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Europe Grocery Report 2018

Europe Grocery Report 2018

The EU 28’s grocery markets are a €1.0trillion sector, a barrier that was broken for the first time in 2015.

Despite decades of EU integration, national grocery markets remain quite different from each other. But there are strong commonalities too – one is the rise of German hard discount.

The discounters will become the biggest retailers by sales in the EU. Schwarz Gruppe, Lidl’s parent, is already the number 1 in the EU. Total turnover including Kaufland reached €96.9bn (+7.4%) in 2017 (YE Feb 2018). For comparison, Carrefour 2017 sales stood at €88.2bn (EU and ROW), with the retailer struggling for growth. Aldi sales were not far behind.

To understand what’s in store in other markets one should look to their domestic market. And currently there is nothing short of a revolution going on at Aldi in Germany.

After years of Lidl’s growth outperforming the sector, the discounter has run out of steam and radical change is afoot. Once again Lidl acts as a trailblazer innovating in the supply chain, logistics and store design, but now against a backdrop of Aldi flying high.

As all major players have pledged record investment levels into their store estate and digital transformation, German grocery looks likely to become a beacon for store design and in store as well as store format innovation for years to come.

With €186bn in sales France has become the biggest grocery market in the EU. 2017 saw significant changes in the sector with E.Leclerc becoming the biggest grocer and toppling Carrefour of its perch.

Regarding online, the drive boom is now over, due to legislation and saturation, so that the rate of openings has significantly slowed. Moreover there is a shopper behaviour shift towards ultra fast deliveries (hence the Ocado/Monoprix or Amazon/Casino deal) and most of the big players are pushing innovative partnerships with logistics start ups to speed up same day deliveries.

In the UK consumer spending is under enormous pressure. Prices are rising, wage growth is flat and interest rates are on the up. At the same time, retailers face increasing cost pressures from online, rate rises, minimum wage rises and input cost inflation.

The structure of the market is changing, with both Tesco buying into wholesale (Booker) and Sainsbury’s into non food (Argos) and … the competition (Asda).

Looking ahead, Aldi and Lidl could more than double their market share to as much as a quarter of the market over the next 3-5 years. If it comes to a no deal Brexit then the damage to the sector would be immense. The big 4, Tesco, Sainsbury, Asda and Morrisons would suffer for years to come.

In a clear sign that the crisis in Spain is now well and truly over, Mercadona is ramping up the SKU counts in stores again (easily done as it controls its inter providores suppliers) and investing heavily in brighter new store outlets (as well as online) – as Spanish shoppers have finally more disposable income to spend again. The move to downscale in 2007/8 and speedy reaction to changed realities on the ground is credited with the retailer gaining market leadership in the country.

While negotiating its transition after the death of its founder, Italy’s Esselunga remained the most efficient grocer in all of the EU in 2016 with over €16,000 of sales per square meter. To put this figure in context, market leader Coop reported sales of €6,700 per square meter – or almost €10k less. Looking ahead, the market will be shaken up by the entry of Aldi and the investment pledged by Lidl.


