Germany: home of the discounter; land of the no-frills retailer. But not everybody's like that. One hypermarket retailer is showing that you can offer shoppers value for money - matching Aldi's price on key KVIs - while clearly differentiating your offer by focusing heavily on customer service and fresh foods to create a successful retail format in one of the toughest markets in the world. And the retailer in question? Globus.
Not known to many in British grocery, this privately-owned company has 36 stores in the bottom half of Germany, sales of E3.5bn, is ranked number ten among the country's grocery retailers, has operations in the Czech Republic and plans to open in Moscow. For proof of how it stands out from a price-led crowd, visit its new concept store in Oggersheim, near the prosperous town of Ludwigshafen, south of Frankfurt.
Space in the 100,000 sq ft store, which opened in November, is split roughly 50:50 between food and non-food, the latter at the main entrance. Shoppers enter a 'promotion street' featuring low-level fixtures to create a sense of space and, importantly, to draw customers in to the non-food area.
An impressive start. Then there are high ceilings, clever spot lighting, garish corporate colours of orange and green, and bright photo-signs highlighting departments - all accentuate the store's funky ambience.
But the really neat tricks are in the fresh foods department. Whizz past the bakery (ten freshly baked rolls for E1 - beat that Aldi!), ignore the counter offering 40 types of fresh fish and the 22m-long cheese stall, through fresh and chilled with low-level refrigerators, and you are in what manager Dieter Reis calls "the heart of his store".
You can't miss the 36m-long, glass-fronted counter along the store's back wall with any type of red meat imaginable - it's like nothing you will have encountered before. What you may not realise is it is all supplied from the E2.5m plant at the back of the store, which, on a busy day, will take up to five French Charolais cattle and 50 Belgian pigs and turn them into 40 different types of sausages, chops, marinated steaks - you name it, Globus butchers do it, processing 200 tonnes of meat a month, with 100 tonnes used for the chain's award-winning sausages.
It's an amazing operation giving Globus an incredible USP. Sure, it carries significant overheads - the store employs 20 butchers alone and staff costs are twice the average - but managers say the margin upside from its fresh food sales is considerable. While vegetarians may be appalled, they are thin on the ground in Oggersheim where punters clearly love the variety of Fleisch and Wurst. Little wonder the store is a top ten performer for Globus, which plans to open a second later this year in Freilassing near Munich.
Roy Edleston, managing director of Food from Britain (Germany) and expert on the German market, is not surprised at the apparent success of the pilot store. He explains: "You have to be differentiated in a market where discounters have 40% share; the air is very thin and price is important. By being very customer-orientated, Globus has done well in terms of image and turnover."
Mind you, the mighty discounters are not having it all their own way in what remains a tough market. Figures from German food trade rag Lebensmittel Zeitung show Aldi's sales dipped 1.4% last year. A lacklustre performance from Germany's top discount brand despite signs a consumer recovery is underway after years of stagnation. It's fragile, but retailers hope next month's World Cup will provide a much-needed boost to sales.
"Every country gets retailers it deserves. In Germany discounters became destination shops and supermarkets and hypermarkets became the place you did a top-up shop. But the clever retailers now match Aldi on price and then offer more," says Edleston.
That's clever companies such as Globus, which has unveiled a truly unique concept in big box retailing.