“One store, you won’t need more!” This is the brand promise our Real sales line fulfils each and every day. With a comprehensive range of food products including a large share of high-quality fresh items, a broad assortment of nonfood products and an attractive price-performance ratio, Real is one of Germany’s leading hypermarket operators. Our sales line operates 312 stores across Germany and 12 in Turkey. The Real business in Eastern Europe will be taken over by the French retailer Groupe Auchan.
Real’s hypermarkets have between 5,000 and 15,000 square metres of selling space. These stores offer customers all the products that cover their daily needs under a single roof. Real generates three-quarters of its sales with food items. The centrepieces of its product range are fresh foods, including fruit, vegetables, meat, sausage, fish and cheese. Real also offers a wide range of nonfood items, including electronic devices, household products and textiles. Customers can find up to 80,000 different items in every Real hypermarket.
New structure for increased customer orientation
To improve profitability over the long run and increase added value for customers, our sales line is resolutely pressing ahead with realignment. After all, one of Real’s main goals is to systematically serve and exceed customers’ expectations, cultivating customer loyalty in the process. Customer orientation is thus at the heart of the sales line’s activities – in both assortment design and all service offerings.
Against this backdrop, Real began restructuring its sales activities in the financial year 2012. In April 2013, the number of sales regions in Germany is to be cut from 7 to 3. This will allow Real to streamline processes to reduce administrative expenses. In the new structure with the regions North, South and East, the hypermarkets will receive more individual responsibility and discretion in designing assortments. This will allow store managers and their teams to more quickly and flexibly respond to the needs and shopping habits of their customers with local products.
In the financial year 2012, Real continued to make strides in improving customer orientation as indicated by the results of a 2012 study on food retailing conducted by the German Institute for Service Quality (DISQ) for the news channel n-tv. The market research company evaluated 17 companies using mystery shoppers. During the test, Real received good scores in the categories of service quality and price-performance ratio. In the overall ranking, our sales line was awarded second place and improved its ranking by 6 places compared with the previous year. As a result, Real was named “Most Improved 2012”.
Entrepreneurship at the local level
In the financial year, Real continued the “Entrepreneurship at the Local Level” project that it launched in July 2010. The objective of this project is also to more quickly and efficiently address individual customer needs in the respective regions. Within a defined period, store managers can autonomously take decisions about the product range, prices, product placement, advertising, processes and personnel. This approach helps central guidelines to be more effectively modified to address the specific market and competitive environments. An additional 21 hypermarkets have joined the pilot project since the beginning of 2012, increasing the number of participating stores to 25. Real constantly monitors sales and earnings trends at these hypermarkets to measure the programme’s success. The project has enabled our sales line to further markedly improve the working relationship between responsible store managers and category management. As a result, in many areas of its assortments Real now offers products that precisely meet the individual needs of customers in the respective regions, including regional assortments that satisfy the need for products from local producers and respond to customers’ growing environmental consciousness.
Customer processes anchored in core business
In the financial year 2012, Real developed a system to more firmly anchor customer orientation in the core processes of day-to-day business. The system is based on a comprehensive analysis of market data and customer information that resulted in the segmentation of 10 core customer groups. One example is “young, quick cuisine”: consumers in this group prefer convenience and frozen products and are prepared to try innovative items. For each of these 10 groups, so-called “customer insights” were compiled from the results of the analysis. These insights into customers’ specific needs, desires, challenges and habits form the foundation for devising targeted strategies for assortment design, pricing, product placement and marketing. In one reflection of this, tinned peaches are placed next to tart cases in the baking section.
The various awards presented to Real during the financial year 2012 testify to its success. It received a special award as part of Salescup, an annual contest for successful sales campaigns sponsored by the trade newspaper “Lebensmittel Zeitung”. The publication honoured Real in the category in-store promotion for the successful realignment and upgrade of its dry foods section. The more than 79,000 readers of the magazine “Meine Familie & ich” nominated the Real hypermarket on Äppelallee in Wiesbaden as one of Germany’s best grocery stores. In October 2012, the magazine also awarded the Prix de Regie to the hypermarket Passau to honour the outstanding commitment of the stores’ employees.
In addition, the results of the customer barometer 2012 demonstrate that Real continued to improve in key aspects such as friendliness, competence and staff availability. Real also substantially improved customer satisfaction in the areas of product variety, value for money and store layout. The customer barometer is a telephone survey of about 34,000 German consumers which Real conducts once a year, most recently in January and February 2012. The survey questions address service aspects that are very important to Real. These provide the basis for the calculation of a performance index. Furthermore, Real has used additional indexes to measure the trust and loyalty of its customers since 2010.
Own-brand products strengthened again
With the 3 own brands “real,- QUALITY”, “real,- BIO” and “real,- SELECTION”, the sales line offers its customers an alternative to traditional brand products priced in the medium to upper ranges that is both inexpensive and of equal quality. With “TiP”, Real also offers one of Germany’s most well-known private labels in the budget price segment. In 2012, Real offered about 5,000 own-brand products in its assortment – expanding its assortment of food and nonfood products by 400 items. The products that Real sells under its own name help to sharpen the brand’s profile. In addition, Real further increases its gross earnings because the margins for own-brand products are better than they are with traditional brand products. On top of that, Real’s assortment contains an additional 8,600 exclusive own-brand products that do not use Real in their names. These brands include:
- “Alaska” – household appliances
- “Villa Noblesse” – home textiles and household goods
- “My Little Bear” – baby textiles and hardware
- “active” – sports textiles and hardware
In 2012, Real introduced the new own brands “Designer’s Mama” for maternity clothing and “Big & Chic” for women’s and men’s clothing. It gave “Alaska” a facelift with a newly optimised, higher-quality design to raise brand recognition. With a broad selection of own-brand products, complemented by many items made by well-known companies, Real optimally meets the diverse needs of its customers.
