- REWE GroupPressPress ReleasesREWE Group Defines its Strategic Objectives in an Eight-Point Programme
REWE Group Defines its Strategic Objectives in an Eight-Point Programme
Cologne, 23.01.06
Core businesses of food trading and tourism – more internationalisation
"The new REWE Group umbrella brand unifies tradition with our future aims and reflects our national and international strategic objectives. REWE remains a component of the name. This is our clear acknowledgement of our co-operative roots and values. Finally, the new logo succinctly stands for our core businesses, with red standing for food trading and yellow for tourism", Dr. Achim Egner, REWE Group CEO, said in explaining the intentions behind the new umbrella brand logo at a press conference on Monday (23 January) at REWE Group's Head Office in Cologne. The "basket ribbon", developed in 1971 by Professor Stankowski, had witnessed the development of REWE Group into an international firm. With a turnover in excess of 40 billion euros, a workforce of 265,000 and activities in 14 countries, REWE Group now ranks as the second-largest German, third-largest European and sixth-largest global food trading company. The "REWE" sales brand, whose logo had represented all the firms in REWE Group, has played a major role in helping the firm achieve this leading position. Yet today the firm encompassed 14 strategic business units in the fields of discount stores, international full-range stores, domestic full-range stores, specialist stores, bulk customer service as well as travel and tourism. "This move to put all of our – increasingly international – businesses under a common name and a common logo was long overdue", Dr. Egner pointed out.
In the past several months, the Management Board at REWE Group had advanced the modernisation of the firm, breaking the effort down into improving the structures and processes of purchasing and marketing and into optimising the logistics. The final results were spelled out in the eight-point programme.
According to the programme, REWE Group is to pursue a clear brand strategy that concentrates the full-range stores in Germany under a strong, uniform national brand and that clearly positions the "Penny" discount store brand on the market. The programme calls for an international brand architecture: strengthening the marketing brand entails an expansion of the private-label brands. These are currently only at around 15 per cent among the supermarkets and hypermarkets. The stated aim is to increase this share up to around 40 per cent.
Other components of this future programme are the REWE structural reforms. These will streamline and rescale the sales regions in Germany. They will also create clear chains of command and optimise internal services for the purpose of increasing efficiency for the strategic business units. In sales, there will be one category management unit to bear responsibility for designing and developing the product range for each business unit. The advantage of this structure lies in improving proximity to customers and in speeding up decision-making.
"REWE Group will of course continue to have a strong central purchasing department in the future. The purchasing department will continue to combine the procurement of goods and serve as the point of contact for suppliers", Dr. Achim Egner emphasised. This would also involve making the structures of central purchasing simpler, more efficient and more transparent. Rather than four departments as in the past, REWE-Zentrale has now had three purchasing categories since the beginning of the year: Food 1 (dry goods and "near food"), Food 2 (fresh goods) and Nonfood. In addition, there is also one person in charge of internationalisation for purchasing.
All supermarkets in Germany will share the "REWE" brand in the future
In the second half of 2006, the full-range stores, such as REWE and miniMAL, will be operated under the "REWE" brand so as to combine performance strengths and to continue bolstering the brand through shared activities and advertising. "At first we will merge 2,500 stores with 800 to 3,000 square metres of floor area. The intent here is not to homogenise the two types of stores, but to combine the advantages of their systems under the future brand REWE.
"We will advertise successful core product ranges while promoting the flexibility of our independent retailers with modular solutions", explained Josef Sanktjohanser – Management Board member in charge of wholesale, domestic full-range stores of the independent retailers/chain stores and large-scale stores as well as other areas – in describing the central idea behind combining store brands. National advertising campaigns in print and television would lend the "REWE" brand a very different penetration and awareness. It would also save tens of millions in costs.
The REWE structural reforms – which also reduce the number of regions from nine to six – will result in additional cost savings, especially by reducing structural and logistical redundancies in the sales districts of REWE and miniMAL. With a total sales district area of around 300,000 square kilometres, the two brands were duplicated over an area of around 165,000 square kilometres – an area nearly half the size of Germany. "These overlapping districts have cost time and money. In the most literal sense of the expression: the money was lying on the street", emphasised Sanktjohanser.
International success for the supermarkets and the Penny discount chain
The supermarket and hypermarket businesses will also continue to be strengthened throughout Europe. REWE Group is active in Austria, Italy, Poland, Croatia, Bulgaria, Romania, the Ukraine, Slovakia, the Czech Republic and Russia under its Billa, Merkur, Standa, miniMAL and XXL store brands. "We will primarily streamline and reorganise our chain store networks in those countries where we already have a presence. We will focus on expansion in Eastern Europe in particular, also in Russia. To the extent this has not yet been achieved, REWE Group is aiming for a position at least among the top three relevant competitors in each country. We will take action wherever this is not attainable", said Alain Caparros, Management Board member responsible for international business, including REWE Group Austria/Eurobilla, domestic and international discount stores as well as the domestic and international commercial wholesale customer business for REWE Group. To achieve these goals, REWE Group will apply a consistent brand strategy for each sales line. Responsibility for operative business under the REWE Group umbrella will fall on the strategic business units and their country managers in each nation. Purchasing and marketing are to be oriented internationally. The second main sales format at REWE Group is the Penny discount store chain, which is the market leader in countries such as Hungary and the Czech Republic. The focus of investments will be on Italy, Romania and Bulgaria.
This year will witness the opening of 100 to 150 new Penny locations on the German home market. "Of greater importance than the expansion figures is the turnover at each store: we are well ahead of our direct competitors on this point", said Caparros explaining the moderate numbers of new store openings compared with the rest of the industry. Caparros felt the expansion of private labels to be more important. Around 55 per cent of the products are presently not major brands. The aim would be to increase this figure in the premium segment as well for the sake of optimising yields and brand profile.
Travel and Tourism as the second core business for REWE Group
The second core business for REWE Group is travel and tourism, which encompasses the strategic business units of package tours, building-block tours and travel sales. "REWE Travel and Tourism is certainly a solid component of the REWE Group umbrella brand, but it will continue to operate with six strong and independent tour operator brands", said Norbert Fiebig, Management Board member in charge of the Travel and Tourism division. With the brands ITS, Dertour, Jahn-Reisen, ADAC-Reisen, Meier's Weltreisen and Tjaereborg, REWE Group is the third-largest travel and tourism company in Germany.
REWE Travel and Tourism will continue to secure and expand its leadership in the building block tour business as a specialist for long-haul travel and individualised trips as well as for specific countries and themes. The division also aims to be the price leader for comparable product groups and types of travel. "We will continue optimising our costs while adhering to clearly defined quality standards", Fiebig announced. In the “package tour business”, the offers and prices would be made even more flexible in future. Building block packages would be set up in package tour destinations in order to attract new customer groups and to offer existing customers additional variety. Furthermore, the risk-free franchising approach would also be promoted among hotels.
The focus of the multi-channel marketing strategy among the building block tour operators will continue to lie on travel agencies. In parallel, the opportunities afforded by direct marketing via the internet will be systematically exploited and expanded. The premise here is that there should be equal chances for the different sales channels which is ensured by offering the same sales prices. In addition, REWE Travel and Tourism will increasingly gain in profile as a marketing and fulfilment partner as well as a content supplier for travel and tourism services.
A progressive optimisation of the travel agencies chain network is given particular priority. Despite considerable success, the REWE Management Board still feels there is room for improvement here. The process of renovating and refurbishing existing travel agencies is the second item on the agenda for the next few years. In the business travel market, REWE Group aims to increase the international accounts, to improve the IT tools for creating tailored travel services and to increase general service quality.
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