Dutch convenience stores to test the German waters

Dutch retailer Ahold has announced that it is planning to expand in Germany and open its first store there in the second half of 2012.

Ahold, which earlier this year entered Belgium with Albert Heijn supermarkets, will roll out AH to Go convenience stores in Germany. The grocer is targeting Düsseldorf and Cologne, cities close to the Dutch border so shops can be supplied by distribution hubs in the Netherlands.

Germany is an attractive market for investment because it is the fastest-growing industrialised nation in the world with good growth prospects. Germany, unlike other continental neighbours like France, has an underdeveloped convenience sector.

German shoppers are moving away from shopping in out-of-town hypermarkets and into the city centres. AH to Go is moving into a niche area that should have significant growth potential.

In Germany, city centre food shopping is dominated by discount chains, which offer a very small range of convenience food, and supermarkets like Rewe and Edeka, which are growing the space allocated to this popular category.

However, despite the good growth prospects for grab and go items, Germany has yet to develop a convenience format dedicated to their sale. So far, Rewe Group is the only retailer to launch a convenience store format in Germany, with just one Rewe to Go store operating in Cologne.

The chance to be the one of the first retailers to exploit this potentially lucrative market is one that would tantalise a retailer like Ahold, a retailer that is already highly proficient in this channel.

In fact, one need only look at the French market to see how fast the convenience channel can grow. Since the launch of the first Monop’store in 2003 in Paris, all the key French grocery players have opened their own convenience banners with the intent of dominating the French urban convenience market.

As for Germany, Ahold holds a 50:50 chance of succeeding in this market as it is uncertain to what extent the convenience channel will be taken up by German consumers. If AH to Go proves successful, it is likely that Rewe will tweak its own convenience format and roll out the similarly named Rewe to Go more aggressively in a bid to gain a foothold.

Stores opening in Cologne are worth watching because if AH to Go can perform well in Cologne – a highly competitive market for grocery retailers and the home of Rewe’s HQ – the format can work in any Germany town.