Germany: Action, a variety discounter on the rise

DRC interview for German national TV SWR - ARD

Discount Variety Retail Chain Action is a so-called non-food discounter - the offer ranges from DIY supplies and textiles to toys, sports and decorative items. Action attracts around 20 million customers every week.

Action operates more than 3,000 stores in thirteen European countries. Each store offers around 6,000 products, a mix of brands and private labels as well as no-name products.

What convinces action fans: Two-thirds of the items cost less than 2 euros. In addition, Action wins over its customers with the surprise effect. The discounter is constantly changing its offer. Every week, 150 new products are added to the stores.

Where does the discounter Action come from?

In 1993, the two Dutchmen Gerard Deen and Rob Wagemaker opened a non-food discounter in the small Dutch town of Enkhuizen and called it "Action". Four years later, 17-year-old Hajir Hajji started working in one of the then 12 Action stores, as a part-time job during her studies. In the meantime, she is the top boss of Action.

Action opened its first store in Germany in 2009 in Schüttdorf, Lower Saxony. There are now over 600 stores in Germany, and 59 new stores were added last year alone. In 2011, the investor 3i joined the discounter and gradually took over most of the shares. With the investor's entry, Action's rapid expansion begins.

Prices: How cheap is action really?

Marc Houppermans works for a discounter giant in Germany and the Netherlands and now advises discounters worldwide. "Basically, Action has the goal of being the best and lowest in price," says the discount expert. That's how many customers perceive it.

But is Action's image as a bargain discounter justified?

In addition to many no-name products, Action's shelves also include numerous branded products. Balloon gas, for example, costs only 17.99 euros here. The same product can also be found at other providers - much more expensive everywhere. At Globus, for example, the product costs a whopping 12 euros more at the time of our research.

Action offers some branded products at low prices, but mostly also private labels. According to the discounter, there are around 70 - including, for example, "Hotel Royal", "Saucee" or "Super Finn". According to Action, the first private labels were introduced a little more than 10 years ago.

Toilet paper from Action versus Rewe, Aldi & dm

The market research institute YouGov surveyed 20,000 Germans about their non-food purchases. Among other things, the product category "household" was particularly popular with Action. That's why we took a closer look at the price-performance ratio of toilet paper.

Our result: The Action private label is significantly cheaper than Hakle's toilet paper. At first glance, Action also seems to beat the own-brand products of Rewe, Aldi and dm in terms of price. But since there is less paper on the roll with Action's own brand, Action loses this price advantage again and is ultimately on a par with toilet paper from Rewe, Aldi and dm.

Action, Rossmann, Kaufland: Which shopping basket is the cheapest?

For this check, Marktcheck compiles a shopping cart with private labels from various categories: from sunscreen to washing-up liquid to cleaning wipes. This shopping cart is compared with similar products from Rossmann and Kaufland. Differences in package sizes are converted. At Rossmann, you pay the most at 35.91 euros. At Kaufland, a little less. And at Action only 31.76 euros. Action is not the cheapest for every product, but it can still clearly win the shopping cart price check.

How can action products be so cheap?

Action says it buys 44% of its assortment in Europe. The rest comes from Asia.

How does Action manage to offer its products so cheaply?

Heiko Großner, General Manager of Action Germany, says: "The main reason for the low prices is, of course, the volume we buy. On the other hand, we are of course also very cost-oriented and we try to eliminate all unnecessary costs and really be able to offer the cost advantages to the customer. We are sometimes surprised ourselves that products are offered elsewhere at expensive prices."

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Discount expert Marc Houppermans explains: "You often find products that are slow sellers or whose companies have gone bankrupt, which can be taken over for very low prices." For example, you can buy Lego cheaply at Action, but it can be old products.

Heiko Großner also admits that there are promotions and discounts at market participants where you can buy items cheaper for a certain period of time. "If we find that we are permanently unable to offer an item at the same price as others, we would not resell that item," he says.

How safe are Action electrical appliances?

Action offers electrical appliances such as toasters, kettles or hand blenders at reasonable prices – some even cost less than 10 euros.

