Surging sales growth in the UK over recent months for Germany's two leading discounters, Aldi and Lidl, has thrown into sharp relief the different systems that are used to distribute fresh produce in two of Europe's largest markets.
While the fresh fruit and vegetable business in the UK has adapted itself over the last two decades to what is widely recognised as the world's leading category management model, Germany has been characterised in recent years in particular by the growing strength of the discount retailers.
Discounters, such as Aldi and Lidl, have accounted for over half of all fresh produce sales in Germany for many years now. German shoppers are used to finding discounters within easy reach of their homes, thanks not only to the strength of Aldi and Lidl but also because discount formats are operated by mainstream retailers such as Edeka and Rewe.
Interestingly, food retailers such as Edeka, Germany's largest, have been developing own-brands that imitate those used in the UK by the likes of Tesco (Finest) or Sainsbury's (Taste the difference). At your local Edeka store, you can now find its Edeka Selection brand. Real, the chain owned by Metro, is launching its own Real Selection brand too – alongside its Rio Grande brand for mainstream fruit as well as value brands.
At the same time, leading UK retailers are unveiling discount labels to take account of the looming recession in the UK. The impact of the downturn in consumer spending in the UK, its first dip in almost 20 years, has been keenly felt by British food retailers, who are battling to hold onto market share. Not for nothing did Tesco recently label itself as 'Britain’s largest discounter'.
Indeed, British retailers could probably learn a thing or two from the Germans, not least how to maintain margins when the market is dominated by discounters. There is no danger of a discount takeover in the UK just yet, but the price war could bring about a shortage of particular product lines, especially if UK retailers do not learn to be more flexible: for example, Namibia's top supplier of early table grapes says he's avoiding the UK for the first time this year because he can make better money in continental Europe. It’s a sentiment that will find an echo elsewhere.
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