Düsseldorf (dpa) – Whether it is fashion, stationery or decorative items: in addition to the grocery trade, discount stores such as Tedi, Action or Kik have secured an increasingly large share of the market in recent years. But the Corona crisis also caught low-cost providers off guard. Ambitious growth plans became obsolete almost overnight. Instead of euphoria, in many cases the image suddenly dominated the scene. But it seems too early for a swan song for so-called discount stores that aren’t food.
“Nonfood discount stores have a long history of success behind them. They grew by almost 40 percent between 2013 and 2019, ”emphasizes retail expert Martin Langhauser of the Society for Consumer Research (GfK). “It is one of the few sales lines that has managed to grow steadily in the online boom.” Sometimes new cheap shops were opening on the shopping streets of Germany almost every week.
However, the success story was suddenly interrupted by state-mandated store closings in the spring. “As with almost all stationery retailers, the blockade lost almost all of our revenue overnight. What followed was tough crisis management, ”says a Tedi spokeswoman, speaking on behalf of much of the industry. One of the first things to do was cut back on the company’s ambitious growth plans.
Take action as an example: the low-cost Dutch supplier currently operates 379 branches in Germany, where it sells a wide range of decorative items to food, from fashion to DIY products. There are even more than 1,500 stores across Europe. 2020 should be another year of stormy expansion. But it turned out a little different.
“Our expansion strategy has not fundamentally changed as a result of Corona, but there are some delays,” says Action boss Sander van der Laan of the German Press Agency. “Originally we wanted to open 240 new stores in Europe this year, now there are only 163. And the entry into the Italian market planned for this year has been postponed until next year.” Also in Germany, fewer new stores would open than originally planned.
Competitor Tedi, which currently operates almost 2,400 stores across Europe, has also put its expansion plans to the test and does not yet want to determine how many branches should open by the end of 2021. “We cannot answer this question at this time. The situation is still too confusing for that, ”says the company.
But it’s not just expansion plans that were suddenly wasted. Obviously, many things had to be put to the test. With the stores reopening after the closure, low-cost provider Euroshop raised the standard price of all products after 16 years of price stability from € 1 to € 1.10, up 10 percent. The reason for this on the company’s Facebook account was very brief. “This is necessary (…) for our future (…)”. The group declined to provide more background information, even upon request.
Most low-cost providers are silent on how business is currently doing. Only Action boss van der Laan reveals: “Since the stores reopened after closing, sales at Action have developed very well. They are well above the level of the previous year. Profits are also developing well. “The company may not be able to fully make up for lost sales caused by the spring closures. But Action will be” very profitable “again this year.
“Our offering is simply tailored to today’s needs: we sell key products like cleaning agents and disinfectants, but also decorative items to make your own apartment a little more comfortable in these challenging times, and DIY products that are also experiencing a boom, “explained the success manager. Discount textile store Kik also said on request: “Kik came out fine from the first stop in spring.”
They shouldn’t be completely alone in this. According to GfK figures, non-food discount stores developed “pretty solidly” overall in the months after closing.
A swan song for cheap suppliers would be premature despite all the corona-related turmoil. There may even be golden times in sight for them. “The future outlook for nonfood discount stores is not bad,” says Langhauser, a GfK retail expert. The need for offers in the entry-level price range “will tend to increase in the short and medium term when we again see an increase in unemployment figures in Germany.”