decade, this no-frills hard discounter may have found a gap in the market. The economic crisis caused by the coronavirus, declining purchasing power and consumer confidence could give the retailer a jump start in Europe and become a serious competitor for Aldi and Lidl.

EU allows dairy descriptive terms for plant-based items

The European Parliament has dropped Amendment 171, a bill which would have censored all use of dairy-related language for plant-based food. Regulations on dairy-free alternatives in the EU are already restrictive. Legislation passed in 2013, means words like “cheese,” or “yoghurt,” can only be used to describe milk-based products which must originate from animals.

This amendment would have gone further and would have prohibited dairy-related packaging formats, such as a carton for plant-based milk, or a block for plant-based butter. In addition, allergen information like “does not contain milk” and descriptive terms like “creamy” or “buttery” would not be allowed.

Plant-based food manufacturers, environmentalists and consumers had heavily criticised the proposed bill. They argue that consumers aren’t confused by descriptions of dairy alternative products and that a more sustainable production and consumption is desirable.

Is Auchan leaving Asia?

According to Bloomberg, Auchan wants to sell its 65 % share of its Taiwan business, which would make it the last step in the company’s exit from Asia. Auchan sold its stake in China’s Sun Art Retail Group to Alibaba Group Holding Ltd. last year. Earlier, it sold its Vietnam business to local retail group Saigon Co.op.

Auchan launched in Taiwan in 1997, it now operates 20 hypermarkets and two convenience stores there with around 5,500 employees. The chain is active in 12 other countries including France, Portugal, Spain, Romania, Ukraine and Russia. It has a consolidated revenue excluding taxes of 32 billion euros from 1,985 points of sale under the Auchan banner.

German supermarkets growing faster than discounters

Grocery retailers saw sales growth in 2020. Although the number of store visits declined, the average purchase amount increased significantly. German retail institute EHI has found that especially supermarkets in the country have benefited from this phenomenon.

Food discounters increased revenues by an average of 5.6 percent compared to the previous year, while sales of supermarkets grew by 13.1 percent. Among Germany’s discounters, Lidl has the largest market share with 27 percent and sales of 21.6 billion euros in 2020 in about 2,300 stores. Aldi Süd and Nord follow with 2,000 and 2,200 stores generating 16.4 and 12.2 billion euros, respectively. Netto-Marken-Discount achieved sales of 14.6 billion euros through 4,200 stores and Penny 8.1 billion euros with 2,200 stores.

Coop Nordics to bring Carrefour private label to Scandinavia

Carrefour has signed a partnership with Scandinavian purchasing group Coop Nordics group which will focus on private label. Coop Nordics is one of the leading retailers in Scandinavia with a business volume of over 27 billion euros and a combined market share of 33%. It includes Coop Denmark, Coop Norway, Coop Sweden and Finnish retailer SOK.

The deal will allow the cooperative to purchase both food and non food products from Carrefour including French, Spanish and Italian private label items. Coop Nordics will sell Carrefour‘s own brand products in its more than 4500 stores in Finland, Denmark, Norway and Sweden.

Nestle’s comments on its “unhealthy” products

Nestle says 60% of its traditional food and beverage products do not meet its recognized standard for healthy eating. Nestle uses the Australian health star rating system, which scores products on a five-star scale and is used by international researchers including the Access to Nutrition Foundation. A product must score at least 3.5 stars to be considered healthy.

The company says that some of its categories will never be ‘healthy’ no matter how much it renovates. Only 37 per cent of Nestlé’s food and beverages by revenues, excluding products such as pet food and specialised medical nutrition, achieve a rating above 3.5 under Australia’s health star rating system.

Big retailer in Russia getting bigger

One of Russia’s biggest chains, Magnit, is taking over rival Dixy. The deal would add over 2,500 stores to its network, almost doubling its size in the process. Founded in 1994, Magnit utilizes a multiformat model which includes convenience stores, drug stores, supermarkets and pharmacies. In addition, the company operates a private label food production business.

Dixy is in the top five largest chains in Russia with a revenue of about 3.4 billion euros. Magnit’s and Dixy’s revenues combined would add up to 22.4 billion euros, which brings it close to market leader X5 and gives it a good chance to catch up the leader’s place in the future.

Two years ago, Magnit tried to buy another big Russian retailer, Lenta, but it lost negotiations to steel tycoon Alexei Mordashov who ventured into the retail sector for the first time. Supermarket consolidation in Russia comes as no surprise since the economy is marked by yearslong decline in income putting pressure on retailers to merge and gain power to better compete with an increasing number of rivals.

In the Stores 

Coop Switzerland is expanding its zero-waste range to include bottling stations for mineral water and beer. Further filling stations for shelf-stable food and detergents will follow in the summer.

Waitrose is expanding the range of products it offers as part of its Unpacked refillable concept with 13 new lines.

Lidl has announced that it will test the “Eco-score” in seven Dutch stores. The international sustainability score indicates the impact of a product on the environment, based on a green A (good) to red E (poor).

Edeka has introduced a new own brand “Edeka Heimatliebe” for more than 100 different items of regional fruit and vegetables. The products come from both conventional and biodynamic agriculture.