Upgrading of stores
To make its hypermarkets more attractive to customers, Real continued to systematically modernise its stores in 2012 as part of the sales line’s new strategic focus on Germany. Most hypermarkets have been upgraded. During the financial year, 3 stores were substantially remodelled: the hypermarkets in Mannheim-Vogelstang, Cologne-Gremberg and Gütersloh are now exemplary illustrations of an appealing shopping atmosphere. As part of the modernisation work, the stores received a facelift and were equipped with the latest technology. Among the steps being taken as part of this effort, the sales line is integrating concept modules into its stores. These are product groups that are showcased together in a uniform manner. The concept modules include an in-house bakery, which has now been implemented in all stores. The key elements of this concept are a contemporary display, friendlier colours, decorations for the service counter and assortment optimisation. In its in-house bakeries, Real offers more than 90 varieties of oven-fresh, high-quality baked goods. The hypermarket produces approximately 230 million loaves of bread and rolls each year, making it one of Germany’s largest providers of freshly baked goods. Because Real’s customers also place a high priority on the product groups of meat, fish, sausage and cheese, the sales line is expanding its expertise in these areas to gain an edge on major competitors.
In September 2012, our sales line bundled all of its online activities under the standard Internet address www.real.de and updated its entire online design in the process. Visitors to the site now directly land in the sale section of the online shop and no longer on the website of the stationary hypermarkets. An additional benefit is that the same log-in information can be used for the various online services, including the portal for Real’s “familymanager” customer loyalty programme. Customers will no longer have to log in for each service separately.
Another reason for bundling the websites was that the online shop has become an integral sales channel alongside the stationary business. Real offers, for example, more than 13,000 products from the areas of multimedia, sports & leisure time, home & garden, toys, the world of babies, health & fitness and foods & chemist items online. In 2012, employees processed about 345,000 orders – an increase of more than 20 percent compared to the previous year. The online shop creates an opportunity for the sales line to tap new customer groups and generate additional sales.
As part of its multichannel sales concept, Real operates 2 drive-in stores in Germany. Customers can order food and chemist items online at www.real-drive.de and then pick up the order 2 hours later at one of the 2 drive-in stations. The pick-up stations in Isernhagen-Altwarmbüchen near Hannover and in Cologne-Porz are conveniently located for drivers, providing fast shopping for customers.
Successful customer retention efforts
In summer 2012, Real conducted a 6-week marketing campaign in Germany called “Domino-Fieber” (Domino Fever): customers could collect 28 different domino tiles. During the campaign, the German hypermarkets gave away approximately 36 million dominoes. The stores also hosted swap events that attracted many customers. Real launched another 6-week marketing campaign in January 2013. The “Murmelix” (Marblelix) campaign built on the success of the sales line’s 2011 “Murmel-Fieber” (Marble Fever) campaign.
During the financial year 2012, Real also launched 2 reward programmes to strengthen customers’ bond with its hypermarkets. Real’s customers received 1 loyalty point for every €5 spent at the store. Against a small additional payment, these points could be redeemed and exchanged for attractive rewards, including nearly 1.5 million jewellery items and 3 million knife sets.
Focus on German business
In November 2012, METRO GROUP and the French retailer Groupe Auchan signed an agreement to divest Real’s business in Eastern Europe. Groupe Auchan will take over the operational activities and real estate assets of the sales line in Poland, Romania, Russia and Ukraine. The stores in Turkey are not part of the transaction. The purchase price amounted to about €1.1 billion. Real intends to focus more intensively on the successful further development of its domestic market. At the same time, we created new growth opportunities for the business in Eastern Europe. The divestment still requires approval by the relevant antitrust authorities and will likely be finalised in 2013.
Responsible business practices
In the financial year 2012, Real pressed ahead with its sustainability activities to protect the environment and conserve resources for future generations. As part of this work, the sales line expanded its assortment of local products in order to reduce transport routes and simultaneously guarantee freshness. The sausage selection of Real’s professional butcher shop “The Master Butcher” is now comprised of about 70 percent of regional products. Real is also strengthening its social commitment in the nonfood area. In November 2012, for example, the sales line joined the international Cotton made in Africa initiative that works to improve the living conditions of African cotton growers and their families.
In dialogue with customers
Real places a high priority on conducting a candid and transparent dialogue with customers. From this direct contact, our sales line gains important insights it can draw on to improve day-to-day work and better meet customers’ needs.
Real has set up customer advisory councils in more than half of its hypermarkets: each quarter, the stores invite 10 to 15 customers from various age segments to point out areas they think require further improvement. The recommendations are considered in the further development of the operating business. Real is the only retailer that has set up customer advisory councils at the market level nationwide.
In addition to direct contact, Real also uses social media to maintain its dialogue with customers: in December 2010, for example, Real created its own official page on the online platform Facebook. At the end of December 2012, the page had more than 300,000 fans, making it more popular than those of its competitors. In the financial year 2012, the sales line also set up a channel on the microblogging platform Twitter to inform customers about its products and services in short messages. The objective is to intensify the dialogue, answer questions and receive suggestions about Real’s offer. In addition, Real uses social media to disseminate company news and advertise promotional campaigns and sweepstakes. In autumn 2012, for example, the sales line launched a Facebook campaign under the motto “Ganz Deutschland isst deine Pizza” (Germany eats your pizza) calling on customers to create their favourite pizza. More than 17,000 Facebook users submitted ideas. In January 2013, all Real stores across Germany added the winning pizza to their assortments.