Executive summary
Millennial shopper
Millennial shopper: an introduction
Millennial shopper: (1) Green, health & wellness
Millennial shopper: (2) Craft/artisanal
Millennial shopper: (3) Digitalisation, social media, voice
Millennial shopper: (4) Urbanisation challenges
The future of Grocery Retail
Grocery retail: Five theses for the future of retail
Grocery retail: (1) the age of store based foreign expansion is over – unless you’re a discounter
Grocery retail: (2) Discounters will become the biggest EU retailers by sales
Grocery retail: (3) Vertical integration in grocery retailing will continue
Grocery retail: (4) Winning strategies: convenience, fresh and foodservice
Grocery retail: (5) digitalisation and innovation logistics, loyalty and in store
The future of FMCG
FMCG: (1) Ingredients splitting three ways
FMCG: (2) all growth from small scale start ups
FMCG: (3) almost all innovation from small scale start ups
FMCG: (4) cost cutting & M&A, (5) Silicon Valley
FMCG: a new golden age for CPG? Not likely for the small players
GDP & Population, EU 28
GDP: EU28 2014, 2015, 2016 in €, ranked by size
GDP & Population: analysis and explanation
GDP: EU28 2016 in €, ranked by size, Germany – Finland
GDP: EU28 2016 in €, ranked by size, Portugal - Malta
Population: EU28 2017, ranked by size
GDP: EU28 2016, in €, per capita, ranked by size, Luxembourg – Spain
GDP: EU28 2016, in €, per capita, ranked by size, Malta - Bulgaria
EU28 Retail, On a rebound
Retail: EU28 2014, 2015, 2016, in €, ranked by size
Retail: EU28 2016, in €, ranked by size, France – Finland
Retail: EU28 2016 in €, ranked by size, Greece - Malta
Retail sizes: analysis and explanation
Retail: % share of GDP, EU28 2016, ranked by size
Retail: EU28 2016, in €, per capita, ranked by size, Luxembourg – Cyprus
Retail: EU28 2016, in €, per capita, ranked by size, Spain – Romania
Grocery Retail, Defensive sector in transformation
Grocery Retail: EU28 2015, 2016, 2017, in €, ranked by size
Grocery Retail: EU28 2017, in €, ranked by size, France - Denmark
Grocery Retail: EU28 2017, in €, ranked by size, Finland - Malta
Grocery Retail sizes: analysis and explanation
Grocery Retail: % share of Retail, EU28 2016, ranked by size
Grocery Retail: EU28 2017, in €, per capita, ranked by size, Sweden - Estonia
Grocery Retail: EU28 2017, in €, per capita, ranked by size, Greece – Romania
EU28 Retail, Growth
Grocery Retail: EU28 2012 - 2017, in €bn
Grocery Retail: EU28 2013 - 2017, in y-o-y %
Grocery Retail: EU28 2012 - 2017, 5 year growth rate in %, ranked
Grocery Retail Growth: analysis and explanation
Country profiles: France – the EU’s biggest grocery market
Executive summary: France
Market shares and profiles, the leading players
France Grocery Retail: shares, in %, ranked by size, E.Leclerc – Aldi
France: E.Leclerc winning number one spot, Carrefour multichannel transformation
France: E.Leclerc store format pictures, drive pieton, drive, express
France: Carrefour job losses to come, Intermarché operates most drives
France: Carrefour reflets de France, Carrefour BIO, store formats pictures
France: Casino the multichannel champion, the Cdiscount master stroke
France: Casino Cdiscount non food cooperation in store, execution pictures
France: Auchan, still the hypermarket operator with the highest sales density
France: Auchan Velizy, new click & collect system pictures
Discounters, Lidl dominates the French market
France: Lidl leads the market in growth terms, Aldi Nord refreshes its stores
France: Lidl France store pictures, Aldi Nord refreshes its stores, pictures
Online, The French contribution of le drive
France: the country of the drives, but home delivery is coming
France: the non food marketplaces integration and opportunities
Buying alliances, More potential synergies to come
France: buying alliances, trying to avoid supervision of Loi Sapin 2
Organics boom, Chiming well with French cuisine
France: halal boom, local artisanal products, private label developments
France: Organic specialists expanding, Biocoop, Naturalia and La Vie Claire
France: Data, organic market 1999-2015 in €m
