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The distribution network in Germany

Evolution of the Sector
With more than 84 million inhabitants, the German market is the largest in European Union with one of the highest income in the world. The measures put in place in the context of the Covid-19 pandemic strongly impacted German consumers. Price adjusted household final consumption expenditure was 0.2% lower in 2021 than in 2020, and down 5% from the pre-crisis level of 2019 (Destatis).

After growing by 5.7% in 2020, retail turnover increased by 2.9% in 2021, reaching a new record (Bundesbank). However, parts of shop-based retail trade, such as retail trade in textiles, clothing, footwear and leather products, suffered losses in turnover during the pandemic (Destatis). Traditional department stores were negatively impacted by the pandemic, whilst online shopping increased significantly. E-commerce increased by 14% in 2021, and generated a revenue of USD 109 billion (ecommerceDB). Online grocery shopping, which was still a niche market in 2019, showed the highest growth in e-commerce in 2020, with sales increasing by 60% (USDA). The boom in internet and mail order trade continued after shops reopened. Online trade turnover increased by 36% during May-September 2021 compared with the same period in 2019 (Destatis).
The German retail food market is characterized by consolidation, market saturation, strong competition and low prices, although there has also been a consumer preference towards smaller grocery formats, including convenience stores, small grocery retailers and independents. In this way, all major grocery retailers have been investing in modernizing their existing stores to fit with this new trend. The top four retail groups together (Edeka-Group, Rewe-Group, Schwarz-Group, Aldi-Group) account for around 74.5% of the revenues (USDA). While Germans are very price sensitive in general, many wealthy consumers are looking for premium quality products and are willing to pay a higher price.
The growth of discount stores is slowing down due to market saturation, while sales in supermarkets are increasing. During the pandemic, supermarkets recorded the best performance in terms of revenue growth among all retail channels. This underlines the growing trend towards small, quick but high-quality grocery shopping in the cities, as well as the new shopping behaviours developed by consumers spending more time at home. Thus, the rise of smaller grocery formats has hampered growth of hypermarket sales. Although, hypermarkets are still widespread amongst consumers in rural or suburban areas due to their convenience and attractive prices.
Market share
According to Euromonitor, the German distribution structure is characterised by:

  • the high level of consolidation of the market
  • the large number of small independent shops
  • the sector's low level of concentration (as compared with the main European markets such as France, the United Kingdom and Belgium)
  • the predominance of distribution in city centers and urban areas
  • small number of "hypermarket" style stores, mainly in the suburban and rural areas

According to the German Retail Business Federation, in 2020 specialty stores represented 16.4% of total retail trade market, followed by discount stores (15.4%), specialised chain stores (14%), traditional supermarkets (11%), hypermarkets (11%), department stores (1.7%)

According to USDA, the four leading German distribution groups are Edeka, Rewe, Schwarz Group and Aldi, which together held 74.5% of value sales in 2020 (latest data available). The rise of discounters such as Lidl or Aldi has forced distributors to wage a price war. As a result, narrow profit margins may slow down the modernisation of sales outlets and the development of new distribution concepts. Other online food retailers in Germany are Amazon, getnow and Picnic.

Retail Sector Organisations
German Retail Business Federation (German only)
Foreign Trade Association of German Retailers

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Latest Update: June 2022

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