Hendrik Schäfer and Daniel Schädel from the German Electrical Engineering Association take a close look at five products from the company's own brand "Home Essentials". "We have often found safety defects in products in this price category and that's why it's worth taking another look here," says Hendrik Schäfer.

There is a GS mark on all products. The authenticity of the mark can be checked in the online databases of the testing laboratories. The discounter's household appliances are therefore tested by German test laboratories.

For the experts, this is a real selling point. "The GS mark not only confirms the electrical but also the chemical safety of the product. And this is actually not always the case with this category of entry-level devices," explains Hendrik Schäfer.

This ensures the quality of action

Jens Madinsky, Technical Manager of Quality Management at Action, explains that the GS mark at Action is a minimum requirement for all items that run on 230 volts. According to Action, all own-brand products must meet the minimum legal requirements of all 13 EU countries in which Action is active.

The advantage for Action: a product can be produced in very large quantities and sold in all European stores. "If in any country the requirement is stricter, like the European directive, it becomes our minimum requirement. All our products are tested in accredited test laboratories," says Jens Madinsky.

In addition to legal requirements, the discounter is also oriented towards competitors, according to Jens Madinsky: "In terms of quality standard, the item must be at least as good as the competition."

Action advertising: Unpaid online marketing by brand fans

Action hardly invests in classic advertising, but benefits greatly from social media. Influencers give tips on bargains at Action and talk about their latest discoveries.

"Of course, that's the dream of every retailer, that there are people out there who recommend me without me paying them," says marketing expert Karsten Kilian. Virality is the best thing you can think of in marketing. "They are credible, more convincing than if I say myself, I'm great, I have great bargains. This is what third parties say about me. That's the best advertising you can have."

Action is much more popular than other markets and reacts to the latest trends in social media, the expert suspects. Karsten Kilian explains that Action has an eye on what is being discussed on social media and obtains these articles very quickly.

By advertising influencers online who are not paid by Action, the company can save on marketing. "There are only a few Europe-wide influencers that we consciously address. And of course, that makes us proud that we can grow so organically and thus certainly invest a little less than other companies in terms of marketing," says Heiko Großner.

What are the working conditions like at Action?

Action employs a total of around 80,000 people, 15,000 of whom say they are in Germany. So far, there are no works councils at Action in Germany.

The employees earn at least 15 euros an hour. There is a small Christmas bonus and a company pension scheme. In addition, the employees are shown opportunities for advancement.

Some employees criticize that they are under time pressure at Action. For example, the time for putting away the goods is specified to the second. "It is very important to know how much goods are coming and how much time I need to put them away. That's why it's an orientation and planning aid for us in the branch," says Heiko Großner about the criticism.

Sustainability at Action: Just greenwashing?

According to its own statements, Action is trying to become more sustainable. For example, the discounter relies on seals for some raw materials, such as wood or cotton, or uses partially recycled plastic.

Moritz Jäger-Roschko is an expert on sustainability at Greenpeace. In his opinion, the labels that Action uses are a clear case of greenwashing: "They don't change the core business model. Action thrives on creating artificial incentives to buy through cheap prices and short availability. And that simply clashes with the basic idea of sustainability."

Jens Madinsky counters that Action tries to produce every item sustainably as far as possible and makes sure to use sustainable materials. Due to the large purchase quantities, this is also possible at a discount price.

However, it is admitted to Marktcheck that Action has not yet achieved 100 percent sustainability everywhere.

Action: Expansion on a grand scale

Every weekday, an action market opens throughout Europe. According to the discounter, at least 370 stores are to be added this year.

Action's location policy is very successful, new branches are quickly refinanced. The general conditions are always similar: about 700-1100 square meters of retail space, at least 30,000 inhabitants, many parking spaces, rather rural location, low rent.

Despite low prices and steady expansion, Action is making a lot of profits. The non-food discounter is able to increase its sales year after year. Action's formula for success consisting of inexpensive products and a rapidly changing assortment seems to be working - surprises at a bargain price.

Read more: Action: Ein Discounter auf dem Vormarsch

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