A comprehensive range of food and non-food products, high-quality fresh items and attractive prices: all this makes Real one of the leading hypermarket companies in Germany. Its aim is to provide customers with the best shopping experience. Our sales line operates 310 stores across Germany and twelve in Turkey. In addition, it operates two drive-in grocery stores in Germany as well as an online shop. During the year under review, Real’s business in Romania, Russia and Ukraine – with the exception of four stores in Romania and one store in Russia – was sold to the French retail company Auchan. The transfer of the Polish business is scheduled to be completed in the first half of the financial year 2013/14, following approval by antitrust authorities.
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 fruits and vegetables, meat, sausage, fish and cheese. Real also offers a wide range of non-food items, including electronic devices, household products and textiles. Customers can find up to 80,000 different items in every Real hypermarket.
Realignment of core business
To improve profitability and increase added value for customers, our sales line has devised a strategy to which it realigned its operational business in 2013. The objective is to rigorously focus on customers and develop ideal solutions for their individual needs and requests. Among other steps taken, a decentralised organisational structure with a flatter hierarchy was set up to help achieve this goal. As part of this step, Real restructured its sales activities: in April 2013, the number of sales regions in Germany was to cut from seven to three. In the new structure with the regions North, South and East, the hypermarkets will assume more individual responsibility and have more discretion in designing assortments. This will allow store managers and their teams to use local products to more quickly and flexibly respond to the needs and shopping habits of their customers.
Close to the customer
A central element of the realignment is the territorial strategy. In essence, its objective is to better leverage existing customer potential in stores’ catchment areas. To this end, the sales line analysed each hypermarket’s catchment area using data provided by the Customer Information Management (CIM) and Controlling departments. Payback data about customer groups as well as information regarding competitive influences and purchasing power were also evaluated. This information shows the areas where each store has the greatest potential: in regaining lost customers or acquiring new ones through the use of focused advertising campaigns, in improving customer frequency or in increasing the average transaction value of customers who live a five-, ten- or 15-minute drive away from the store. Using these findings, stores can more precisely address the needs of customers, develop more specific measures and tailor their range of products. Continuous and exacting controlling of the data generated each day reveals whether decisions were effective or if the stores must take additional steps. During the short financial year 2013, 32 pilot stores in Germany began implementing the new territorial strategy. Starting in 2014, the strategy will take effect in all 310 hypermarkets in Germany.
Regionalisation is not only playing a role in Real’s new customer approach and sales activities. It is also shaping assortment design. This allows the sales line to respond to its customers’ increased demand for products from local producers. During the period under review, Real launched partnerships with a number of local suppliers. In mid-2013, a modified agreement that simplifies and accelerates the creation of such partnerships with smaller producers was prepared. New advertising materials and more than 120 in-house exhibitions in the hypermarkets gave customers the opportunity to experience “Gutes aus der Heimat” (Good things from home).
Own-brand share expanded again
With the three own brands “real,- QUALITY”, “real,- BIO” and “real,- SELECTION”, Real 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”, the sales line also runs one of Germany’s most well-known own brands in the budget price segment. In 2013, Real offered more than 5,000 own-brand products in its range of products – 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 more than 7,000 exclusive own-brand products that do not use Real in their names. These brands include:
- “TiP” food and non-food items in the budget price segment
- “Steinbach” – household goods
- “Mauro Ferrini” – textiles
- “My Little Bear” – baby textiles
- “Big & Chic” – clothing (for plus sizes)
In addition, Real introduced a new brand under the discount structure in 2013. Its product portfolio contains nearly 20 items that have been available in all hypermarkets since November 2013. Prominently placed in stores, the products are characterised by their uniform yellow packaging which bears no brand name. It simply carries the name of the product. The slogan “Ohne Schnickschnack. Ohne teuer.” (No frills. No extra cost.) sums up the brand promise. With this promise, simple package design and competitive pricing, these discount products clearly stand out from the other own brands in food retailing. Real intends to gradually expand the portfolio, following customer response.
