Real could disappear from the market
The Real self-service department store chain has been up for sale for months. Now the retail giant Kaufland has announced its interest. The giant wants to take over several of the 287 stores in Germany.
The Real self-service department store chain has been up for sale for months. Now the retail giant Kaufland has announced its interest. The giant wants to take over several of the 287 stores in Germany.
The newspaper “Lebensmittel Zeitung” reported that Kaufland wanted to take over 100 branches of Real. Kaufland did not give a statement after inquiry of CHIP online.
Real struggles with falling revenues
The EHI Retail Institute determined the net sales of the last years based on press releases, sales reports and quarterly reports. While net sales of 2.6 billion euros were achieved in the first quarter of 2013, they fell to 1.7 billion euros in the quarter of 2017.
Branch penetration also declined. In 2000, Real’s total selling space was 2.6 million square meters, by 2011 it had already reached 3.1 million square meters. However, shortly after reaching this record level, the total selling space declined since 2012. In 2018 it was only 1.9 million square meters.
Transformation of Real branches into Kaufland
Kaufland wants to promote its own growth with new branches. However, since a building permit for new stores can stretch over several years, the company has to make compromises, such as taking over the competition.
Industry experts explained in the discussion with CHIP Online that Kaufland wanted to analyze first of all the conversions of the branches with the help of consulting firms. Over a time window there is no information: “That is too speculative and can be answered only heavily”.
Nevertheless, three trade experts said that the Real markets, which have sales and development potential, are converted into Kaufland stores. “This is particularly the case when there are good transport connections and manageable competitive pressure.” However, the renaming of the branches takes time: “As a rule, rebuilding processes take many years”.
Real could disappear from the market
According to a trade expert, the Real brand will soon disappear from the market. ” But no one can say until when.” In 2016, the Metro Group had also planned to rename the Real stores and to plan a more intensive shopping experience in the stores. In the long term, sales aimed to increase, but this was unsuccessful.
Consequences for consumers
By taking over Kaufland, more favorable conditions could be enforced with the manufacturers. Kaufland is generating additional growth of around two billion euros and thus has a strong position in the entire retail sector. This could benefit consumers in terms of prices and assortment, as food could become cheaper.
In general, food prices are currently falling, and this could intensify in 2019. For example, Aldi reduced numerous food products and its own brands. Lidl reduced prices for XXL products. In addition, Real and Edeka are starting the new year with discounts in their food segment.
However, since Kaufland only takes over a small number of stores, those with low sales are particularly threatened with closure. This has a particularly negative effect on employees but also on customers, who have fewer shopping opportunities in the affected areas. Regional dealers who supply Real also have to fear a loss of orders.