Grocery retailing in Germany : situation, development and pricing strategies

Over the last four decades, the German food-retailing sector has been subject to continuous structural change. Most important has been the combination of increasing concentration with rising store size and the growing role of discounters implementing an aggressive EDLP pricing strategy. Thus, consumers have benefited from intensive price competition, despite the higher market share of leading food retailers. The analysis of market conduct, in terms of price formation and pricing strategies, reveals a typical situation of imperfect competition. The law of one price certainly does not hold for individual foods. Price levels and pricing strategies diverge substantially across firms and store types. There are successful retailers with an EDLP strategy, as well as others with a HiLo strategy. A major lesson to be learned from the German experience is that increasing concentration in food retailing does not necessarily imply that more market power is exerted at the expense of consumers. Competitive markets are compatible with a high level of concentration as long as a strong competitive fringe, for example discounters, challenges the large chains in food retailing

Price variability or rigidity in the food-retailing sector? Theoretical analysis and evidence from German scanner data

In many industrialized countries, the grocery-retailing sector exhibits a strong and increasing market concentration. Hence, it is important to understand retail pricing for many questions related to market power in the marketing chain and to agricultural and food policies. We analyze intertemporal pricing of grocery retailers in Germany with a large set of scanner data for processed foods. In theory, food prices could be rather variable, e.g. due to fluctuating commodity prices in a competitive world, or rather rigid, e.g. due to price adjustment costs. We elaborate that retail sales are crucial and raise food price variability at the points of sale. Despite this, prices are rather rigid and often do not change for many weeks. Moreover, pricing strategies for identical brands vary strongly across retailers. Retailers seem to have differential pricing strategies and, thus, market power. This casts substantial doubt on the assumption of a competitive price transmission in the marketing channel underlying most analyses in agricultural economics. --Grocery retailing sector,pricing patterns,sales,price rigidity,scanner data

Grocery retailing in Germany: Situation, development and pricing strategies

Like many other industrialised countries Germany has experienced a powerful concentration process in food retailing. There are some issues, however, which make Germany a special case in Europe and among industrialised countries in general. This holds true in terms of market structure and concentration, market development and pricing strategies. The market share of hard discounters like Aldi and Lidl has grown continuously in recent decades and the market share of discounters in general has reached a magnitude that is well above that found in other European countries. This has led to robust price competition in German food retailing. Along with this development, it has been very difficult for inward foreign direct investment (FDI) to gain ground in the German food retailing industry. One example was the market entry by Wal-Mart which, given its initial ambitious goals, was not successful. On the other hand, German hard discounters have strongly affected outward FDI by other German food retailers. In the process of expanding into other markets abroad, these companies have had a positive impact on exporting by the German food industry. This article describes and analyses these major trends in German food retailing in detail. It is organised as follows. The structure of food retailing is described and explained in Section 2. Section 3 deals with the importance of inward and outward FDI in German food retailing. It is discussed in both sections how increased concentration in food retailing affects the marketing chain. Price competition is intense in Germany, and studies of food pricing strategies have used scanner data. Therefore a special case study in Section 4 is the analysis of food pricing strategies in Germany based on scanner-data evidence. The analysis shows that the pricing behaviour of food retailers is characterised by the every-day-low-pricing (EDLP) strategies of discounters and the high-lowpricing (HiLo) strategies of their major competitors. The main elements of pricing policies are indicative of firms' market power: repeated price discounts for major food brands, frequent changes of loss leaders, the dominant role of psychological pricing, and a strong price rigidity for all other foods which are not on special offer. --

Grocery retailing in Poland: Structural changes and foreign direct investment

The development of the Polish food retailing sector is very interesting. With the transition from a socialist to a market economy, structural change in the retailing sector has been especially rapid and the new open markets in Poland have attracted foreign investors throughout the economy in general and in the foodretailing sector in particular. This article describes and analyses the major trends in Polish food retailing. It is organised as follows. The structure of food retailing is described and explained in Section 2, first at the store-type level and then at the firm level. How the powerful concentration process in food retailing has affected the marketing chain is also discussed. Inward foreign direct investment (FDI) in Polish food retailing is covered in Section 3. Given the special importance of FDI in the Polish economy during the transition process, an analysis is carried out of the determinants of FDI in retailing within a cross-country dataset and with a particularly detailed look at FDI in Poland. The results are summarised in Section 5. --

Price variability or rigidity in the food-retailing sector? : Theoretical analysis and evidence from german scanner data