France: NatureO – the French organic specialist
Outlook
Outlook: Grocers preparing for the Amazon Fresh onslaught
Country profiles: Germany – the land of the discounters
Executive summary: Germany
Market shares and profiles, the leading players
Germany Grocery Retail: shares, in %, ranked by size, Edeka – Globus
Germany: Edeka sales bigger than €50bn, investments, Budni partnership
Germany: Edeka integration of Netto, Tengelmann, Bringmeister
Germany: Edeka and Bringmeister, online strategy
Germany: Edeka, Netto, Bringmeister store pictures
Germany: Rewe, strong growth through acquisitions in 2017
Germany: Rewe raises funds to invest in its future, redesigns click & collect
Germany: Rewe digital moves away from pick from stores, scalable IT infrastructure
Germany: Rewe’s discounter Penny starts online service
Germany: Rewe’s outlook, store remodeling, online
Germany: Rewe’s click & collect, Rewe 2020 store, Penny store pictures
Discounters, The birthplace of Aldi and Lidl
Aldi: The original – split into two, an organising principle to manage complexity
Aldi: Figures 2011 - 16, Sued & Nord in €m, international vs domestic
Aldi: Benchmarks, sales densities, Sued ahead of Nord, profits and margins
Recent developments - Aldi Nord and Sued 2017
Germany: Aldi Nord revival gathering steam, record sales per store
Germany: Aldi Nord closes and Aldi Sued opens stores, while both grow sales
Germany: Henkel lists its Pril brand at Aldi Sued
Germany: Aldi Nord opens new pilot store in Germany
Germany: Aldi Nord’s new pilot store in Germany
Germany: Aldi Nord’s new pilot store in Germany - store pictures
Germany: strategy change from pureplay private label to FMCG A brands listings
Germany: Aldi uses tactical promotions for FMCG A brands
Germany: Aldi Sued lists another Henkel brand, Schauma
Germany: Aldi logistics, innovation testing and optimisation
Germany: Amazon lockers at Aldi Sued
Germany: Nivea is ramping up presence at both Aldis
Germany: Aldi Sued lists more beer brands
Germany: Aldi advertising coordination between Nord and Sued
Germany: Aldi starts non food B2C deliveries
Germany: Aldi considers discounting and moving away from EDLP
Germany: Aldi Nord is planning €bn store investments
Germany: Aldi lists Jacobs coffee capsules, targeting Nespresso users
Germany: Aldi seeks to raise synergies in pan European buying of brands
Germany: Aldi Nord lists more Mueller brands
Germany: Aldi Sued showcases new Frankfurt store
Germany: Aldi Sued remodeled store of the future Frankfurt
Germany: Aldi Sued Frankfurt store pictures
Germany: Aldi Sued also announces record investments
Germany: Aldi Sued is relaunching its private label ranges
Germany: Aldi Sued in convenience stores push, to trial new format
Germany: Aldi discounting permanently listed FMCG A brands in promotions
Germany: Aldi Sued entry label private label umbrella brand, pushing organics
Germany: Aldi Nord is building residential mixed use schemes in Berlin
Germany: Aldi Nord Berlin store pictures
Germany: Aldi widens ranges, SKU count almost on Lidl level
Germany: Aldi’s new bake off stations, flexibility, price leadership
Germany: Aldi and bake off, the footfall driver par excellence
Germany: Aldi extending SKU range to record levels
Lidl - Schwarz’ jewel in the crown
Lidl: the copy cat overtaking Aldi, the original
Lidl: OSA, Warendruck, operational independence for Lidl and Kaufland – until now?
Lidl: category management, acting as the second mover
Schwarz: sales 2010 -17, total & domestic growth, domestic share of total
Lidl: strong growth essentially lfl, pan EU presence, big bang expansion
Lidl: store upgrades, premiumisation, bake off stations, vertical integration
Recent developments: Lidl 2017
Germany: both Aldi and Lidl partner with SAP systems and mine big data
Germany: Lidl logistics and robots, going automated
Germany: Lidl abandons online grocery in Germany and starts cutting costs
Germany: Lidl becoming a tech pioneer
Germany: Lidl cuts back more – further savings rounds
Germany: Lidl attacks Amazon suppliers
Germany: Lidl starts using Salesforce, Lidl’s meal kit Kochzauber hits stores
