Smaller Grocery Stores Team Up with Amazon to Take on German Giants

Smaller Grocery Stores Team Up with Amazon to Take on German Giants

By Stephen Fuchs on Email @StephenWFuchs

As Germany’s key players in the grocery scene continue to expand and dominate every corner of the country, many of the remaining small guys aren’t yet ready to give up the fight, and while competing directly is becoming an almost impossible task, some have found that utilizing their biggest competitor yet, Amazon, might be the only option left.

German national chains Aldi, Lidl, Edeka and Rewe are among the four large players pushing out the small regional chains, and in the past a buyout offer would’ve been the saving grace. But more of these small stores are wising up and realizing that there are other options aside from throwing in the towel, and while the move could be seen as a risky step, several regional brands have opted to join forces with Amazon to bring their products directly to the customer, skipping the physical store requirement.

taking on a giant who clearly wants to take you out seems like a risky move

Amazon has made it clear that the company has its eyes on taking over the traditional grocery market as it has put a lot of effort into its Amazon Prime Now, a service that offers quick same day delivery for essential household items — many delivered within an hour or two. In the US, Amazon stepped up its efforts by buying out the popular Whole Foods grocery chain, only solidifying its intentions. So taking on a giant who clearly wants to take you out seems like a risky move, but for the regional stores giving it a try, it is so far worth it.

One of these chains is Feneberg, who through Amazon is now supplying around 4,000 items to shoppers around Munich that don’t require a trip to one of their 76 stores located across the Bavarian region of Germany. Tegut, after being forced out of a previous attempt to acquire Kaiser’s Tengelmann stores and seeing it instead split off into the ownership of the big chains, now uses Amazon to offer close to 5,000 items, many of which are the stores own private label items.

With Amazon being more concerned about competing with the big chains, it is relying on these smaller stores to get it done, but what happens when Amazon no longer needs their help? The stores may be playing with fire, but as one industry expert, Dirk Homberg of logistics service provider JDA, puts it, for now “it makes sense. Many German retailers are not up to the challenge of meeting the complex and demanding requirements of customers, such as being able to order and receive products in any location, at any time.”

“the time will come when Amazon will no longer need us”

Thomas Gutberlet, who runs Tegut, said that before making the move, there was “intensive discussion in the company as to whether this was a risk or an opportunity,” and while they ultimately saw the benefits outweighing the risks, it is seen as only a temporary move. “We also know that the time will come when Amazon will no longer need us, when their [grocery] business is going well. Then they’ll go it alone.”

Sources: Handelsblatt

Photo by leonie wise on Unsplash

Stephen Fuchs
Stephen founded German Pulse and LGBT Germany out of a passion to introduce Americans to a Germany that goes beyond beer and polka (although with enough beer he has been known to polka it up a bit). He's a coffee addict, lover of wine and good times, a hit in the kitchen and editor of TV commercials. You can follow him on Twitter (@StephenWFuchs) to find out a lot more.
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