Discount retail chain Penny (owned by the German REWE Group) wants to get more market shares from Aldi and Lidl. To this end, the company is increasingly experimenting with a kind of super discounter. Penny relies on a mixture of supermarket and discounter. Such a concept has already celebrated its successful debut in Munich. Penny has already converted 130 of the almost 2,200 stores in Germany. By the end of 2021, 600 stores should have adopted the new concept. Stefan Magel, Divisional Director Retail Germany of the Rewe Group, describes Penny's market hall concept as a "super discounter". The thought is not new. Aldi and Lidl rely on similar accents and have had good experiences with it. The shopping experience is increasingly coming to the fore in the post-Corona era. What's new in the Penny stores? The changes are already noticeable in many places. In these stores, Penny focuses on freshness, a neat overview and lots of organic goods. As the "Lebensmittel Zeitung" reports, almost 25 to 30 vegetable and fruit items with organic certification are to be sold in the super discount stores. In total, Penny offers up to 180 such articles at full capacity. The fresh food counter is right at the entrance, as is the case with most supermarkets. The idea behind the placement: Fruit and vegetables create the impression of freshness, which is burned into the minds of customers in the long term. Customers should find the goods more clearly. Instead of stacked boxes of groceries on wooden pallets in the shops, customers can now find modern shelves. The usual discount store concept has finally had its day. These modern shelves are no longer lengthwise and in rows inside the shop, but are arranged according to categories. Customers are guided through the branch like a labyrinth. The jam, muesli and coffee department can be found under the heading Breakfast in a U-shape. Additional purchase incentives are then created with display stands. This idea is originally known from furniture stores like Ikea or Mömax, which repeatedly show offers and thus invite you to shop. You won't find any classic deep-freeze counters in the new Penny branches. Meat, frozen vegetables and frozen pizzas are stored in freezer shelves that can be opened automatically or manually. The concept was established by supermarket parent Rewe. Thanks to the modern appearance, significantly more people are accessing it. Penny, Aldi, Lidl and Co .: Why are discounters prettier? For many decades, the price was the focus of discounters. Consumers bought there because food was considered particularly cheap. Ever since supermarket giants put a lot of pressure on the discounters with no-name goods, Aldi, Lidl and Co. have been looking for ways to create new incentives. In the past, Aldi has increasingly included A-branded products in its range. Penny presented itself as a retailer from the neighborhood and arch-rival Lidl rebuilt branches, staged itself in commercials as the first point of contact for quality and organic. The industry is at odds over how Corona is affecting efforts overall. Retail experts firmly expect that prices will come into focus again and that one-stop shopping will continue to prevail. "That could stimulate the price war again," emphasizes an insider. "Customers then look where it is cheapest and where they can get the most groceries." See here for more: https://www.xing-news.com/reader/news/articles/4029377?cce=em5e0cbb4d.%3AS9UoFor8KKnEHS5kTI1IAB&link_position=digest&newsletter_id=75572&toolbar=true&xng_share_origin=email

Discount retail chain Lidl US (owned by German Schwarz Gruppe) announced its CEO, Johannes Fieber, will be leaving and will be replaced by Michal Lagunionek, a board member at Lidl International, in early June. It was also announced that Lidl Denmark’s CEO Dirk Fust will be moving over to the US to help with network expansion. We look at the background of the new duo and what it could mean for the future of the discounter in the US. Michal Lagunionek, who is the new CEO? Lidl US has named Michal Lagunionek as its new CEO from the beginning of June 2021 replacing Johannes Fieber. Fieber arrived at Lidl US in 2018 and played a key role in the discounter’s store model evolution to better align with American shoppers’ habits and expectations. He managed to transform the model and put Lidl back on the store opening path. Michal Lagunionek has been at Lidl for over 20 years. He was Lidl Poland’s CEO for 10 years before joining Lidl’s International board six years ago where he oversaw the development of the discounter in several markets including, the US since 2020 when Lagunionek took over from Roman Heini as President. His experience as a board member will be highly important for Lidl US but it’s probably his 10 successful years as CEO of Lidl Poland that could help him have an impact. During his time as CEO in Poland, Lagunionek oversaw the opening of more than 470 stores resulting in sales jumping from €300mio (US$ 360mio) to €3bn (US$ 3.6bn). Poland is a unique market for Lidl. First, it’s one of the few major European countries where it is one of the top three retailers (second largest in Poland). Secondly, its main competitor, local discounter Biedronka, is also the market leader (21% market share vs 8% for Lidl). This unique position means Lidl needs to constantly innovate and evolve its assortment as well as maintain price competitiveness to differentiate and better compete with Biedronka. Lagunionek will bring with him this knowledge around model evolution, price, and network expansion to unlock growth. Dirk Fust likely to play a key role in the ramp up of store openings Lidl Denmark CEO Dirk Fust announced earlier this month he will be leaving his role to take on new responsibilities in the US. His exact role at Lidl US is yet to be confirmed but he will bring on board success and knowledge around network expansion. Fust was named CEO of Lidl Denmark in 2016 when the discounter was operating 102 stores with only one or two new opening per year. He was tasked to ramp up the network expansion, which he successfully did. During hist time as CEO, more than 30 new stores opened with around seven new store openings every year, making it the fastest expansion pace