Retail trade - What makes a good supermarket? What the Rewe boss says
Rewe-Chef Lionel Souque is cautiously optimistic about the economic development in Germany. The consumer mood has improved in his opinion lately. "Since inflation has decreased, people are buying more organic produce again. I believe this is because they can now afford higher-priced items," he told the German Press Agency (dpa). In the past year, when inflation was high, many people had cut back on these items. In the conversation with dpa, Souque also commented on other current topics. Overview:
What makes a good supermarket?
"The basics must be there, the products must be top fresh, there needs to be a diverse selection, the service must be good, the prices must be right, and cleanliness is important," says Souque. This requires as little waiting in line at the cash register as possible and friendly and competent employees. "That sounds simple. But achieving that every Monday through Saturday and from early morning to late evening in all markets in Germany is more challenging than one might think."
How do food prices develop?
The Rewe-Chef does not expect food prices to increase overall. However, price increases for individual products are possible. "You can't plan every harvest. In addition, there are price developments for raw materials on the world market, such as cocoa and orange juice, where raw material prices have recently risen significantly." Prices for other products have decreased. A reliable statement about how it will develop overall is therefore difficult. According to Souque, Rewe prices have not risen recently but have even decreased slightly.
How does Rewe react to the popularity of private labels?
Consumers have been reaching for the cheaper private labels of retailers more frequently during shopping in recent times. "Inflation has led many to start doing this. They have noticed that quality and price go hand in hand and now remain loyal to these products," says Souque. Rewe expanded its private label offering. "Our price-cutting brand 'Ja' has grown from 600 to over 1,200 items," says the Rewe-Chef. A typical Rewe market, according to the company, has around 15,000 items in its assortment, about one third of which are private labels. Their sales share has recently grown more than that of branded products, according to Souque.
Branded articles remain important for the supermarket chain to differentiate itself from discounters. The Rewe-Chef wishes for more creativity from the large food manufacturers. "Branded articles must offer added value. People are not willing to pay double just because of the brand. They expect the product to taste better, be healthier, or offer something new," he says. In his view, there is a lack of innovation spirit. Exciting new products often come from small companies or start-ups. "I'm looking forward to the big food conglomerates bringing a few interesting, new things to the market with their huge innovation centers. Customers will be pleased," says Souque.
Do people shop differently in Germany?
Souque was born in France. Does the consumption behavior there differ from here? "People in Germany are very price-sensitive, more so than in other countries. This is due to the fact that the German market is heavily influenced by discounts," he says. "Many Germans have no problem paying three euros for an espresso, but if the cheese costs ten cents more, it becomes a problem." According to Souque, things have changed in Germany in recent years. More and more people are interested in cooking and healthy eating, in the content of food and animal welfare. Many are also willing to spend more money on quality and sustainability.
How about the SB-cashiers?
SB-cashiers can be found in many supermarkets today, and Rewe plans to focus even more on self-checkout systems in the future. "By the end of the year, we want to increase the number of supermarkets equipped with these systems from around 1,000 to 1,800. Then, in almost half of our stores, there will be SB-cashiers. In the coming years, this will surely increase," Souque said. SB-cashiers are doing well and are used by about a quarter of customers.
The so-called self-checkout systems, which allow customers to scan their own items, have several advantages in Souque's view: "They save time. No one enjoys waiting in lines at the supermarket." Normal cashiers will still exist, but their number will be reduced. "It's not about eliminating jobs, but about giving our employees more time for the essentials: customer contact and shelf maintenance," Souque said.
What are Rewe's plans for its delivery service?
Rewe delivers households in 90 cities with groceries, making it the market leader in this area. Competitors like Picnic are expanding rapidly and putting pressure on the company. Souque can imagine expanding the delivery service if it is desired by customers. Making money with food delivery, however, is difficult. The employees would have to take on tasks that the customer usually performs, such as product selection in the market and transportation.
"For a delivery, you need a personnel deployment of over 30 minutes. However, the sales prices are the same as in the market," Souque said. The margin on food in Germany is relatively low anyway. This is also reflected in an overall low sales return of one to three percent. Why does Rewe offer the service despite this? We want to give customers the flexibility to shop as they prefer. "We are investing in customer relationships and image," Souque said.
- Lionel Souque, the Rewe-Chef, believes that the decrease in inflation has led German consumers to buy more organic produce and higher-priced items.
- Inflation in the past year had caused many consumers to cut back on organic produce and other higher-priced items, according to Souque.
- The German Press Agency (dpa) reported on Souque's optimistic view on the economic development in Germany and his comments on various topics, including food prices and supermarket fundamentals.
- In Souque's opinion, Rewe supermarkets should provide top-quality fresh products, a diverse selection, good service, competitive prices, and cleanliness.
- The Rewe-Chef does not expect overall food price increases but anticipates price increases for individual products due to unpredictable harvests and fluctuations in raw material prices on the world market.
- Souque expressed hope for more innovation from large food manufacturers, believing that branded articles must offer added value and not simply charge more due to brand recognition.
- Rewe has expanded its private label offering in response to the growing popularity of private labels among consumers, with its price-cutting brand 'Ja' growing from 600 to over 1,200 items.