Germany: Lidl is pushing vertical integration
Germany: Lidl is expanding into conurbations with its convenience concept
Germany: Lidl takes groceries offline and only focuses on nonfood and meal kits
Germany: Lidl expands Kochzauber in stores, varies the business model
Germany: Lidl’s recycling and plastics reduction drive, the plastics strategy
Germany: Lidl starts operations at new online DC in Germany
Germany: Lidl’s metro store, pictures
Online: State of play
Germany: Online state of play, AmazonFresh effect minimal – so far
Convenience stores, more potential synergies to come
Germany: the remaking of the convenience store market
Organics: Structural change in an established market
Germany: structural change in the sector as the majors pile in
Germany: dennree, Alnatura, Basic store pictures
Germany: Organic boom continues, sales over €10bn for the first time
Outlook
Outlook: Amazon? Aldi comes back with a vengeance
Country profiles: UK – from innovator to laggard thanks to Brexit?
Executive summary: Sector in thrall to Brexit uncertainty, discounters, Amazon
Market shares and profiles, the leading players
UK Grocery Retail: shares, in %, ranked by size, Tesco – Iceland
UK: Tesco recovery, cutting subsidiaries, countries and jobs
UK: Tesco’s Booker merger/acquisition
UK: Tesco Booker, supplier opportunity, synergies, store in store concept
UK: online grocery opportunity with Booker, still much to do for Tesco
UK: Tesco’s vegan range, store pictures
UK: Sainsbury’s – is the Argos acquisition turning sour?
UK: Sainsbury’s, job cuts, the failed Nisa tie up
UK: Sainsbury’s Nine Elm’s store pictures
UK: Asda new boss, Walmart dividend, finally turned a corner?
UK: the former Netto stores are still struggling, the runaway success of George
UK: Asda job cuts
UK: Asda click & collect pick up tower, George concession pictures
UK: Morrisons rebounding, partnering with Ocado and Amazon
UK: Morrisons – vertical integration as template to emulate for big 4, job cuts
UK: Morrisons store pictures, Alexa skill
Discounters - Aldi and Lidl transforming UK grocery retail
UK: Aldi and Lidl revolutionising UK grocery, Aldi’s declining profits
UK: … as Aldi sales accelerate, Aldi store opening plans
UK: Aldi Christmas record, breaking the £10bn in sales barrier
UK: Lidl fastest growing grocer for Christmas in UK, store expansion plans
UK: why Tesco’s discounter attempt will simply not work
UK: cannibalisation, Capex, buyer set up, product quality, store footprints
UK: multichannel (incl discounter) vs focused discount operation, poor track record
UK: too expensive to launch and dubious results
UK: Aldi UK, Lidl UK store pictures, PL specially selected, deluxe pictures
Online, UK is the leading EU online grocery market
UK: the country of home delivery, Tesco champion, Ocado leapfrogging the rankings
UK: Asda’s online basket size, Waitrose decline, Morrisons and Amazon
Brexit impact, What would happen to food & grocery under a no deal scenario?
Food & Grocery: drivers of food price inflation
Food & Grocery: our estimates for food price inflation
Food & Grocery: no deal impact on price, up to a third more for everyday food
Food & Grocery: no deal impact on availability
Food & Grocery: animal products and BIPs
Outlook, Brexit – the worst case scenario
Food & Grocery: growth 2010 – 16, forecast, inflation, volume for 2017
Food & Grocery: in £bn 2010 – 19f, skyrocketing inflation, in no deal scenario
Food & Grocery: relative winners, hard discounters, vertically integrated Morrisons
Food & Grocery: panic buying, collapse of Irish trade, devastation of UK farming
Asda/Sainsbury merger - the implications for grocers and suppliers
Asda/Sainsbury: the implications of the merger
Asda/Sainsbury: lower prices and threats to suppliers
Asda/Sainsbury: synergies and where they come from
Asda/Sainsbury: non food and other opportunities
Asda/Sainsbury: UK’s big 4 will become the big 3, but there is still Aldi & Lidl
Asda/Sainsbury: will it move towards one brand in future?
Country profiles: Italy
Executive summary: Italy - a tale of two opposites
Executive summary: Italy – dominated by the cooperatives
