Migros want to conquer German market with Tegut

In January the supermarket chain Migros took over the small German competitor. "Up to the very end there were still many other interested parties," Wolfgang Gutberlet of Tegut says. How much Migros finally paid for Tegut has remained a secret. Estimates vary from about 200 to 250 million Euro.
Migros took quite a chance buying Tegut. The German foodstuff trade is a difficult market, especially for novices. The margins in the foodstuff trade are approximately only one percent on average, as calculated by 'Handelsverband Deutschland' (HDE).
The market is growing and according to market research bureau GfK a growth of about two percent is expected. "But that at the moment is for prices only" as per
GfK-expert Wolfgang Adlwarth. As far as number of discounters is concerned Germany is No: 1 in the world. The percentage of cheap suppliers is about 40 percent.
Perhaps the trend is in favour of Migros. The stereo-type that Germans only look at the price is no longer correct, according to Adlwarth. Especially with the younger customers premium brands such as, for instance, organic and fairtrade products win popularity. And Tegut is known for its good products and a large share of organic products. But other suppliers on the market have noticed the changing
consumer wishes. Aldi, Lidl and Netto also, for a long period already, have offered their own organic brands. The decision by Migros to take over Tegut is therefore 'courageous' Marco Atzberger of the 'EHI Retail Institute' in Cologne agrees. The positioning in Germany is a 'very ambitious risky undertaking' according to him.
Nevertheless Atzberger does see opportunities in the Migros plans. Migros in the take-over of Tegut also takes over a brand, which is both in content and regionally rather strong. Therefore there is a good chance that the take-over of Tegut will be successful.

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