since Lidl entered the country in 2005. For 2021, Fust secured the biggest investment plan ever in Denmark at €135 mio (US$ 160mio) placing the discounter in a position that is fit for the future with the goal to reach 200 stores within the next seven years. The appointment of Fust at Lidl US is strategic as there are similarities between where Lidl US is today compared to Lidl Denmark in 2016 in terms of accelerating the network expansion. Fust is bringing a wide breath of experience and knowledge and is likely to contribute to the ramp up of store openings. Finally, in Denmark, Fust has also been a key enabler to adapt the company strategy to the local culture which seems to be one of the next areas of development at Lidl US to ensure the success of the discounter in the longer term. Fust told CEO magazine in 2020: “We adapt the Lidl brand to each individual country in which we operate. I’ve worked in Germany and also on the international side, so I’ve visited more than 20 of the countries we are in. What has worked so well for us is exploiting our global processes while at the same time having the freedom to adapt that framework to local cultures.” Could the duo evolve Lidl US and create a disruptor? Despite the German head office supporting future development in the US, it’s still difficult to measure the overall success of Lidl US. Yet it shows the head office is confident its operations in the country are in a good place and they believe there are opportunities for growth. Some might argue the number of stores remain low, but let’s not forget that it took 20 years to Aldi to reach 500 stores in the country, something Lidl is likely to achieve in 10 years, especially if it ramps up its pace of expansion. It will benefit from some tailwinds as its value proposition will resonate with a larger part of the population due to the likeliness of the K-shaped recovery for the economy, but there will also be headwinds coming from the rapid growth of ecommerce. It seems Lagunionek and Fust are arriving at a pivotal time for Lidl in the US as the discounter has found the right store format and the focus is again on expansion. Both will bring a wide breath of knowledge and expertise that will be paramount to ramp up the expansion pace but also to evolve the assortment to ensure it is aligned with shopper needs. Despite being early to say if Lidl could play a stronger disruptive role in the US, market suppliers should keep a close eye on the development and actions that will be implemented by Lagunionek and Fust in the next 12 months as the retailer could rapidly evolve in size and by assortment. Inside the latest stores Lidl continues to improve the design of its stores offering an enhanced shopping environment. Every new store now displays the mention “Food Market” on the outside façade to help increase the brand awareness. Wooden-like fixtures in the produce area give a more natural look and feel while the wooden crates in the wine section showcase premium wines. The in-store bakery and the wide assortment of freshly baked goods are a strong point of differentiation compared to other retailers. See here for more: https://retailanalysis.igd.com/subscriber-home/news-article/t/lidl-us-why-suppliers-should-be-keeping-a-close-watch-on-it-over-the-next-12-months/i/28195

Discount Retail Chain Aldi Spain (German family owned) is committed to making 100% of its packaging circular. In the midst of a price war in the different supermarkets that operate in Spain, Aldi wanted to announce a new strategy that looks more for sustainability and not so much for its business portfolio. With a view to 2025, the German discount chain has proposed that 100% of its own private label brand packaging be circular, that is, that they can be reused. The 2030 Agenda that has prevailed throughout the European Union with the great objective of protecting the environment has arrived and will continue to reach the main continental companies. Thus, from Aldi and as has been customary in recent years, this time they have decided to promote a greater goal that achieves packaging much more linked to sustainability. As reported by FinancialFood, German supermarkets will carry 100% of their recyclable, compostable and reusable packaging in four years. All products that go through their own private label brand, where the virgin plastic used for packaging will also be reduced by up to 20%. Aldi announces a new cardboard packaging for its hamburgers in Spain With more than 375 tons of plastic saved in all its stores in 2020, this new strategy will implement cardboard or glass packaging, as well as rPET. A material created from 20 to 100% recycled plastic that is very present in both food items and drugstore or cosmetics. In addition, with regard to Spain, Aldi has already committed to commercialize 100% recycled plastic bags and compostable plastic bags in fruits, vegetables and bakery. For its part, in the last campaign it is guaranteed that the meat assortment is 100% national with 75% of the offer of the discount chain with Welfair certification of animal welfare, as well as the launch of a new cardboard packaging for hamburgers. See here for more: https://www-eleconomista-es.cdn.ampproject.org/c/s/www.eleconomista.es/nacional/amp/11219696/Asi-es-la-nueva-estrategia-de-Aldi-para-fomentar-el-desarrollo-sostenible

