PRICER.LT: HOW ENGINES OF RETAIL CHAINS ARE WORKING AND HOW FAR THEY WILL GO

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In the July review of the food price survey, we took a brief look at the results of the retail chains:

https://pricer.lt/posts/421-pricerlt-liepos-maisto-kainu-tyrimas-prekybos-tinklu-kainine-ir-apyvartu-olimpiada-tarpiniai-rezultatai

Source: https://www.vz.lt/prekyba/2021/07/14/lidl-lietuvos-finansiniai-rezultatai-pagal-apyvarta--trecias-didziausias-tinklas

„It means that Lidl was growing by 23,2 percent if compared with the previous period. If Lidl keeps the same growth dynamics – and it is only 10 additional stores and some natural growth - IKI will be pushed from the second place.“

We have collected some data from open resources for this article and we will look deeper at the Lithuanian retail chains data, and will make some predictions what will happen with the retail chains in the nearest future if they make no changes.

So, what growth was in the retail chains in 2020 if we compare with 2019

 

 

2020

 

2019

Retail chain

Company ID

Turnover, Eur

Grow

Turnover, Eur

Maxima LT, UAB

123033512

    1 689 164 000   

-1,16%

  1 709 000 000   

Palink, UAB - IKI retail chain

110193723

       672 684 000   

-0,78%

     678 000 000   

Lidl Lietuva, UAB

111791015

       578 338 000   

23,21%

     469 400 000   

Norfos mažmena, UAB - Norfa

110778328

       559 073 649   

6,04%

     527 238 000   

Rimi Lietuva, UAB

123715317

       360 312 422   

6,95%

     336 900 000   

UAB "Barbora" - Barbora.lt

302908069

        22 500 000   

99,12%

       11 300 000   

The first two market leaders Maxima and IKI were reducing their turnover and market share. Of course, Barbora.lt being a part of the Maxima Group was growing almost by 100% but if you sum Maxima and Barbora.lt figures there will be 1 720,3 million Eur in 2019 and 1 711,7 million Eur in 2020 – anyway it is 9 million Eur less. There is an impression that Maxima shared part of turnover with e-grocer Barbora.lt (mostly Maxima customers started shopping in Barbora.lt) and they just lost some part of the turnover. How this looks from the point of view of effectivity, we will write later. And the winner of 2020 year is Lidl who adds almost 110 million Eur, grows by 23,21 percent and takes the 3rd place. If Lidl keeps the same dynamics – next year it will take the 2nd place and will push IKI down to the 3rd place.

The retail chains occupy market by opening stores. So how much turnover they are getting from each store:

   

2020

2020

2020

Retail chain

Company ID

Turnover, Eur

Number of stores

Turnover per store, EUR

Maxima LT, UAB

123033512

    1 689 164 000   

252

            6 703 032

Palink, UAB - IKI retail chain

110193723

       672 684 000   

224

            3 003 054

Lidl Lietuva, UAB

111791015

       578 338 000   

54

          10 709 963

Norfos mažmena, UAB - Norfa

110778328

       559 073 649   

150

            3 727 158

Rimi Lietuva, UAB

123715317

       360 312 422   

68

            5 298 712

UAB "Barbora" - Barbora.lt

302908069

        22 500 000   

 

 

Sure, that it is fairer to compare how much they are getting from a square meter but the turnover per store is still a good indicator. The most effective in this case is Lidl and if to take into account what retail chains told about their store areas in general (not fully vaccinated people can’t go to stores bigger than 1 400 sq m and other, then Lidl retail chains declared that they have more than half bigger stores while almost all stores of Lidl are less than 1 400 sq m) Lidl has the smallest count of square meters and the biggest turnover by square meters.

Source: https://www.lrytas.lt/verslas/rinkos-pulsas/2021/08/10/news/aktualu-visiems-neturintiems-galimybiu-paso-prekybos-tinklai-skelbia-kiek-turi-parduotuviu-iki-1500-tukst-kv-metru-20386947/

IKI has the worst turnover per store indexes. This chain probably will be losing market share and positions further – in order to overcome IKI, Lidl needs to open only 10 stores during a year.  What further perspectives of Lidl are – some sources are speaking that their aim in Lithuania is 100 Lidl stores.

Source: https://www.delfi.lt/verslas/verslas/lidlas-ikele-koja-i-lietuva-kiek-dar-parduotuviu-atidarys.d?id=71510264

This is an ambitious but very realistic target. If to take into account today's numbers – that will be 1 071 million EUR yearly turnover. Will Lidl overcome Maxima? Probably not but surely Lidl will strongly decrease the buying power of Maxima (not speaking about the other retail chains and Latvia with Estonia where Lidl will open shortly) and will take additional 500 million EUR from the market leader.

One funny remark – the e-grocer Barbora sells as much as 2 stores of Lidl – and this data is for the year 2020 where a lot of people were scared of the pandemic.

What concerns the other chains in the nearest future. If there are the same growth trends, after 3 years Norfa will also overcome IKI and push it to the 4th place. This can be possible because of personnel effectiveness:

   

2020

2020

2020

2020

Retail chain

Company ID

Turnover, Eur

Number of employees

Yearly turnover per employee, EUR

Monthly turnover per employee, EUR

Maxima LT, UAB

123033512

    1 689 164 000   

12 751

132 473

11 039

Palink, UAB - IKI retail chain

110193723

       672 684 000   

5767

116 644

9 720

Lidl Lietuva, UAB

111791015

       578 338 000   

2 066

279 931

23 328

Norfos mažmena, UAB - Norfa

110778328

       559 073 649   

3 201

174 656

14 555

Rimi Lietuva, UAB

123715317

       360 312 422   

3 040

118 524

9 877

UAB "Barbora" - Barbora.lt

302908069

        22 500 000   

716

31 425

2 619

Of course, by the index Turnover per employee the biggest star is Lidl. Maxima, IKI, Rimi are more than twice less effective in comparison to Lidl, speaking technically – a Lidl store has two times more powerful engine.
Norfa is not as effective as Lidl but it performs significantly better than the others. If Norfa does not make mistakes with offers to their customers and finds way to new consumers – this chain has a bright future.

And the most ineffective employees work in Barbora. They hardly make turnover to get a minimal wage. And if we recall presumption that all Barbora turnover was taken from Maxima clients – it means that Maxima Group drained down part of their turnover through the detrimental ineffective channel.

But globally speaking, as the biggest loser in today's situation we see IKI, which is in the 2nd place now but there is a big possibility of great fall. This is a small piece from Rewe Group press release about closing activities in the Russian market:  

Source: https://www.rewe-group.com/en/press-and-media/newsroom/press-releases/rewe-international-and-lenta-llc-sign-purchase-agreement-for-billa-russia/

If there are the same trends as we see today, IKI will meet Rewe Group market abandoning criteria. That’s why IKI management must think carefully about their future actions, if they do not want the Russian situation for their company.

 

BE WORTH OF FREE CHOICE ALWAYS!

More information:

Head of food direction at Pricer.lt

Petras Čepkauskas

Tel.: 868512156

[email protected]

www.pricer.lt

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