Supermarkets in Austria

2020 IMPACT

Proximity and convenience benefit supermarkets during pandemic

The largest overall channel within grocery retailers in value share terms, supermarkets greatly benefited from the pandemic and subsequent lockdown in Austria in March, mainly due to the home seclusion trend. Many consumers wanted to ensure that they had sufficient stock levels of essential groceries due to remote working and studying, which meant that they could reduce their visits to retailers due to concerns over coming into contact with others which had the potential to increase their risk of exposure to the virus.

Home seclusion trend results in greater demand for fresh ingredients due to opportunity to experiment with cooking from scratch

Although many Austrians experienced a significant dip in their disposable incomes during 2020 as a result of the pandemic including rising unemployment, which forced them to prioritise their expenditure, they were less reluctant to save money on groceries whilst confined to their homes. On the contrary, many treated themselves to high-quality foodstuffs in the face of uncertain times and cutbacks in other areas, including foodservice with the latter forced to close during the initial lockdown from mid-March to mid-May.

Fairly consolidated competitive landscape where Spar cements overall leadership in value share terms in 2020

Supermarkets remained a fairly consolidated competitive landscape in 2020, led by Spar Österreichische Warenhandels AG (Spar, Eurospar) in value share terms, followed by Rewe International, where its Billa banner is the overall brand leader in addition to having the highest number of outlets. Nevertheless, Spar has a competitive edge on its rival in terms of local customer knowledge due to the high share of Spar supermarkets operated by largely independent, locally anchored owners.

RECOVERY AND OPPORTUNITIES

Despite dip in 2021, value sales of supermarkets will remain higher than pre-pandemic levels

Like other modern grocery formats, with the exception of forecourt retailers which is likely to benefit from increasing traffic and greater relaxation in terms of restrictions on movement for the local population in 2021, supermarkets is predicted to see a drop in value sales (at constant 2020 prices) compared to the previous year when the channel had benefited from the home seclusion trend. A greater likelihood of returning to the workplace and eventually foodservice outlets due to increasingly busy lifestyles will also support this trend, depending on the threat level of the virus.

Proximity and convenience will remain key driving factors behind supermarkets’ popularity

With value sales through supermarkets set to normalise in terms of consumer purchasing over the forecast period with low, positive growth, the channel will need to address a number of factors including lack of expansion potential in combination with increasing difficulties in operating fully-fledged supermarkets profitably in more rural areas due to decreasing purchasing power and migration due to increasing urbanisation. Nevertheless, the channel will continue to benefit from the convenience of proximity, as consumers gradually return to their daily routines, which will include on-the-go demand for quick, hot or cold snacks and beverages in lunchtime breaks, for instance.

M-Preis set to make further gains due to geographical expansion

M-Preis Warenvertriebs GmbH (Mölk), with its highly successful network of supermarkets across two banners which had continued to gain share across all indicators (value sales, selling space, outlets), was previously limited to the four most western federal states in Austria. However, it is expected to continue its expansion to the eastern region of the country.