Variety Discount Retail Chain Action (owned by 3i Group) has grown well, started in 1993 in the Netherlands, has now 1,700 stores in Europe, including 599 in France. The opening of a new store in the 19th arrondissement of Paris will allow the discounter to pass the 600 mark. Established in France since 2012, the Dutch brand has grown since the opening of its first store in Courrières, Pas-de-Calais. This Thursday, it is the 600th stores that opens its doors on French territory and not the least, since it is the first in the capital. A key step that responds to new challenges "The objective, by opening a store in Paris, is to increase awareness of Action and reach a larger target. We are known in the provinces, but we also want to make ourselves known within the walls of the capital", explains Wouter De Backer, Managing Director of Action France. Eco responsible discount Action’s positioning in the market is clear: to offer quality products at low prices. But not only. Eco-responsibility is also at the heart of the establishment's concerns, which makes it a point of honor to market sustainable products. “People think that discount products and sustainable products are not compatible, we want to show the opposite and break with preconceived ideas on the subject,” continues Wouter De Backer. In 2020, 60% of paper and wood products marketed by Action came from sustainable sectors. The same goes for 76% of cotton put up for sale, promising figures which, according to the managing director, "should reach 100% by 2025". While waiting for this date, it is the opening of the Parisian store that occupied everyone's minds on Wednesday, mobilizing the teams who put the latest products on the shelves. “We can't wait for this Action store to open. This is a real challenge for the establishment and we are convinced that we will be able to meet it, ”says Wouter De Backer. Office supplies, household cleaning products, toys, decoration, crafts, clothing, linens… The busy gondolas were able to welcome their new customers on Thursday. See here for more: https://www-leparisien-fr.cdn.ampproject.org/c/s/www.leparisien.fr/amp/paris-75/paris-lenseigne-action-ouvre-son-1er-magasin-dans-la-capitale-20-05-2021-7OZLFOEV25FZ5NJNN7RQXOZFVQ.php

Discount Retail Chain Tiendas 3B (owned by Anthony Hatoum and PE Group Quilvest Capital Partners) plans to close the year with 1,350 stores, while expanding its coverage thanks to e-commerce, through Mercado Libre. At the moment, Tiendas 3B has 1,200 stores in 12 states across Mexico. Supermarkets grew during the coronavirus pandemic and Tiendas 3B was no exception. In 2020 this chain of discount retail stores increased its number of customers, increased its sales to double digits and will maintain its expansion rate during this year. Anthony Hatoum, founder and CEO of the chain, affirms that the company's revenues increased more than 25% at the end of 2020, as a result of its business model, which is committed to keeping prices low. This scheme, he points out, has allowed him to register similar growth during the last seven years. "In this year, which is going to be possibly difficult, any customer who is looking for value and who wants his money to go further is a potential new customer for 3B Stores," he says. Tiendas 3B opened its first store in the country's capital in 2005, after Hatoum moved to Mexico from Turkey. Now, its stores, which do not exceed 300 square meters, are located in the colonies of 12 states of the Mexican Republic, including Guanajuato, Querétaro, Jalisco, the State of Mexico and Guerrero. This year, the chain is preparing the opening of 150 more stores to add 1,350 at the end of the year, in addition to its nine distribution centers. Without disclosing the investment amount, Hatoum explains that the location of these stores will follow the organic and “circular” growth that has caused the company to expand through the central region of the country from Mexico City. The chain's founder considers that proximity was one of the keys that led to attracting new customers to his sales floor during the lockdown. In other words, it was easier for consumers to buy basic products in their mini-discounter, without leaving their neighborhoods to visit other larger-format stores. “You can walk to a 3B Store and you can go every day,” he says. "The three b" "Good, nice and cheap" are the 'three bs' that Mexicans look for when buying a product. The director of 3B Stores considers that the value offer of its business model is based on offering good quality products at low prices. To achieve this, the company maintains a restricted range of products so that consumers can only find items from the leading brands in their best-selling format on their shelves and, together with them, own private label merchandise from 70 business partners at a still price. lower. The investments of the discount retail chain in Mexico, which increased its sales by 8.6% during 2020, will have a growth of 32.7%. The discounter does not offer product promotions to buyers and accepts only cash payments, to save the commission of banks or other digital payment platforms. “This is our policy. Always give the client the best that we can. It's part of gaining customer trust,” he says. Advertising Proximity stores are a format that large retail chains such as Walmart, Soriana and Chedraui have also explored in Mexico, with their Bodega Express, Soriana Express and Supercito formats, respectively, and that allow them to get closer to buyers looking for the lowest prices . This is a scheme that, in fact, they have pushed for the last year. Walmart closed last year with 1,133 Bodegas Express, the format that has driven its growth the most, as happened in the last quarter of 2020, when it opened 20 stores of this format out of a total of 35 new stores. “Mexico is a very competitive market in for the retail sector, much more than any other country I know. But it is such a large country, with such a large, dynamic market that there is room for two, three or four players in this area of ​​local stores. There is room for everyone and this benefits the customer at the end of the day,” says Hatoum. The surprise of e-commerce Online sales are a segment that Tiendas 3B boosted with Mercado Libre's cooperation. The online store within the company's marketplace achieved strong growth because it had a very small base, but what has surprised the Lebanese businessman the most is that they have orders from cities where they do not have coverage, such as Tijuana. Even with good results on the digital platform, Hatoum explains that for now he will not launch his own online store. The businessman points out that the costs of the logistics chain would be a barrier to his low price policy. “I prefer to sell in stores at the lowest price. I think that the market for the moment is here, it is what the client asks for. But the day he asks to buy more online, we turn to that channel in two seconds," he warns. See here for more: https://expansion-mx.cdn.ampproject.org/c/s/expansion.mx/empresas/2021/02/22/tiendas-3b-abrira-150-tiendas-mientras-mira-al-e-commerce-de-reojo?_amp=true