Market shares and profiles, Italian Grocery market
Italy Grocery Retail: shares, in %, ranked by size, Coop – Lidl
Italy: the cooperatives dominate, Esselunga the standout operator
Italy: Conad challenges for leadership
Italy: Esselunga store format pictures
Italy: Esselunga – transitioning after death of founder
Italy: Esselunga private label pictures
Italy: Esselunga operator with the highest sales density
Discounters
Italy: Aldi Sued enters the market belatedly
Italy: …and Lidl invests €350m to update its store concept
Italy: Aldi store pictures
Online
Italy: online grocery pioneers
Italy: Online, Esselunga leads the market
FICO: Italy
Italy: FICO Eataly, pictures
Italy: FICO Eataly, the Disneyworld of food
Italy: FICO Eataly, the largest agri-food park in the world, a hotel is coming
Country profiles: Spain
Executive summary: Spain – the land of vertical integration
Executive summary: Spain – the crisis is over as Mercadona ramps up its ranges
Market shares and profiles, Spanish Grocery market
Spain Grocery Retail: shares, in %, ranked by size, Mercadona – Auchan
Spain: hypermarkets and regional chains, the crisis is well and truly over
Spain: Mercadona store format pictures, the new store model
Spain: Mercadona, the vertical integration champion
Spain: Mercadona PL range, deliplus, hacendado, bosque verde, compy
Spain: Mercadona’s co innovation and vertical integration strategy and facts
Spain: Dia la Plaza store pictures
Spain: Dia focuses on digital and 3P partnerships
Discounters
Spain: all about Mercadona, Lidl growing strongly, but only also-ran
Spain: more on Mercadona’s success factors, the large industrial cluster
Spain: Lidl strong growth after heavy investments in recent years
Spain: Aldi wants to reach more than 300 stores in Spain
Online
Spain: online – potential to grow, Mercadona is investing
Sources
A bit more on ResearchFarm
Chart 1 GDP: EU28 2014, 2015, 2016 in €, ranked by size
Chart 2 GDP: EU28 2016 in €, ranked by size, Germany – Finland
Chart 3 GDP: EU28 2016 in €, ranked by size, Portugal – Malta
Chart 4 Population: EU28 2017, ranked by size
Chart 5 GDP: EU28 2016, in €, per capita, ranked by size, Luxembourg – Spain
Chart 6 GDP: EU28 2016, in €, per capita, ranked by size, Malta – Bulgaria
Chart 7 Retail: EU28 2014, 2015, 2016, in €, ranked by size
Chart 8 Retail: EU28 2016, in €, ranked by size, France – Finland
Chart 9 Retail: EU28 2016 in €, ranked by size, Greece - Malta
Chart 10 Retail: % share of GDP, EU28 2016, ranked by size
Chart 11 Retail: EU28 2016, in €, per capita, ranked by size, Luxembourg – Cyprus
Chart 12 Retail: EU28 2016, in €, per capita, ranked by size, Spain – Romania
Chart 13 Grocery Retail: EU28 2015, 2016, 2017, in €, ranked by size
Chart 14 Grocery Retail: EU28 2017, in €, ranked by size, France - Denmark
Chart 15 Grocery Retail: EU28 2017, in €, ranked by size, Finland - Malta
Chart 16 Grocery Retail: % share of Retail, EU28 2016, ranked by size
Chart 17 Grocery Retail: EU28 2017, in €, per capita, ranked by size, Sweden - Estonia
Chart 18 Grocery Retail: EU28 2017, in €, per capita, ranked by size, Greece – Romania
Chart 19 Grocery Retail: EU28 2012 - 2017, 5 year growth rate in %, ranked
Chart 20 France Grocery Retail: shares, in %, ranked by size, E.Leclerc - Aldi
Chart 21 France: Data, organic market 1999-2015 in €m
Chart 22 Germany Grocery Retail: shares, in %, ranked by size, E.Leclerc - Aldi
Chart 23 UK Grocery Retail: shares, in %, ranked by size, Tesco – Iceland
Chart 24 Food & Grocery: growth 2010 – 16, forecast, inflation, volume for 2017-9
Chart 25 Food & Grocery: in £bn 2010 – 19f, skyrocketing inflation, in no deal scenario
Chart 26: Italy Grocery Retail: shares, in %, ranked by size, Coop – Lidl
Chart 27: Spain Grocery Retail: shares, in %, ranked by size, Mercadona – Auchan
Table 1: Grocery Retail: EU28 2012 - 2017, in €bn
Table 2: Grocery Retail: EU28 2013 - 2017, in y-o-y %
Table 3: Aldi: Figures 2011 - 16, Sued & Nord in €m, international vs domestic
Table 4: Schwarz: sales 2010 -17, total & domestic growth, domestic share of total

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