Upgrading of stores
To make its hypermarkets more attractive to customers, Real continued to systematically modernise its stores in 2013. Two stores were substantially remodelled: the hypermarkets in Dortmund-Oespel and Menden 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. The construction of the new hypermarket in Essen was completed in October and sets new standards. A new store in Magdeburg also opened in October 2013. The territorial strategy will be rigorously implemented at these stores. Their assortments will be specifically tailored to local customer structures. In addition, 65 hypermarkets are applying a new concept for fruits and vegetables. This concept aims to streamline departmental processes and give the stores more flexibility in terms of product presentation. This includes separate display blocks for organic, exotic and local products. Signs that look as though they were written with chalk evoke the feel of a weekly market and enhance the shopping experience for the customer.
Real also developed a new concept for the “Beauty & More” department, which provides for a more emotional shopping experience. Curved shelves, accent colours in light and dark shades and large mirrors create a friendly and inviting atmosphere. Real presents new items and trends at the department’s entrance. This concept has already been introduced at several stores.
Real is also taking new approaches to the operation of its online shop: in August 2013, the sales line assumed responsibility for logistics, which was previously supplied by a service provider. In addition, Real strengthened the link between its online shop and stationary stores: products are stored in four master stores in Bochum-Wattenscheid, Wildau, Göttingen and Böblingen-Hulb. These stores are responsible for packaging and sending orders. Customers can choose to have their purchases delivered to their home, to a Deutsche Post Packstation or to their local hypermarket free of charge. Working people in particular benefit from longer opening hours with the store-delivery option. This system creates new incentives for customers to visit a hypermarket.
As part of its multichannel sales concept, Real also operates two pick up stores in Germany. Customers can order food and chemist items online at www.real-drive.de and then pick up the order two hours later at one of the two pick up stores in Isernhagen-Altwarmbüchen near Hannover or in Cologne-Porz. The pick up concept is to be implemented at additional stores, particularly those in metropolitan areas. Real intends to make shopping faster and more comfortable for customers. For these reasons, new pick up stations should be built between customers’ homes and workplaces when possible. Waiting times should also be shortened.
New accents in marketing
Real is also addressing the changing shopping behaviour of its customers with enhanced promotional services. As a founding member and long-time partner of the Payback loyalty programme, Real began offering eCoupons alongside traditional paper coupons in 2012. This provides customers with the option of selecting and activating eCoupons tailored specifically to their individual shopping needs via the Real app and at www.real.de. When paying for their purchases at the checkout, they simply show their Payback card to collect bonus points. Real uses eCouponing to reward existing customers for their loyalty and to attract new customer groups. In addition, our sales line uses this solution to develop individualised campaigns for various target groups and has been offering this option to its industry partners since 2013. The benefit: unlike print campaigns, digital coupons are associated with very little overhead and fees for redeemed coupons. The enhanced service is well received by customers. The download statistics for the Real app shot up following introduction. With 32,000 downloads, it was the front-runner in the lifestyle category of the Apple App Store in September. The fact that the digital strategy of our sales line is paying dividends is demonstrated by its good score in the first Digital Readiness Index for retail and wholesale companies in Germany. Real was ranked third among 25 major retail companies. The index, which is prepared by the consultancy Neuland, assesses the digital development of companies as a prerequisite for online sales. The study determined that the Real brand is present in digital channels and uses its knowledge of customers to create a major competitive edge. With the eCouponing approach, Real is one of the first companies in Germany to successfully link these two topics (presence and customer knowledge) to create promotional campaigns that speak to end consumers.
In 2013, our sales line set new accents with a marketing campaign geared towards strengthening regular customers’ bond with the sales line and targeting additional customer groups. The campaign aimed to improve customer frequency, acquire new customers and raise the average transaction value per customer – the so-called ticket size.
Each weekend Real distributes 24 million fliers to German households. The fliers advertise products that meet consumers’ daily needs – since May 2013, they have touted attractive promotional prices and more than 2,000 items with permanently lower prices.
