Cheap buys Discount chains spreading rapidly
Düsseldorf · Market leader Tedi opens around three new stores every week. Discounters are springing up everywhere in Germany, even in small towns, offering bargain basement prices.
They are popping up like mushrooms in many German cities: discount stores like Tedi, Action, Mäc Geiz or Rusta. The stores are very basic and it’s sometimes hard to find a thread that links all the merchandise together: home decorations and accessories, paper products, household goods, cosmetics and sometimes even groceries. But the bargains seem to be a draw for German consumers.
The branch is booming: Market leader Tedi reports that it is opening about three new stores a week in Germany. Competitor discount store Action says it is planning more than 60 new stores for this year. Swedish newcomer Rusta, which came to Germany in May, also has big plans. It says at least 500 stores are possible. And this isn’t even all of the discount chains on the market.
Marcus Hepp of Boston Consulting says the success of Tedi and the other discounters is not surprising. “The German consumer is very used to discounters - in the form of supermarkets but also for clothing and furniture.” But there are niches which the bargain stores haven’t yet filled, home decorations or paper products for example. Hepp says that Tedi or Action both venture into these areas with a collection of household items, party and paper goods, small electric items and cosmetics.
Tedi’s chief executive Silvan Wohlfahrt explained “We have benefitted because many small shops have had to close in the past years. This strengthens our role as a local provider. The customer is happy when they can find arts and crafts items, paper products or home decorations at our stores.”
The discount stores are often laid out in a way that offers no clear oversight as to where items are located. Commerce expert Hepp says this is a part of the strategy. “The searching and finding, even the moment of surprise, are all a part of the recipe for success, spurring on the buying impulse. The goal is for customers to buy more than they had originally planned,” explained Hepp.
Sander van der Laan who heads the Action discount stores, confirms this strategy. “Typically, a customer comes in to buy one or two things but leaves the store with seven or eight items in the bag,” he says. He agrees that the moment of surprise when customers find the unexpected bargain is key for their success. (Orig. text: Erich Reimann)