Discount Retail Chain Aldi Denmark (German family owned) made significant progress on the 2020 results and has reversed the development in the discount chain ALDI. ALDI Denmark's annual accounts for 2020 show that the discount chain is improving its result by DKK 170 million (US$28 million) compared to 2019, an improvement of as much as 33%. New ALDI stores The discounter ALDI Denmark came out stronger in 2020 with an improvement in net profit of DKK 170 million (US$28 million) compared to 2019. With growth in both revenue and earnings, the financial year shows a clear improvement on the ordinary result and a marked improvement in operations. In addition, there is a general improvement in the grocery retail sector as a consequence of the Corona pandemic. However, the positive development does not change the fact that ALDI Denmark will also deliver a significant deficit in 2020 as a whole. It shows the company's annual accounts for 2020. “After several years of challenges, we have succeeded in reversing the trend, so that in 2020 we deliver a result that is 33% better than in 2019. The revitalization plan follows the expected timeline, and based on the investments and initiatives made in the financial year, the result is better than expected,” says CEO of ALDI Denmark, Finn Tang.

Steinhoff International priced its shares in variety discount retail chain Dealz & Poundland owner Pepco at 40 zlotys (US$10.5) for its Warsaw stock market listing, valuing the discount retailer at around 23 billion zlotys (US$6 billion). The price tag is towards the lower end of a 38 zloty (US$10.4) to 46 zloty (US$12.3) per share indicative price range, but at 40 zloty (US$10.5) the offer was more than five times subscribed, a person with knowledge of the situation said. The initial public offering (IPO) is Poland's biggest this year and gives a boost to Warsaw's stock market which has had an uptick in listings, but was passed over by parcel delivery company InPost, which opted to list in Amsterdam in January. The company chose Warsaw over London because Poland is its largest market. Pepco, which owns the Poundland chain in the United Kingdom as well as the Pepco and Dealz brands in Europe, trades from more than 3,200 stores across 16 countries and is led by chief executive Andy Bond, a former boss of British supermarket group Asda. See here fore more: https://www.checkout.ie/retail/dealz-owner-pepco-valued-e5bn-warsaw-listing-132299

Spanish leading supermarket chain Mercadona’s new private label policy, replacing the former “inter-suppliers” by a much wider base of manufacturers called “totalers”, is an authentic revolution. The industrial ecosystem which had been built by the Spanish leading food retailer, structured around a relationship model close to vertical, now enters in competition in a much more open market. A new strategy One year ago, in January 2019, all the Spanish economic press published the news in front page: Mercadona was publicly disclosing the decision to transform its private label’s supply chain, migrating to a wide base of 1.400 suppliers, which were named “totalers” in their genuine language. In fact, this decision was the official death of a system which had been predominant since its creation, in 1998: a focus on a reduced number of manufacturing partners -namely 120-, to which the whole management of a product category (or at least, a significant part of it) was delegated. These companies, named inter-suppliers, worked under a long-term collaboration framework, with an open book policy, through which both parts fixed every year improvement targets leading to better consumer prices. Mercadona acquired a deep knowledge of the supplier’s operations, and had a strong influence in R&D, logistics and industrial investments. Both parts were so much blended that, in case of finishing the collaboration, a 3-years delay was given to the provider for organising the spin off. This model was praised in the academic community and presented in many business schools. Thanks to its implementation, the retailer built the biggest food cluster in Spain: in 2017 the company's annual report mentioned 249 factories, more than 50.000 employees, and a total investment of more than 700 million euros. Such kind of integration models are quite scarce in the European retail. We could mention the French Intermarché and the Swiss Migros for comparison, as both have powerful manufacturing networks into their corporate structures. The first of them owns Agromousquetaires, a conglomerate of 62 plants and 11.000 workers with 4.000 million euros overall revenue - being the fourth food industrial group in France. Nevertheless, as a difference, Mercadona’s strategy has never relied on owning the capital of its suppliers; all the most, they have brought financial support for accelerating their development, or for temporarily solving financial issues. A long-term planned change So, the former inter-supplier archetype has come to an end. To understand the genesis of such a relevant change, we will step back some years before, when Mercadona took the decision to transform its fresh products model. Their previous intent to manage this category in the same way tan dry food, with all the merchandise packed, had been a failure. The process was excessively centralised and industrialised, talking about products who need store closeness in order to achieve tight lead times. Mercadona’s chairman, Mr Juan Roig, uses to be crystal clear when he describes past failures: in the GS1-AECOC Congress held in 2013, he explained that “our custard apples were so hard that they rebounded on the floor, as if they were soccer balls” (I have extracted 90 seconds from the conference which is posted in Youtube). The transformation of fresh products was the first renouncement to centralise category management through global suppliers. In the new model, purchasing decisions were taken at product level, with a much more granular view, attending different criteria: quality, proximity to logistic platforms, integration with the primary production. As this process proved to be quite successful, it was only a question of time to see this philosophy translated to the rest of the assortment. This started to happen