Berlin, the destination for the 2020 NACS Convenience Summit Europe June 2-4, is a hotbed of innovation in convenience and forecourt retailing, with new food-to-go concepts, healthier offerings and sustainable solutions.

Germany’s leading retailers, Edeka and Rewe, and the discount operators, Aldi and Lidl, are investing in this area, while new-to-market players like EG Deutschland are introducing food court concepts that are popular and proven in the United Kingdom.

There’s a lot to play for in a dynamic and thriving marketplace. Germany’s economy grew for the ninth consecutive year in 2018, and unemployment is at a 25-year low. The IGD estimates the total grocery market to be worth about €255 billion ($282 billion). The discount channel makes up the largest share at around 31%, followed by supermarkets at 26%.

The convenience channel commands just a 4% share, but that creates opportunities for retailers in Germany to innovate and expand in this segment, according to IGD senior international retail analyst Keshia Beadle. “This is particularly true for locations with high footfall such as train stations and airports, where offering a more targeted range could help these stores win with shoppers,” Beadle said.

Online is the fastest growing segment, although this is from a small base as the uptake of online shopping has been reasonably slow to process in Germany, Beadle added.

Discounters have had a massive effect on the German industry.

Bakeries—there are 47,000 bakery shops in Germany—are another popular format, while the country boasts 14,000 forecourt locations. Many of these are being modernized, said Christian Warning, the NACS representative for German-speaking markets. Although in some regions, stores still operate as traditional confectionery, tobacco and news kiosks, rather than food-on-the-move destinations.

Warning cites a shortage of labor—Germany’s unemployment rate is 3.1% compared with the EU average of 6.3%—as one of the key challenges facing the industry. “There are many regions in Germany with full employment,” he said. “And there are dealers that have closed sites because they couldn’t find staff,” he said.

By the same token, however, rising employment and increasing wages are strengthening consumer confidence, and with more disposable income, consumers have more to spend in retail and increased willingness to spend, Warning added.

New Options

Germany’s top retailers are providing shoppers with plenty of new options. The leading retailers in the market, Edeka and Rewe, are developing new concepts as well as improving their existing store networks, Beadle reported.

The latest concept out of the blocks from Edeka is a standalone organic store, created to meet growing demand from shoppers in this category. Edeka also has been testing a wider selection of eateries to provide customers with more food-to-go and eat-in options, Beadle said. Within convenience, Edeka’s latest concept—Edeka Xpress—focuses on providing convenience in urban areas with a wide selection of food-to-go options.

Rewe, meanwhile, has been developing its Rewe To Go convenience concept and has been rolling out this in partnership with fuel operator Aral, the BP brand in Germany and largest forecourt operator. It also is implementing its Rewe 2020 concept, which focuses on freshness and flexibility to better fit the needs of consumers. “Rewe has been refining its Rewe To Go concept and, as well as standalone stores, has plans to open 1,000 stores on Aral forecourts. To date, 500 have been opened,” Beadle said.

Lidl and Aldi also have been expanding into main shopping streets and are testing smaller stores. “By adding convenience-focused items such as meal solutions, further change is likely to occur in this area as the competitive landscape intensifies,” Beadle said.

Warning agreed: “The discounters have had a massive effect on the industry. Aldi has developed coffee-to-go and sandwiches-to-go, which is a very good solution. At lunchtime, Aldi has a convenience assortment that includes salads. Aldi is doing a better job than 95% of convenience stores at gas stations currently,” he said.

Germany’s larger retailers are certainly upping their convenience game, Warning added. The top four—Edeka, Rewe, Lidl and Aldi—account for 60% of the total available market volume and are investing heavily in their German networks, Warning said. “Edeka and Rewe each invested €2 billion in their German networks; Aldi Süd will invest €3.5 billion within the next two years; Aldi Nord will invest another €2 billion, and Lidl is investing €3 billion from 2016 until 2020.”

A new retail partnership between Valora Food Service Deutschland and EG Deutschland, a subsidiary of the globally active EG Group, is poised to shake up convenience retailing on the forecourt. The duo has launched a pilot project in which Valora’s BackWerk and Ditsch shops are upgrading petrol stations to become a one-stop shopping destination. “EG Germany is transferring its successful strategy in Great Britain, combining several strong food brands at one petrol station, to Germany for the first time,” Warning said.

In October 2018, the British filling station operator EG Group took over the German Esso filling station network with about 1,000 locations throughout Germany. EG Germany wants to establish strong food brands at its service stations to increase the frequency of trips by fuel and non-fuel customers. Valora’s consumer brands are viewed as the ideal partners for this strategy.

In September 2019, a 12-month pilot project launched at three locations in Cologne and Frankfurt. In Cologne (Höninger Weg, Neustadt-Süd), a BackWerk store has been incorporated into the forecourt location, and in Frankfurt (Königsteiner Strasse & Rheinlandstrasse) BackWerk and Ditsch stores have been added.

“The brands are integrated into the petrol stations as a shop-in-shop system—comparable to a food court concept. This not only turns the petrol stations into places of leisure with a great culinary variety but also invites you to linger,” Warning said.

Customers can choose from the proven and popular assortments from BackWerk and Ditsch, with BackWerk focusing on sandwiches and rolls, sweet pastries, hot top-seller snacks such as hot dogs, crunchy chicken and Fairtrade coffee. At Ditsch, customers can enjoy fresh oven-warm pretzels, seed pretzels, savory and vegetarian pizzas, as well as coated pretzel sticks. In addition to the wide range of snacks, BackWerk and Ditsch offer classic baked goods such as fresh rolls, bread, butter croissants and sweet pastries for local supply at the weekend.

Leading Trends

As in other world markets, health and sustainability are climbing up the retail agenda in Germany. “Health is a big focus in Germany, with retailers reformulating their private label ranges to make them healthier,” Beadle said. This is in anticipation of government plans to introduce a NutriScore labeling system in the next year.

Health is a big focus in Germany, with retailers reformulating their private label ranges to make them healthier.

“Meat-free products are also growing in popularity, with consumers looking for more options in this area,” Beadle reported. Retailers are widening their ranges, and Aldi Süd has partnered with Veganz, the plant-based food brand from Berlin, for a limited time.

Sustainability and traceability also are an increasing focus for retailers, and partnerships are helping to address this, Beadle said. For example, the Metro Group has partnered with Too Good To Go, a food waste app, to launch in the German market, while Edeka has introduced a microplastic-free label to its private label cosmetics.

Packaging-free stores are one of the latest concepts to take off in the German market, with a number of these in Berlin and other large cities across the country, Beadle added. “These stores invite customers to bring their own containers (ones also can be purchased in-store) and fill them up with a variety of products sold by weight. These include dried grains, nuts, coffee and household products.”

Elsewhere, Rewe’s discount banner Penny has launched a new concept in Berlin called Box 80. Large-scale street art adorns the walls to fit in with the trendy Friedrichshain area where the store is located. “The new concept is modern and creates an exciting shopping experience,” Beadle said.

Berlin has it all, it seems. Convenience leaders will have an opportunity to explore the latest innovations in the German market at the 2020 NACS Convenience Summit Europe, June 2-4. For more information or to register, visit www.convenience.org/cse.