- After the Russian investor SCP bought the Real supermarket chain, now 88 Real stores go to Kaufland and 53 branches to Edeka.
- In addition to the branches, SCP also wants to get rid of the Real.de online shop quickly. In addition to Aldi, interested parties are also real competitors Kaufland.
- The rapid growth of online business during the Corona crisis should help to find a customer quickly.
Update May 14, 2020: Aldi and Kaufland are interested in Real.de
Not only the Real branches, but also the digital shop Real.de is to be sold. The metro recently made online sales of just under 600 million euros, with a marketplace volume of 1 billion euros expected for the current financial year. Business is booming, especially during the Corona crisis, the majority of which make up the marketplace business. The new owner SCP wants to use the upturn to sell the online shop as quickly as possible, as the “Lebensmittelzeitung” reports. The Russian investor is apparently aiming for sales proceeds in the three-digit million range.
The first prospective customers are said to already exist: in addition to Aldi, the Schwarz group (Kaufland, Lidl) is said to have signaled interest. With the exception of a few experiments abroad or with flopped grocery delivery services, both the discounter and Kaufland have not yet made a major entry into the online business. In addition to the two German trade heavyweights, the Chinese trade group Alibaba should also be interested. Regardless of who wins the contract in the end: the Real.de brand will probably not remain, but it will be much more interesting for the buyer to take over the logistics, administration and know-how of the employees.
With the takeover of Real.de, the Schwarz Group could push the weakening online shop of Kaufland. Amazon rival Alibaba, on the other hand, wants to grow more strongly in Europe with its AliExpress online shop. The Chinese are currently building a huge logistics center in the Belgian city of Liège, which is scheduled for completion in 2021. The takeover of Real.de could enable a quick and easy entry into the German market
Update May 3, 2020: Ministry of Economy sees no chance for small traders
The Federal Ministry of Economics sees little in the takeover drama surrounding the Real branches as an opportunity for small retailers. This emerges from an answer letter from the Federal Ministry of Economics to the Green politicians Renate Künast and Katharina Dröge. “From a competitive and competitive perspective, it may seem desirable for smaller competitors to buy as many branches as possible,” says the letter, which is available to NewsABC.net. However, the legal situation stipulates that the state can only intervene if competition is significantly affected by the merger. The cartel office should not reject the acquisition of Real branches by the retail giants Edeka or Kaufland on the grounds that a purchase by smaller rivals would be better for the competition, suppliers or employees. This was “also not desirable in terms of regulatory policy”. So far, the planned takeovers by Edeka and Kaufland have not yet been registered with the Federal Cartel Office.
The letter from the Federal Ministry of Economics was a response to a request from Renate Künast and Katharina Dröge. The Green politicians had previously warned in a letter to the Federal Minister of Economics Peter Altmaier (CDU) against a further concentration of market power in the trade, as NewsABC.net reported.
Edeka and Kaufland take over 141 branches
The investor consortium SCP and the real estate investors X-Bricks have completely taken over the 276 Real stores and their approximately 34,000 employees, but now want to break the chain.
As the “Handelsblatt” reports, investor SCP is now in agreement with its competitors Kaufland and Edeka: Kaufland wants to take over 88 stores, Edeka 53 branches. The branches are to be transferred to the new owners in the fourth quarter of 2020, and the parties have agreed not to disclose any financial details.
Patrick Kaudewitz, Chairman of the Board of Directors of SCP, said the takeover had created clarity and predictability for a large number of markets and their employees. However, the sales still have to be approved by the cartel office. The latter had already announced that it would closely examine the takeovers. The four major suppliers Aldi, Lidl, Edeka and the Schwarz Group (Lidl, Kaufland) control around 85 percent of the entire food retail sector.
In addition to the sales, Real has already set the course for the closure of 7 branches, as reported by the “Deutsche Presseagentur”. By the end of the year, the shops in Bamberg and Deggendorf, in Rhineland-Palatinate Bad Sobernheim and in Lower Saxony Papenburg getting closed. At the end of March 2021, the shops in augsburg and in Wildau near Berlin the branch in North Rhine-Westphalia will follow at the end of June 2021 Rheine. A total of 650 employees are affected. The closings are discussed with the future real owner.
In total, up to 30 particularly badly operating branches are to be closed completely, and a core of 50 real branches is to remain at least 24 months. Part of it is to be expanded into malls, in which fast food restaurants, bakeries or branches from Aldi are also moving.
Also read: Can Ikea, Toom and Co. save the pedestrian zones with unusual branches?
Economic drama around Real: Russian investor takes over branches, closings and layoffs threaten
The economic drama surrounding the takeover of the ailing supermarket chain Real was like an eve of soap: a constant back and forth and always new, sudden turning points in the negotiations. The deal is now sealed: the investor consortium SCP and X-Bricks and the parent company Metro have agreed on a 100 percent takeover, as both announced a few weeks ago. The supermarket chain is in danger of being broken up.
As the German Press Agency reports, the agreement provides for the sale of Real as a whole at an enterprise value of around one billion euros, according to a statement. Metro speaks of a net inflow of funds of around 300 million euros – around 200 million euros less than originally hoped – and continues to be more than 1.5 billion euros net inflows after all transaction costs from the sale of Real and the sale of a majority stake in the Chinese business. Meanwhile, the European Commission has approved the deal as expected, there are no competition concerns, as it says from Brussels.
