German Grocer Edeka is set to acquire Tengelmann's grocery operations with effect from 30 June 2015. The acquisition includes 451 Kaiser's supermarkets with sales of EUR1.8 billion in 2013. This is subject to approval by the Bundeskartellamt (Federal Cartel office). Edeka remains the market leader in Germany with over 45 Billion in sales.
Market concentration is particularly high in the supermarket channel, where Edeka and Rewe control over 80% of Supermarket sales. Unless smaller players successfully carve a niche for themselves, they will be gradually pushed out of the market as is the case with Tengelmann.
Tengelmann had identified a new concept as key to fighting known as black/red/gold’ store concept. The concept aimed specifically at differentiating itself from the competition by creating a friendly atmosphere and an attractive range of products. This also meant a focus on freshness, quality, shopping experience and service and customer orientation.
With the third biggest supermarket player being acquired, the supermarket channel will undergo further consolidation. Kantar Retail will expect key customers, including discounters, to continue to innovate as retail in Germany further converges to the centre of the market, making differentiation even more important.