WE ARE
strong & diverse
Beleuchtetes Logo am PENNY-Markt auf dem Kiez
Illuminated logo on the Reeperbahn PENNY store
Illuminated logo on the PENNY store “Grüner Weg” with wooden façade

PENNY: the Store Next Door

Thanks to our 2,130 stores, at PENNY we have the privilege of being part and parcel of people’s everyday lives. We’re committed to putting quality products on the shelves and getting crisp, fresh produce into people’s baskets all at low prices. Stores within easy reach, customer-friendly business hours – some of them until 11 pm – and a large selection of private labels, such as Naturgut with lots of innovative organic products or the vegan umbrella store brand Food For Future, ensure that our customers get maximum flexibility and convenience from their discounter. In 2021, PENNY became the first German discounter to offer a delivery service in the Cologne area, Berlin and Hamburg in conjunction with Bringoo.

Cologne Institute for Commercial Research (IFH): Collating and Sharing Knowledge

The Cologne Institute for Commercial Research (IFH) is a renowned market research and consulting firm deeply rooted in the University of Cologne. Its employees continuously analyse market trends, customer behaviour and the development of competition and share this knowledge with the sector. The Cologne Institute for Commercial Research’s main aim is to make its industry, wholesale, retail and services customers as well as public institutions more successful and ready to take on whatever the future has in store.

The Benefit of Acting Locally

Low prices alone aren’t enough to impress customers. Stefan Magel, Divisional Board Member/COO PENNY Germany, and Dr Kai Hudetz, Managing Director of the Cologne Institute for Commercial Research (IFH KÖLN), discuss the future of discounters and PENNY’s brand profiling.

For a long time now, discounters have been about more than just low prices. These days, they also feature a large range of fresh products and organic produce as well as regional and vegan items as standard – all things that only supermarkets used to boast. Discounters are no longer just focusing on prices and instead are constantly building their brand profiles around other selling points. So what’s going on there?

Dr Kai Hudetz: For years, all companies involved in the food retail sector have been working hard to ensure that they constantly offer more without customers having to compromise on price. They’re all checking out the competition and striving to outdo each other to the delight of customers who have all realised that low prices don’t automatically equate to sacrifices in terms of the overall shopping experience or the range of products on offer.

Stefan Magel: There is fierce competition between supermarkets and discounters. They’re all looking for opportunities to steal each other’s customers and are more than prepared to take inspiration from each other’s strengths and work on their own weaknesses. As a result, these days consumers can also buy products at very low prices in supermarkets and find high-quality fresh products that were previously only available from supermarkets in discounters.

Are consumers not as fixated on prices as they used to be? Perhaps because other aspects influencing where they shop have become more important over the course of the pandemic?

Stefan Magel: A trend for one-stop shopping emerged during the pandemic. Many consumers were keen to buy as much as they could during a single visit to a single store so as to avoid having to come into contact with too many people. As a result, supermarkets benefited thanks to their extensive product ranges. What’s more, over the years, customers have learned that they can also buy products at low prices at supermarkets previously deemed to be “expensive”. In the last few years before the coronavirus pandemic, customers generally became more and more willing to switch. The one shop where people get absolutely everything has long been a thing of the past....

Dr Kai Hudetz: ….Yes, people who we call “smart shoppers” are always on the look-out for the cheapest offers. Price continues to be the top priority for them. However, “loyal shoppers” constitute a much, much larger group of customers. They’re loyal to their store even when they suspect that they could possibly get something even cheaper somewhere else. However, on the whole, they’re happy with “their” store’s value for money because they continuously discover great products there at low prices. Stores that are not deemed to offer attractive prices won’t be able to impress consumers. However, low prices alone aren’t enough to earn customers’ loyalty.

Feature story about Stefan Magel, Divisional Board Member/COO PENNY Germany

»It is becoming increasingly important for stores to demonstrate good ethics if they want to become trusted stores. Customers are keen to know what the store they’re shopping in stands for.«

Stefan Magel
Divisional Board Member/COO PENNY Germany

How do stores manage to earn themselves the status of a trusted store?

Stefan Magel: Low prices, first and foremost, but good quality, a broad range of fresh products and a pleasant overall shopping experience have also now become standard requirements. It is becoming increasingly important for stores to demonstrate good ethics if they want to become trusted stores. Customers are keen to know what the store they’re shopping in stands for, what its approach to sustainability is and which animal welfare standards are met by the meat on offer. Young consumers in particular are increasingly asking these types of questions.

Dr Kai Hudetz: It is vital that a brand delivers on its value proposition in store because this is often where little things will determine whether a customer comes back or not: How long are the queues at the checkout? Is the reverse vending machine always full? Are there often empty shelves? Retailers have to constantly take their concepts to the next level, but they then have to ensure that they put them into practice. That’s the real challenge.

So how do you develop and maintain a brand profile?

Stefan Magel: Look at PENNY, for example. When we redefined the brand, we initially asked ourselves: What are our assets? We knew that we had a good reputation in terms of pricing and that lots of customers appreciated the interaction with employees in store. We were also a stone’s throw away from customers, in city centres, and not in the countryside like many competitors. We wanted to leverage that. So our approach was to combine this local connection with an emotional connection. We wanted to be the local discount supplier. And we’ve achieved just that. PENNY is now the store that is “just round the corner”, where you can buy products at low prices and feel right at home. Customers do small to medium-sized shops with us but come more often as they live close by.

Feature story about Dr Kai Hudetz, Managing Director of Cologne Institute for Commercial Research (IFH)

»Discounters must never forget where they came from. They must maintain their reasonable price policy. As a result, they probably won’t be able to further expand their own services a great deal.«

Dr Kai Hudetz
Managing Director of the Cologne Institute for Commercial Research (IFH KÖLN)

And it is the store that is sometimes known for slightly cheeky communications.

Stefan Magel: We consistently manage to attract attention with unusual, smart ideas and promotions. Our Christmas campaign, for example, was – based on clicks and views – the most eye-catching promotion for three years running. That’s great but it will ultimately only pay off at the checkout if you’re also doing a good job on the ground, making sure that the stores are shipshape, expanding the product ranges and developing an exceptional company culture.

What additional products and services can discounters develop in order to win over customers?

Dr Kai Hudetz: Discounters must never forget where they came from. They must maintain their reasonable price policy. As a result, they probably won’t be able to further expand their own services a great deal. However, combined approaches with partners, for example from the logistics industry, could be a possible option for further strengthening stores’ brand profiles as local suppliers. Discounters as regional ports of call, perhaps reinforced with regional sponsorship. I think this approach could be very promising.

Stefan Magel: Those are precisely the areas we’re working on at PENNY. Stores as local meeting places that offer various different services – this could represent an opportunity for further development and for building customer loyalty. This incidentally will involve more regional product ranges. This is where we benefit from the fact that we are part of the REWE Group as regional procurement is part of its DNA.

Dr Kai Hudetz: Those who are benefiting most from this fierce competition are, of course, the customers. They can rest assured that all companies involved in the food retail sector want to give them a fantastic shopping experience. However, that doesn’t make PENNY’s work any easier.

Stefan Magel: We’re more than happy to take on this challenge. We’re well equipped for it.