Système U has launched a new range of price-entry level products under the own brand “Prix Mini.” The roll-out of the around 400 products should be completed in September and the range will be priced at about 20% cheaper than the U brand.

Tesco’s exclusive plant-based Wicked Kitchen range has partnered with Beyond Meat to launch a line of frozen ready meals. The meals include a Korean inspired bowl, a naked burrito, a biryani and a chilli.

Rewe has opened a new generation of carbon neutral sustainable green store. Wood is the main building material and, on the roof, it grows 800,000 basil trees which supply around 400 stores in the vicinity. The roof also contains 13 water bassins in which 20,000 fish are bred each year. The fish fertilize the basil plants with their excretions. These in turn clean the water from the fish tanks, which flows back to the perch.

El Corte Inglés has launched Mimo, a highly personalized perfumery and cosmetics loyalty programme aimed at women and men with which it responds to customers who seek tailored communication and suggestions.

In Germany, Lidl is starting a test with fruit and vegetable products on which a logo with the name of the respective producer is emblazoned under the logo “total lokal”.

Carrefour offers free periodic protection to female students in more than 1,000 stores. From 28 May until 31 August, students will be able to benefit from one free packet per month of Carrefour soft tampons or sanitary napkins in all Carrefour hypermarkets and supermarkets.

Selex’ banner Famila will have expanded its network with 70 stores to a total of 267 store in Italy by the end of this year.

Hypermarket operator Globus is launching a new own brand called Globus Regional in its stores in Saxony, Thuringia and Saxony-Anhalt. The ingredients for the products come from the region. The retailer has also launched a new own brand, Globus Fresh 'N'Go, in the fresh convenience segment. The range should include around 100 items by summer.

Online supermarket retailer Picnic aims to double its turnover to € 1 billion by the end of this year. It now serves customers in more than 125 Dutch cities, 40 German cities and has just started in France.

Rewe is selling its Billa supermarket operations in Russia to local retailer Lenta. The company is leaving Russia in order to free up investments for other markets.

Carrefour is launching a range of organic dog and cat treats under its Companino brand. The range includes items that are all certified organic, without added artificial preservatives, without artificial colours and flavours, in different flavours such as beef, chicken, cheese or milk.

Markant's own brand Jeden Tag is getting a foreign sister: "My Price" is being launched for entry-price level in non-German-speaking countries. The new label should include 350 items by end of 2021.

Plus launched a new fresh brand called Boerentrots within the meat department. It concerns fresh meat products supplied by Dutch farmers and includes pork, Blonde d'Aquitaine beef, chicken, veal and lamb.

Market Research 
Sustainability has its price

A survey by McKinsey shows that almost half of Germans have been spending more money on fair or more environmentally friendly products since the pandemic. But price is also important: two thirds would buy more if sustainable products were cheaper. Every second respondent states that they consciously choose new products "in order to reduce the ecological footprint and make a contribution to society.” According to the survey, 27 percent consciously save in other areas in order to be able to afford sustainable products.

The age of the respondents plays a major role. The younger the consumers are, the more they value sustainability. In Generation Z (15 to 23-year-olds), 60 percent are willing to pay more. 18 percent of them stated that they would accept a price premium of more than 20 percent. For women it is 52 percent, for men 49 percent.

Nutri-Score enhances sales

Nielsen France research shows that the influence of Nutri-Score on sales is significant. Sales of products without Nutri-Score increased by 0.8%, while over the same period, products bearing the label increased by 18.5%.

European discounters account for 43% of retail growth

The discount channel is the second largest and fastest-growing grocery retail channel in all of Europe, according to new research from IGD. The discount channel will be the major contributor to growth in the sector up to 2022, with leading discounters – Lidl and Aldi – adding more sales than most major European retailers. The discount grocery channel accounts for 43% of growth across Europe and will add €34 billion in sales from 2020 to 2022.

While in some mature markets, the channel’s growth is slowing, in other regions, such as in Central and Eastern Europe, the channel is expected to show double-digit growth.

PLMA News 
PLMA’s “World of Private Label“ International Trade Show, 14-15 December 2021 in Amsterdam

On 14 and 15 December 2021, PLMA’s “World of Private Label“ International Trade Show will be held in person at the RAI Exhibition Centre in Amsterdam. PLMA’s timing will allow for a safe event under the theme ‘Back to Business with PLMA’. All aisles are extra-wide which, together with a variety of other health and safety measures, will allow all attendees to apply social distancing.

Products on display will include fresh, frozen and refrigerated foods, dry grocery, and beverages as well as non-food categories, including cosmetics, health and beauty, household and kitchen, auto aftercare, garden, and housewares & DIY. The show floor is divided into separate food and non-food halls to help visitors make the most of their time.

Exhibitor registration for the 2021 “World of Private Label“ is open. For more information, click here. To request an application to exhibit, click here.

26-27 October 2021

Online Executive Education Programme

14-16 November 2021

PLMA’s annual US Private Label Trade Show

14-15 December 2021

PLMA’s “World of Private Label” International Trade Show