in years 2014-2015, with the entry of “specialist suppliers”: providers focused on concrete products, bringing unique quality and innovation attributes. Mercadona used to called them “gold screws” in their internal language. The internal impact of such a change was quite relevant: while in 2007 the commercial area had only 50 people in headcount, in 2017 this had multiplied to 900 persons working both in prescription (offer definition) and purchasing departments. The results of this new policy are quite visible today when you visit a store. For example, the new beer assortment: where we used to have seven suppliers and own brand Steinburg was hegemonic, now we can see 40 companies, 19 of them artisan-type, providing 70 references. Another section which has transformed is oil: at the end of 2019 we could find 14 different manufacturers, a huge difference with 2015, when the supply was monopolised by Sovena. Forced to reinvent themselves The transformation we have described has a heavy impact on the companies who were previously leading the full provision of Mercadona’s brands: Hacendado (food), Bosque Verde (cleaning), Deliplus (beauty and hygiene) or Compy (pet food). All of them have gone through a competitive reassessment of their products. Despite many of them have been able to protect their position in the legacy range, they have also seen competitors entering the category for covering new consumer needs. This bold move has a transcendental impact on the whole Spanish private label industry: the former inter-suppliers have broken the isolation in which they were confined, as they were working in a kind of exclusivity status for their main client, even if not contractually formalised. So, the entry of the specialists in Mercadona’s supply map is a formidable kick into the existing playground, as it gives back to the inter-suppliers the possibility to sell to the rest of Spanish retailers. In fact, a porosity has been created between two “planets” who were working in an isolated way: 120 industrial companies with strong quality standards, excellent cost discipline, and high flexibility to adapt to consumer needs, have irrupted into the “free” private label market. A new game in the domestic market The war between the representatives of “Mercadona’s galaxy” and the companies supplying the rest of retailers, has just started. Some ex inter-suppliers had to overcome the initial prevention from buyers of other chains, as they were still perceived as a different DNA, having been so much blended with their main client. But this kind of feeling, quite subjective, always steps away in benefit of business realism. In the same way that we have seen around 1.300 suppliers entering Mercadona’s shelves, we are starting to see the reverse movement, as soon as the private label contracts from the rest of retailers are being renewed. These negotiations are taking place with a high level of confidentiality, although some cases have already been made public: for example, the Portuguese Sovena -who has lost positions, as mentioned before, in Mercadona’s oil section- is now working for Carrefour. In fact, this situation leads to a set of risks and opportunities that any industry working on private label -independently of which side of the ground they play in- should thoroughly assess before defining their growth strategy. Introducing into the branded world On top of entering to compete in their “natural” private label market, some historic suppliers of Mercadona are considering the possibility to build their own national brands. As this is a quite different business model, we have very few examples in Spain. All the most, Casa Tarradellas -a leader in elaborated meat products and fresh pizza- was the only key supplier able to work in both kind of products, combining Hacendado for Mercadona with their namesake brand. The inter-suppliers willing to give this step into the branded world will have to deal with a quite extensive transformation agenda: Defining consumption trends and needs that they want to cover; a process in which they will lack the research support that their main client used to provide them, based on the famous co-innovation labs with thousands of consumers bringing plenty of insights. Designing a brand platform enhancing the personality and differentiation attributes needed for success, powered by an omni-channel communication plan ensuring the awareness of their value proposal. Activating the point of sales with attractive actions and product expositions, jointly with a promotional plan which is a pre-requisite in a majority of Spanish retailers - and a key difference with Mercadona’s EDLP model. Defining a pricing policy for positioning properly in front of leading brands and other private labels, as well as for covering the investments needed in innovation and in-store presence. Having a look at all these requisites, it sounds that only a selected group of inter-suppliers will be able to deal with them. Those who really try will need to capture human talent in order to develop the required capabilities, so we can predict interesting moves between corporations, especially in sales and marketing positions. Being realistic, we can also imagine that some companies will keep into a much more tactical profile, with a reduced investment. They will introduce low-price brands, which will probably lead to blur their mainstream business. Developing the alternative channels Looking ahead of the impact of Mercadona’s new supply policy in the Spanish retail, the inter-suppliers are also exploring other opportunities, like the diversification to new markets. This is not really a new topic, as these providers were already allowed to look for alternative customers, as soon as they didn’t compete directly with their main client. We are talking mainly about industrial/B2B, international, and food service; let’s share some examples, all based -same as the following chapter- on public information: · SPB (Suavizantes y Plásticos Bituminosos) is one of the main providers in home cleaning -completed with fabric and personal care-, and dedicates 90% of the production to its key account. Nevertheless, in 2013 the owners’ family decided to spin-off the subsidiary called