Supermarkets Real and Rewe Invest Billions to Combat Callengers such as Amazon

The so-called “Amazon Effect” is being felt in German retailing with two of the countries largest supermarket chains announcing plans to innovate their business models: Real planning a delivery service and Rewe wants to invest two billion euros in the digitization.

The supermarket chain Real has had a bad run recently, reporting declines in sales in recent years of a billion euros. But the company is now planning to change its fortunes by attacking Amazon and its Amazon Fresh by developing its own delivery service.

The company has already tested its new service in Düsseldorf.

“We are now delivering to ten additional cities,” said Henning Gieseke from Real.

These include cities like Berlin, Hanover, Dortmund, Cologne and Nuremberg, while the Amazon Fresh service is currently only active in Hamburg and Berlin.

“Next year it is our plan to reach several million households nationwide,” says Gieseke.

“With this, we cover a large part of the households that would use such a service.”

Real is also planning to modernize its supermarket branches with a billion euros investment. In addition, the company will also have to provide for the costs of the delivery service, which will undoubtedly be expensive, even if it does not set up its own delivery fleet, but delivers via DHL.

The supermarket chain Rewe also announced an offensive: in 2018, Rewe plans to invest more than two billion euros. A large part of this is to be used for digitization. The company not only sees the US giant as a competition:

“Not only Amazon, but also Foodora and Lieferando are competitors – if someone orders pizza there, he does not buy it at Rewe,” said REWEs CEO.

The Rewe CEO also sees an advantage over the US giant: “Technologically, we will never be better than Amazon, but with fresh food we have much more experience and competence.” Amazon had long since realized that the supply of food is not so simple. In the US market and in the UK, for example, its success with foodstuffs has been limited.

“We also make no profit with our delivery service and will not do so for years. However, it is an important service that customers expect.”

Photo credit: Material used in the preparation of this article has been drawn from Gruender Szene.


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