Rewe director fears damaging price war with discounters

In the battle to increase market share, discounters are putting pressure on food manufacturers for better deals. Rewe director Alain Caparros fears that there is a damaging price war about to start within the sector, reports German weekly, 'Der Speigel', on its website.

Discount market leader Aldi has this year, on many occasions, significantly lowered their prices: which has irritated the largest German supermarket group Rewe. "It is value destruction," grumbled Caparros. Just by lowering the price of eggs at Aldi, the company lost millions of Euro. However, the manager doesn't see any other option but to follow the price decreases of the discounters. "We sit at a price spiral which we must follow."

For consumers this only means more savings over the coming months. "As long as discounters are unhappy with their sales and customer growth, they will continue to lower prices," Caparros is convinced. For him it is clear that the development of discounters is to follow supermarkets and offer a complete assortment. "We are following the discounters example, and the discounters are following more traditional supermarkets," said Caparros. "Sooner or later we will meet. The question remains whether this confrontation will be brutal or not."

Belonging to the Rewe Group, discounter Penny shows figures in the red. Not until 2016 will Penny possibly show any profit," said Caparros. Nevertheless, the director is satisfied with the development of his daughter company. Despite tough competition from rivals Aldi and Lidl, in 2013 Penny grew compared to the traditional supermarkets in the Rewe Group.