Cleanity, specialised in industrial cleaning and hygiene, awarding it with a full autonomy to expand. · Prosol (Productos Solubles) supplies instant and portioned coffee and was born in 2001, with the exclusive mission of serving Mercadona. In recent years they have understood the need to go abroad, and have gained contracts in Portugal, France, Germany, Sweden, Denmark, Maghreb and Eastern Europe. This has reduced the dependence towards their main client, who accounted for 55% of sales in 2018. · Congalsa in a leading company in frozen appetizers and “tapas” based on seafood, producing Hacendado for Mercadona. This is complemented with a strong position in on-trade and food service, which are managed under the brand Ibercook, posting 31% sales penetration at 2018 closing. There is no doubt that these diversification initiatives will be boosted in the short term. For example, the on-trade market has a wide potential and interesting growth perspectives. Probably, the inter-suppliers willing to address it will attack the organised channel before overseeing the independents outlets, which require highly specialised route-to-market capabilities due to the tremendous atomization of the Spanish landscape. Alliances for international growth Most of Mercadona’s traditional suppliers are perfectly prepared at industrial level to attend the most demanding RFP’s coming from retailers, and for sure they will try to compete in these kind of processes at international scale. Nevertheless, this could be not enough to face the consolidation process that is spanning into the private label market at European level. The increasing sophistication and segmentation of consumer needs, jointly with food safety requirements which are becoming more and more demanding, are driving the need for developing stronger R&D resources. Economies of scale are also becoming a key success factor, as price keeps being a pre-requisite for retailers when they are purchasing their own brands. Companies who have passed through the “Mercadona school” can hold a first-class position into the concentration trend which has already started. This is also in the radar of private equity funds, who ambition to lead build-up processes at European level. Let’s see some cases: Bynsa Mascotas, who was born through a management buy-in in 2007, is the key supplier of dry food for dogs and cats. In July 2018 it was integrated into the Belgian company United Petfood, and together they form a Tier-1 private label conglomerate in a high-growth category. GAC (Grupo Alimentario Citrus), the preferred provider for prepared salads and vegetables, is growing through acquisitions: after buying two plants to Agrial group (the owner of Florette) in Switzerland and Italy, they have also invested in the German company Thürlander, another specialist in ready-to-eat solutions. Both operations reinforce their capacity to serve the key accounts with the adjusted lead times required by this kind of products. GAC has tripled its international revenue, which represented 27% of sales in 2018. In 2018 also, the family-owned company Ibersnacks joined forces with Europe Snacks and Kolak to lead the private label and third-party supply of snacks and chips in France, UK and Spain. The operation was led by Apax Partners, shareholder of Europe Snacks since 2013. Grupo Siro announced at the end of 2018 the integration of Cerealto, a former spin-off with shared family ownership, which had been segregated some years before to run the business out of Spain. The unified group is currently selling its pastries and bread industrial assets, in order to focus in three categories: biscuits, cereals and pasta. They ambition to convert into a key player in the B2B and private label market, working with a portfolio of 30 international customers. The most recent operation -at the moment in which we publish this article- has been led by the already mentioned Casa Tarradellas. They have surprised the market, being the company selected by Nestlé to sell their meat branch Herta, which will be managed through a 60-40 joint venture holding leadership positions in Spain, France, Germany, Belgium and UK. Conclusions The new “rules of the game” that Mercadona has established through diversifying its supply network, suddenly put under the focus 120 top-class private label companies. At a domestic level, this is triggering an intense commercial activity, thanks to the disclosure between two industrial ecosystems whose lives were running in parallel, with almost no interaction: Mercadona’s providers versus the “rest of the world”. This process is also impacting abroad the Spanish market, as the former inter-suppliers have numerous arguments to be key actors in the concentration process that the private label market is living in Europe. During the next months we will see new corporate M&A’s that will confirm the “revolution” that this sector, which is so important for the Spanish industry, is experiencing. See here for more: https://www.linkedin.com/pulse/mercadonas-revolution-private-label-jean-marie-benaroya/?trackingId=32INisXBqcMclFTl8rIgow%3D%3D

Discount Retail Chain Action (owned by PE 3i Group) wants to expand significantly this year and open about three hundred new stores. Only a handful of the stores are located in the Netherlands, the majority elsewhere in Europe, according to the annual report (pdf) of major shareholder 3i. Every year, Action opens between five and ten new stores in the Netherlands. A spokesperson says that this will also be the case this year. Furthermore, the company is mainly looking at remodeling, enlarging or renewing existing stores in our country, of which there are now around four hundred. The great growth must take place abroad. For example, the chain recently opened the 600th store in France and the 400th in Germany. In addition, Action has recently entered several new markets. For example, the chain opened five stores in the Czech Republic last year. The first results are so good that the chain will open new stores. In addition, the first two branches in Italy were opened as a test at the end of last month. According to 3i, Action was on track to meet the target of three hundred new stores in the first four months of this year. The retail chain is now also achieving good results because stores reopened after the lockdowns. Earlier it appeared that, despite the corona pandemic and temporary store closures, Action still managed to grow in 2020. The company saw revenues increase by 10 percent and profit (EBITDA) grew by 14 percent. See here for more: https://www.3i.com/media/4659/3i_group_ar_2020.pdf

