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Italy Food and Drink Report Q1 2008Published by: Business Monitor International Published: Mar. 11, 2008 - 74 Pages Table of Contents
AbstractItaly’s fragile economy was predicted to register relatively strong growth of around 1.8% in 2007following similar levels of growth in 2006. By historical standards this is good news for Italy and this hasfed into consumer confidence leading to a rise in consumer spending. This, coupled with growingacceptance of the supermarket and hypermarket formats, has led to moderate expansion in the MGRsector. However with many retailers having had experience of previous false dawns when it comes to theItalian economy, and several still struggling to get to grips with enigmatic Italian consumers, the pace ofoutside investment remains moderate as retailers wait to see if this current economic recovery issustained.The Italian MGR sector is one of the most fragmented and least saturated in Western Europe and many ofthe leading brands exist as networks of smaller companies, including the two largest chains in Italy -Conad and Coop Italia. On the surface this would suggest there are opportunities for the big globalretailers to expand rapidly in the Italian market. However, complicated planning regulations that favoursmaller retail formats, plus the fact that nearly all Italian MGRs belong to a buying group, mean thatmarket entry is hard for retailers without a local partner. Peculiarities of the Italian market have alsomeant that foreign retailers have often found it hard to grow their revenues as they struggle to attractItalian consumers away from the retail brands and formats they are familiar with. For example, althoughconsumer spending has reportedly grown in Italy this year, this is not reflected in the revenues of Francebased retailer Carrefour, which operates 57 hypermarkets and 468 supermarkets in Italy. For the firstnine-months of 2007 Carrefour’s sales fell by 2% at its Italian stores. Carrefour has blamed this poorperformance on its network of Carrefour hypermarket stores that Italian consumers just don’t seem to findappealing and has outlined plans to dispose of some of the worst performing stores. However, French based retailer Auchan, operating in the supermarket and hypermarket sector, openedseven franchised hypermarkets in Italy in 2007, suggesting that its own hypermarket stores areperforming reasonably - highlighting the perplexing anomalies that exist in the Italian MGR sector. Thefact that some retailers are managing to make headway in this inscrutable market is highlighted by tworecent acquisitions of substantial size. In November Germany based Rewe acquired La Centrale LazioSpa, which operates eight supermarkets under the Mart banner in central Italy; in a separate developmentSPAR Austria acquired 62 Pellicano supermarkets owned by the Italian Lombardini family. This seconddevelopment in particular is of significant size, suggesting that SPAR Austria is having considerablesuccess with its current Italian operations. The Italian market continues to be mysterious and it is hard todifferentiate what makes certain stores perform and others not; however, the market remains temptingbecause of its lack of maturity and any retailer that strikes upon a format that is popular with Italianconsumers is very likely to reap significant rewards in the future. Get Full Details About This Report >> |
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