2012 was an excellent year for German retail multinational REWE, much to the delight of CEO Alain Caparros - especially after a weak 2011. Discounter Penny still remains a liability, which is why the chain will start rebranding its stores.
‘2012 was a great success’
The Rewe Group saw its sales rise by 2.7 percent to 49.7 billion euro. In Germany sales grew by 2.4 percent, in the twelve foreign markets the sales of Rewe rose by 3.6 percent. According to Caparros, 2012 was one of the most successful years ever for Rewe supermarkets in Germany. He believes that the positive effects of the restructuring of Penny are clearly showing in Germany.
Last year Rewe had to admit that Penny Discount was losing money. This was a big concern to Rewe-franchisers, who feared they would be financing an ailing discount company over the next few years. At the beginning of 2012 Caparros could only promise improvement and wave around with an investment of millions of euros.
Just a year later he can boast a rise in sales of 1.7 percent to 6.8 billion euro for the 2241 Penny Discount stores in Germany. Identical growth was 3.5 percent, higher than the average identical growth in German food retail (2.9 percent).
New locations, private labels and marketing
Abroad Penny is performing even better: in Austria, Switzerland, Bulgaria, Romania, Czech Republic and Hungary Rewe has a total of 1320 Penny Discount stores, which all together saw a rise of 6.2 percent in sales to 3.9 billion euro.
The investment of millions, granted by Caparros a year ago, were spent on a new store concept for Penny in Germany, a new private label and an intensified marketing campaign. Penny is however still leaking money: German magazine Lebensmittel Zeitung believes Penny will start making a profit again in Germany in 2015.
2013: investment budget of 1.5 billion euro
The franchise holders in Germany for the second year in a row had a double-figured sales growth. In difficult conditions their sales grew 10.2 percent when compared to 2011. Caparros stated that these franchises were not only the biggest growers within the supermarket department of Rewe, but also for the whole of the company.
It is no coincidence Caparros complimented these people, because they will have to have two more years of patience with the wobbly Penny-operation in Germany. With these yearly results Caparros is at least sitting more comfortably than a year ago. Furthermore he is continuing to invest: Rewe is reserving a budget of 1.5 billion euro for modernising its stores, many of them named Penny.