Discount Retail Chain PENNY Romania (owned by the German REWE Group), ended last year with a turnover of 4.73 billion lei (US$ 1.2 billion), representing an advance of 19.44% compared to 2019, in the context in which the pandemic generated changes in the behavior of Romanian consumers, motivating them to turn to quality products at fair prices. The company registered a net profit of 85 million lei (US$21 million) in 2020, increasing by 54% compared to the previous year. PENNY Romania aims to invest 5.13 billion lei (US$1.26 billion), the equivalent of over 1 billion euros (US$1.2 billion), by 2029. In 2020, PENNY Romania invested 371 million lei (US$ 91million) in the modernization and expansion of the store network, continuing its expansion plans in a difficult context. Last year, the company opened 20 stores in the new PENNY format, ending the year with a total of 276 stores. The retailer ended 2020 with 100 stores in this new format, of which 80 were remodeled and 20 new openings. The new format emphasizes a modern and welcoming design, and the shopping session for customers is improved, due to the large area for fresh products, own brands to the taste of Romanians, but also due to more visible signage of promotions and main food categories. PENNY entered the Romanian market in 2005 with a procurement policy focused on assortments from regional producers and collaborations with local producers. Currently, PENNY supports local producers and concludes long-term partnerships with them, so that, in the next 3 years, 60% of the assortment will have the main ingredient manufactured and processed as an intermediate in Romania. Plans 2021 Regarding the future plans, PENNY Romania aims to invest 5,13 billion lei (US$1.26 billion), the equivalent of over 1 billion euros (US$1.2 billion), by 2029, mainly by expanding its network to a total of 619 stores and 6 logistics centers. This year, the company aims to open 25 stores in the country and build the fourth warehouse in Filiași, Dolj County. At the same time, PENNY Romania aims to remodel 100 stores in 2021 and the entire network of stores by 2022. Daniel Gross, CEO of PENNY Romania: "Last year was a real test for us. In the face of new challenges, we had to adapt quickly, be flexible, but also firm in our decisions and, above all, prioritize the safety and health of our employees and customers. More than ever, people have been at the forefront of our work in 2020, from ensuring hygiene and distancing conditions in our stores and maintaining open communication with employees, to community involvement and hospital support. The reported figures indicate that we have passed the test and also confirm that a sustainable business in Romania prioritizes the above. However, I emphasize that the results are the result of a huge effort by the PENNY team, which has joined forces. I sincerely thank them for the dedication, involvement and empathy of all colleagues!” The Triple RO objective PENNY proposed that by 2023, 60% of the PENNY assortment should not only have production in Romania, but also have the main ingredient of Romanian origin, as well as intermediate production to be made in Romania. Sustainability and CSR Over the past year, PENNY has continued partnerships with non-governmental organizations such as Habitat for Humanity, the World Vision Foundation Romania, Save the Children Romania, the Romanian Red Cross or the Food Bank and has entered into new partnerships, for example with the Goodbye Association. Social Solidarity and Adi Hădean Association Social responsibility actions aimed to support health professionals and hospitals, but also vulnerable communities and children in precarious situations. Among other things, the company inaugurated the Buftea community center, built next to Habitat for Humanity and open to children from disadvantaged backgrounds. The sustainability report of PENNY Romania for 2020 contains more information on three main topics: sustainable assortment; energy, climate and resources; employees and society. It is available in its entirety on www.sustenabilitate.penny.ro/. PENNY Romania PENNY is the successful concept of the German group REWE and one of the most active retailers in Romania, with the first store opened on the local market in 2005. The entire network is served by three logistics centers located in Ștefăneștii de Jos, Turda and Bacău. Currently, the PENNY network in Romania consists of 283 stores nationwide and a dedicated team of over 5,300 employees. See here for more: https://www.retail-fmcg.ro/retail/penny-rezultate-financiare-2020.html

Discount Retail Chain Tiendas Ara (owned by Jeronimo Martins) recently opened a new distribution center in Los Patios, Norte de Santander. Although the pandemic has had a strong impact on the national economy and on the consumption of Colombian households, as a result of the various closures and circulation restrictions, in this crisis, Jerónimo Martins Colombia, owner of Ara's stores, has seen the opportunity to reevaluate their expansion plans to reach different areas of the country. Based on this, according to the new CEO, Pedro Leandro, they plan to open more than 100 stores, to reach close to 800 by the end of 2021. “We continue with our firm commitment to Colombia and the interest to continue growing to reach new municipalities. Today we have a presence in 20 departments, which allows us to truly live the purpose of proximity and guarantee access to the best quality products at the best price for Colombians. By 2021 we will continue with our expansion strategy to new areas of the country,” said Leandro. That is why so far this year, Ara has already opened 26 stores, and has expanded the supply, in order to meet the growing demand, for which it has already completed 689 stores since its arrival in 2013. In addition, it expanded its logistics network with new stores