As in 2012, the sales line again conducted Real Deal campaigns during the period under review and built on the previous year’s successes with a total of 17 “deals of the day”. As a result, our sales line sold 200 tonnes of bananas and 10,000 tablet PCs within just a few hours. This campaign is unparalleled in the German food retail business and has successfully made its mark. The culinary speciality weeks introduced with the slogan “Eat good food” during the reporting period are also popular. In these campaigns, a special selection of high-quality products, which are sometimes only available during this time period and related to a certain topic like “Asparagus Season”, are offered at stores. In one reflection of this, Real heralded a “culinary spring” in May and added exclusive premium food and non-food items to its assortment. The second culinary speciality week was held in October with an Italian theme and offered a large selection of exclusive brands typical of the country.
With the launch of the six-week marketing campaign “Murmelix” (Marblelix) in January 2013, the sales line built on the success of the its 2011 “Murmel-Fieber” (Marble Fever) campaign. During the period under review, Real also launched two reward programmes in cooperation with the companies Braun and Fissler.
Customer satisfaction improved
The results of the customer barometer 2013 demonstrate that Real continued to improve in key aspects such as value for money, customer satisfaction with the service and technology centre as well as staff availability. Real also substantially improved in terms of special offers, customer satisfaction in the areas of non-food products 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 2013. 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.
In the period under review, Real professionalised its entire press and public relations work. As a result, the major changes taking place at Real were reported on more widely in many national dailies and trade journals. In line with the territorial strategy, the stores now receive more individual support in their public relations work.
To conduct candid and transparent dialogue with customers, Real has also set up customer advisory councils in more than half of its hypermarkets. Each quarter, the stores invite ten 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. Based on buyer structure, international customer advisory councils were also formed during the period under review.
Real also uses social media to maintain its dialogue with customers. The sales line’s official Facebook page had more than 360,000 fans as of mid-2013, making it more popular than those of Real’s competitors. In addition, the sales line also informs customers about its products, services, deals and sweepstakes on its own YouTube channel and the microblogging platform Twitter.
Responsible business practices
In the reporting year, Real forged ahead with its sustainability activities. In one reflection of this, more than 200 trainees and students informed customers about topics such as recycling, energy conservation projects and regionality as part of a Sustainability Day at 41 hypermarkets. Thanks to this event, the trainees and students were awarded second place in the ECOCARE 2013 competition organised by the retail trade magazine Lebensmittel Praxis.
Real is also assuming responsibility in its assortment design: the sales line began offering products bearing the label “Für mehr Tierschutz” (For more animal protection) in January 2013. The seal of the German animal welfare association designates sausage and meat from animals raised in conditions better than those required by law. Furthermore, stores in northern Germany began testing products from the Tierwohl animal welfare campaign at the start of the reporting year. The concept involves the voluntary commitment of producers to raise animals under conditions better than those required by law in terms of stall space, water supply as well as duration of the suckling period and transport. The aim is to improve animal welfare.
During the reporting period, Real made targeted investments in energy-conserving technology for its stores, including energy-saving lighting concepts and new, particularly efficient refrigeration units. Thanks to these investments, our sales line has saved around 125,000 tonnes of CO2 since 2006.
Social commitment is another central pillar of Real’s sustainability activities. Examples of this work include its assistance in the wake of catastrophic flooding along the Danube and Elbe rivers. Real’s hardship fund that was launched in 2012 was able to alleviate the impact on affected employees. In addition, employees organised emergency aid during and after the flood. Employees who serve as volunteers in the volunteer brigade or the Technisches Hilfswerk relief agency were released from their duties on full pay to provide assistance. Real provided quick assistance to affected employees without any red tape in the form of financial support totalling €1,500 – one-third of this total comprised product coupons. Furthermore, Real granted customers in the areas impacted by the flooding along the Danube and Elbe rivers and their tributaries a one-time discount of 10 per cent off their purchases.