German retail group Rewe exceeded expectations last year, with the supermarket segment more than compensating for the poorer performance of their travel agency and DIY chains, which were still suffering from the coronapandemic.
Food closes the gap
Fortunately for Rewe, the group was able to build on its food retail business, which in some cases even exceeded the record sales of 2020. They were thus able to compensate for the company’s travel and tourism division, which again suffered badly, and for DIY sales, which were hampered by the lockdown at the beginning of 2021.
Total sales increased by 2.5 % to 76.5 billion euros: independent retailers in the German home market accounted for 4.8 % more sales, even after the extraordinary sales increase of 20.5 % in 2020. CEO Lionel Souque was particularly impressed by the performance of the Lekkerland convenience format, whose sales increased by 4.4 % to 13.7 billion euros.
Good Russian timing
The German supermarkets performed fairly stable (+ 0.9 %), while the DIY shops lost 11.4 % turnover compared to the – very strong – previous year. The group’s tourism branch, DER Touristik, managed to halve losses and regained 40 % of its pre-corona 2019 sales. A stroke of luck for Rewe was that it had already sold its Russian Billa shops last year, so the group was out of that market even before the war broke out.
Last year, Rewe invested 2.3 billion euros in the modernisation of the company, working on new business models and digitisation. For example, the group took a stake in flash delivery company Flink, opened its first Rewe Pick&Go shop and launched a new market hall concept for Penny. For the current year, Rewe is planning an equally large investment. The group’s operating income rose slightly from 4.3 billion, euros to 4.4 billion.
Repeated negotiations
This year, the group sees its margins melting as rising prices cannot be fully passed on to consumers. Fortunately, Rewe earned well last year, Souque told German website LebensmittelPraxis.
The days of annual supplier negotiations are definitely over: nowadays, negotiations need to be repeated far more often, Rewe thinks. The group says it is taking the manufacturers’ problems “very seriously”.