in Cúcuta and Montería. On the other hand, in recent days the rumor about the purchase of discount chain Justo & Bueno also emerged, taking into account the reorganization process in which they are entering, however, to date, they have not commented on the possibilities of mergers or acquisitions, but in general, they are always looking for new options to consolidate in the market. Pedro Leandro, General Director of Jerónimo Martins Colombia, "The company has made an important effort to continue on the path of growth and expansion in Colombia to consolidate its presence in the country." Raúl ÁvilaEconomist expert, "The impact of Tiendas Ara has boosted the retail market, generating preferences in Colombian homes, which will allow it to continue expanding." “We believe that there is a great opportunity that is intact from a business point of view. We will continue to grow in the country,” said Ana Luisa Virginia, CFO of Jerónimo Martins. Likewise, after ending last year with a 24.4% growth in its sales, compared to 2019, for the first quarter of 2021, Ara managed to increase its revenues by 10.5% and reached $ 878,286 million. "Ara has quite wide supplier channels, competitive prices in the market, strategic locations throughout the national territory, with access points facilities, payment points and very good targeting of products that are satisfying the needs of customers. Colombian homes”, explained the economist and business expert, Raúl Ávila. In addition, the arrival of covid-19 prompted the generation of new services such as e-commerce and homes. It should be remembered that 95% of its products are made in Colombia and during the pandemic this figure has been maintained, spokesmen said. The challenges of the new Ara CEO On April 5, Jerónimo Martins announced the appointment of Pedro Leandro as its new general director in Colombia, replacing Nuno Aguiar, who was in charge of the local Ara operation since 2016. According to the company, among the challenges that he assumed is that of "continuing to position Ara as the ally of Colombian pantries and homes, ensuring proximity to customers." In addition to continuing with the purpose of democratizing access to "own brands, the best prices in the market and the generation of opportunities in the areas where we have a presence." See here for more: https://amp-larepublica-co.cdn.ampproject.org/c/s/amp.larepublica.co/empresas/ara-proyecta-superar-790-tiendas-con-mas-de-100-aperturas-que-realizara-en-este-ano-3169137

Discount Retail Chain Lidl Lithuania (owned by the German Schwarz Gruppe) had a successful entry into the market showing that it had not only opportunities to grow, but also to change consumer habits. Experts say about the role of this retail network in the country's economy today and how its launch in the country has changed the daily lives of shoppers, experts say on Lidl's fifth birthday. Although private brands were not necessarily associated with quality at a good price for Lithuanians in the past, when Lidl started its operations in Lithuania, customers' attitudes towards the brands of retail chains themselves changed. According to Petras Čepkauskas, the head of the food comparison platform Pricer.lt, one of the main features of Lidl's private label brands can be attributed to: functional variants. This can be called a kind of "architecture" of private labels. The specialist continues that in the past, in Lithuania, private brands mostly occupied niches of low-priced goods, and communication was almost non-existent. When Lidl started operating in Lithuania, it started to mention its private brands more often and use them in various sales promotion programs. And although there was a noticeable increase in communication on the issue of quantity, the context remained similar, it was mainly about goods at a lower price level,” says the head of food business at Pricer.lt. Provides customers with different consumption patterns According to the expert, although Lidl often emphasizes the high price-quality ratio of its private label products, it would be a mistake to assume that the retail chain only offers this to its customers. "It can be said that by effectively controlling its range and its presentation, Lidl is extremely fast responsive to customer needs. This is what this discount retail chain does not simply sell potatoes, bread, milk or groats, but by presenting a variety of consumption patterns that relate to customers’ income levels, seasons, functionality, lifestyle and new experiences. The emphasis on the price-quality ratio is only the initial relationship with the customer, but he later begins to evaluate not only these aspects, but also the entire Lidl ecosystem, its practical benefits,” says P. Čepkauskas. Transparency paves the way for an important role in the market Today's important position of the retail chain in the market is also confirmed by the fact that Lidl Lietuva has already become one of the largest taxpayers in Lithuania. STI data show that the company paid €93 mln. euro taxes, i.e. 19.2 percent. more than 2019 (€78 million). According to Rūta Skyrienė, Executive Director of the Investors' Forum, the ability to rise to the ninth place in the table of the largest taxpayers in five years shows that the retail network has purposefully expanded and the company's sales have grown: "Such results would not be possible without initiatives such as the White Wave, which brings together honest and responsible businesses. " During a pandemic, fair dealing is more significant The CEO of the Investors' Forum emphasizes that paying taxes helps businesses to create a positive image in the eyes of the public, and transparency of companies is especially important in the face of a pandemic. "Residents are increasingly concerned about the principles that companies follow in their activities. Responsible and honest activities not only allow us to show the public that business cares about the surrounding environment - at the same time, organizations also contribute to the well-being of the state. The importance of the largest taxpayers is growing even more today, when Lithuania is facing serious challenges, as the state can redistribute the amount paid for basic needs,” says R. Skyrienė.