Bagging Europe’s Groceries

Bagging Europe’s Groceries

“Takeovers in Europe’s grocery-retailing sector work best on the national level. But pressure to grow and the “Wal-Mart factor” are forcing big supermarket chains to look abroad.”

The McKinsey Quarterly, 2000 Number 2

Summary by EURACTIV:

• Between 1994 and 1998, the trend of cross-border expansion, mostly by acquisition, has accelerated in the grocery retail industry: the volume of corporate takeovers by European grocery retailers has more than quadrupled (from $2.9 billion to $12.4 billion). Yet, compared to the US, the European retail grocery sector is only at the beginning of a period of consolidation.
• In Europe, there is a general trend toward converging tastes and lifestyles, making it easier for grocery retailers to realize advantages of scale by operating across different European markets. European retailers must therefore act now, as leadership positions in the sector will be decided during the next couple of years.
• McKinsey predicts the consolidation will continue for some years. It foresees two possible scenario’s for the industry’s development: a European grocery “champions’ league” or strong regional fortresses: presumes an acceleration of the trend to regional consolidation.

Policy relevance:

• More consolidation in the grocery retail sector to be expected in the next years…
• More competition cases to be investigated at EU level?

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