Marcel Haraszti, head of the Rewe Group (Billa, Penny, Adeg etc.) now expects good Christmas business, but in general customers are very frugal this year. “Many more people are buying at entry-level prices. The share of action is increasing.”
In concrete terms, an average of 38 percent of Billa’s goods are sold at a discount and at Billa Plus this is even 44 percent, according to the trade manager. “And the share of our own brands is already 33 percent, compared to only 22 percent ten years ago. We already have 900 products in the entry-level price range under the smart brand.” This trend also applies to other food retailers.
‘We are actually inflation dampers’
After four years of crisis with corona, inflation, explosion in energy prices, etc., consumption is not picking up and people only treat themselves to something good during the holidays, says Haraszti. This would overestimate food prices. In October, prices at Rewe supermarkets only rose by an average of 0.8 percentage points, “we are actually inflation dampers”.
At the same time, the cost pressure for energy and wages is enormous. This year you will pay around 90 million euros for electricity alone, compared to only 58 million in 2020. Last year’s wage increase of 8.43 percent means additional cost pressure, which alone means additional costs of another 100 million euros for the Billa Group with more than 47,000 employees (of which 2,000 students). Efficiency is therefore improved, for example by abandoning unprofitable locations.
New branches are usually larger
At the same time, existing and new branches tend to become larger. “We have expanded the surface area per store from an average of 770 to 821 square meters.” For cost reasons, home delivery for online purchases was also reduced to the Vienna region. In some other cities, such as Linz, Innsbruck and Salzburg, the foodora delivery service is taking over deliveries to customers.
The Rewe Group would invest a total of 520 million euros this year, in addition to the branches and in 1,450 vending machines because of the upcoming bottle deposit. Haraszti would also like to set up self-service boxes in the 580 municipalities across Austria without local suppliers that are operated without staff.
Many mayors are also very interested in this, but to be economically viable, store opening hours would have to be extended by law. Currently, these locations are only allowed to open 72 hours a week, Rewe boss Haraszti criticizes. In general, however, he would also like to see an extension to 78 hours for the branches. “Otherwise we should not complain that turnover is lost to online retailers, while it is more convenient for customers there,” the top manager urges the future government to liberalize.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