In many industrialized countries, the grocery-retailing sector exhibits a strong and increasing market concentration. Hence, it is important to understand retail pricing for many questions related to market power in the marketing chain and to agricultural and food policies. We analyze intertemporal pricing of grocery retailers in Germany with a large set of scanner data for processed foods. In theory, food prices could be rather variable, e.g. due to fluctuating commodity prices in a competitive world, or rather rigid, e.g. due to price adjustment costs. We elaborate that retail sales are crucial and raise food price variability at the points of sale. Despite this, prices are rather rigid and often do not change for many weeks. Moreover, pricing strategies for identical brands vary strongly across retailers. Retailers seem to have differential pricing strategies and, thus, market power. This casts substantial doubt on the assumption of a competitive price transmission in the marketing channel underlying most analyses in agricultural economics

Grocery retailing in Poland: Structural changes and foreign direct investment

The development of the Polish food retailing sector is very interesting. With the transition from a socialist to a market economy, structural change in the retailing sector has been especially rapid and the new open markets in Poland have attracted foreign investors throughout the economy in general and in the foodretailing sector in particular. This article describes and analyses the major trends in Polish food retailing. It is organised as follows. The structure of food retailing is described and explained in Section 2, first at the store-type level and then at the firm level. How the powerful concentration process in food retailing has affected the marketing chain is also discussed. Inward foreign direct investment (FDI) in Polish food retailing is covered in Section 3. Given the special importance of FDI in the Polish economy during the transition process, an analysis is carried out of the determinants of FDI in retailing within a cross-country dataset and with a particularly detailed look at FDI in Poland. The results are summarised in Section 5

Determinanten der Zeitverwendung für Ernährung in Deutschland: eine ökonometrische Analyse mit Zeitbudgetdaten

Time budget data describe how much time people invest in different activities of a daily routine. The study presents contributions of time budget data to the nutrition research on the example of German Time Budget Surveys 1991/92 and 2001/02 of the German Statistical Office. Over time, mothers reduced the amount of time spent on food preparation. Tobit analysis reveals that time inputs in cooking, baking and laying the table are influenced by personal as well as household-specific characteristics and especially by intra-family allocation of time. Fathers increase their participation in food preparation as time invested in their own jobs decreases and their partner’s degree of employment increases. The decomposition of Tobit coefficients, following the MCDONALD/MOFFITT procedure, is discussed. The study reveals how time budget data can contribute to household economic research in an innovative way. Although time budget data do not unveil quality and quantitiy of the food in family households, the results of the study demonstrate the importance of institutionally organised nutrition education in kindergarten and school

Pricing patterns and promotion activities in the German grocery retail industry

The present article discusses several pricing patterns and promotion activities in the German grocery retail industry. Special sales offers on the one hand and continuous pricing on the other hand affect the price instability of several selected products. Altogether the grocery retail industry exerts a stabilizing effect on prices in comparison with the price instability of agricultural commodities in the world market. Different price levels for products in some retail outlets show that a mixed price calculation is used. Price elasticities in the elastic part of the demand function for four selected products indicate that consumers react strongly to price discounts at the point of sale. Beside pricing strategies, different promotion activities affect demand for individual products strongly

Associations between maternal employment and time spent in nutrition-related behaviours among German children and mothers

Objective To examine associations between maternal employment and time spent engaging in nutrition-related behaviours among mothers and children using a nationally representative sample of households in West and East Germany. Design A cross-sectional analysis was performed using time-use data for a sample of mother–child dyads. Associations between maternal employment and time spent in nutrition-related activities such as eating at home, eating away from home and food preparation were estimated using a double-hurdle model. Setting German Time Budget Survey 2001/02. Subjects The overall sample included 1071 households with a child between 10 and 17 years of age. The time-use data were collected for a 3 d period of observation (two weekdays and one weekend day). Results Maternal employment was associated with the time children spent on nutrition-related behaviours. In households with employed mothers, children spent more time eating alone at home and less time eating meals with their mothers. Moreover, employed mothers spent less time on meal preparation compared with non-employed mothers. There were regional differences in time spent on nutrition-related behaviours, such that East German children were more likely to eat at home alone than West German children. Conclusions Maternal employment was associated with less time spent eating with children and preparing food, which may be related to the increasing childhood obesity rates in Germany. Future national surveys that collect both time-use data and health outcomes could yield further insight into mechanisms by which maternal time use might be associated with health outcomes among children