- REWE GroupPressPress ReleasesREWE Group Invests 130 Million Euros in the Czech Republic
REWE Group Invests 130 Million Euros in the Czech Republic
Prague, 19.04.06
Nationwide expansion with Penny and Billa
“Investments of around 30 million euros are planned for the current year alone. The nationwide chain of stores will be expanded by 16 new outlets – eleven Penny stores and five Billa supermarkets. Other focal points for our investments are logistics and process chains. The aim is to use modern systems across all levels – from goods procurement to the service counters within the stores – to increase the competitive capabilities of the store locations even more”, said Alain Caparros, COO and Management Board Member in charge of international businesses for REWE Group, on Wednesday (April 19) at a press conference in Prague. The Czech Republic was a very interesting, and thus a very hard-fought, market.
The top five firms on the Czech market are all sales lines of international conglomerates. Yet these five still hold less than a 50-per-cent share of the market for institutionalised food trading. “Market concentration is unavoidable in light of this particularly low share in comparison to rates of up to 95 per cent elsewhere in Europe. As the number three in European trading, REWE Group is well positioned when it comes to attracting customers”, Caparros said.
Over 90 million euros will be spent to expand the position of Billa stores in coming years. Around 40 million will be invested in expanding the position of Penny, the market leader in the sales floor area segment from 700 to 1000 square metres.
“The Czech Republic plays a very substantial role in our internationalisation strategy due to its central location alone. REWE Group will increase the share of international turnover in its total turnover from 32 to 50 per cent. Our efforts on the Czech market will put even more force behind this general development”, Alain Caparros announced.
Penny sees itself as a Czech discounter
Since entering the market in 1997, Penny has strived to develop into the market leader in the Czech discount store segment. The main reason for its success has been its mixture of goods aimed at satisfying the needs of Czech customers: the Penny product range of 1250 items is composed of 350 private-label and 800 brand-name products as well as leading industry brands. The majority of the foods sold are Czech products purchased within the country. “Penny sees itself as a Czech discounter, and not as a sales point for goods imported from Poland, for instance. This appeals directly to our customers’ tastes”, said Klaus Schneider, Country Manager for Penny. The strong identification with the country was directly reflected in the 2,500 employees who were all from the Czech Republic.
Projections indicate that the share of discount stores in Czech food trading will increase by five or ten per cent to 25 per cent within the next five years. Despite this increase, competition will intensify. In response, Penny aims to attain a leading position not only in product assortment and pricing, but also in the areas of logistics and cost management. Today, Penny already has two modern warehouse locations with a total of 40,000 square metres of storage in Jirny and Lipník to optimise transport costs.
A little more for (and from) Billa
REWE Group has operated supermarkets in the Czech Republic under the internationally successful “Billa” brand since 1991. The store base now includes 77 locations with a total workforce of 2,243. The highest density of REWE Group’s stores is in Bohemia (41 locations), followed by Moravia (26) and Moravian Silesia (10). Five new stores will be added to these over the course of this year.
“Quality and sustainability-oriented growth form the centrepiece. Expansion is neither an end in itself nor is it a struggle to achieve the highest possible numbers. Our aim is to establish a sales network with a strong performance, one that is made up of future-ready and customer-friendly outlets. We will modernise the locations that no longer live up to our standards in terms of their product depth, breadth and presentation”, announced Billa Country Manager Jaroslaw Szczypka in Prague. Billa attaches strategic significance to its product range. The stores offer products at discount prices as well as high-priced industry brand products. With a double-digit rate of turnover growth, categories such as fruits and vegetables, meats and gourmet cuisine were evolving into image-enhancing icons for the Billa-brand supermarkets. Billa was also arranging over 700 training courses a year to train its employees in the finer points of issues such as customer orientation and quality management. Billa was also making efforts to optimise its logistics chains and processes.
Billa’s management sees great potential for opening new stores in small and medium-sized cities. The stores in such locations were developing well; shopping frequency and turnover were on the rise. Management was also exploring ways to increase such potential so as to occupy this niche market systematically and decisively.
REWE Group: The Number Three in Europe
With a total turnover of 41.7 billion euros, 260,594 employees and 11,804 stores in Germany and 13 other European countries, REWE Group is the number three in European trading. REWE Group earns more than 32 per cent of its turnover on international markets. With its Billa supermarket format, its Penny-brand discount stores, its massive XXL discounter and its cash-and-carry wholesaler Selgros, REWE Group managed to increase its turnover by more than 15 per cent to three billion euros in 2005 in Bulgaria, Hungary, Poland, the Czech Republic, Slovakia, Russia, Romania and the Ukraine.
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