According to “Dpa”, the Russian financial investor wants to replace the management of the supermarket chain immediately after the takeover has been completed. After the expected completion of the buying process in May or June, a new management team under the former Lidl manager Bojan Luncer will take over, SCP announced on Monday. In addition to Luncer, the new management trio will include transformation expert Michael Dorn and former Rewe manager Oliver Mans.
What happens now?
What exactly happens to the other branches and whether the other Real employees can keep their jobs will probably remain unclear for some time to come. “The new operators are obliged to take over the Real employees on the respective area,” Koch promised in his letter. However, the Real works council is concerned that many jobs will be cut. The general works council chair, Werner Klockhaus, recently told the Süddeutsche Zeitung that he was expecting a loss of 10,000 jobs. Metro boss Olaf Koch had previously rejected this number. According to Koch, where there will be redundancies, an existing company agreement should alleviate social hardship. It provides for severance payments of 12 to 14 monthly salaries.
Metro has long been a real burden
Really has not been going well for a long time. The parent company Metro has been looking for a buyer for the Düsseldorf supermarket chain since September 2018.
Because the grocery store on the large area is becoming obsolete. The downward trend is underpinned by poor numbers: Real’s sales had dropped again at the end of 2019 – by 1.6 percent to 6.9 billion euros. Ten years ago, Real had sales of just under EUR 8.8 billion in Germany. The business hardly pays off for Metro: Real is burdening the group with an operating loss (Ebitda) of 154 million euros.
The large-scale food trade is hardly worth it anymore
Real’s development is exemplary for all large retailers in Germany. Experts from the management consultancy Oliver Wyman have analyzed the market for the “Handelsblatt”. The conclusion is sobering: branch closings, lost sales, restructuring. Large-scale food retailers such as Real will find it particularly difficult. The consultants predict that the number of hypermarkets will decrease by fifteen percent by 2025 from the current 1,300 to 1,100.
Read also: Smart mirrors, intelligent assistants and 3D-capable smartphones: this is how we will shop in 2030
The industry seems to have closed its eyes to this development for a long time. Rainer Münch, trade expert at Oliver Wyman, told the “Handelsblatt”: “What used to be the success of the large area is now also offered by the supermarkets: A wide range with a wide range of fresh goods and exciting price promotions.” Grocery stores have had an increasing share of the market for supermarket operators such as Rewe and Edeka, but also for discounters such as Aldi and Lidl.
Kaufland also has a hard time
The extent to which the hypermarket business model is under pressure also shows that even the market leaders are not doing well. Kaufland grew by only 1.2 percent this year. The “Handelsblatt” writes that it is an open secret that the company made a loss in 2019. For comparison: Rewe’s sales rose by nine percent in the same period.
The business model of the large-area operators cannot be saved solely by reducing the location, according to the consultant Münch to the “Handelsblatt”. Because the closure of a branch is often more expensive than continuing it for years. Instead, the staging of the space and the offer is more important. The Oliver Wyman study recommends, among other things, using modern data analysis to control the markets more efficiently and thereby adapt the markets to local demand.
8 supermarkets and shops from your childhood that no longer exist today
8 supermarkets and shops from your childhood that no longer exist today
Minimal was operated by Rewe in Germany until 2006. As part of a restructuring, from September 25, 2006 all supermarkets that previously belonged to Rewe – including Minimal – were converted to the uniform Rewe sales brand.
Okfm / wikimedia commons, licensed under the GFDL
The HL stores, which no longer exist today, have been part of the Rewe Group since 1989. As part of the corporate restructuring, the HL stores also became Rewe stores in 2006.
Fohrmann1992 / Wikimedia Commons
Despite the similarity in name, Co op has nothing to do with the Swiss supermarket chain. The company was smashed in 1989 after a scandal involving manipulation of the balance sheet and asset shifts, which the “Spiegel” reported in 1989. Part of Co op later merged into Edeka Nord.
The Massa stores founded by Karl-Heinz Kipp are now operated by Metro AG. However, according to “Manager Magazin”, Kipp received guaranteed rental income of 50 million euros per year for the former Massa properties until 2015. However, the Massa stores were already integrated into Real’s sales network in 1994 and 1995.
LADO / Shutterstock
Schlecker filed for bankruptcy in early 2012 due to insolvency. All branches were closed by mid-2012.
As a result, the Stuttgart public prosecutor initiated proceedings in July 2012 against founder Anton Schlecker and 13 other people on suspicion of infidelity, bankruptcy and bankruptcy. Anton Schlecker was found guilty of deliberate bankruptcy in 2017 and sentenced to two years’ suspended probation and a fine of 54,000 euros.
His children, Lars and Meike Schlecker were found guilty of, among other things, bankruptcy, fraud and infidelity. However, both filed an appeal the next day.
Sean Gallup / Getty
Kaiser’s Tengelmann was sold to Edeka at the beginning of 2017, which in turn sold 64 branches to Rewe. Today Edeka operates large former branches under its own brand, small ones as a net brand discount.
Rewe announced that it would operate the acquired Kaiser’s branches under its own brand. However, the conversion measures proved to be a challenge for Rewe. In mid-January 2019 there are still nine Kaiser’s branches in North Rhine-Westphalia and Rhineland-Palatinate.