Penny invests into urban convenience

Penny has the most city center locations among German discounters

Penny in Germany strengthens its position in urban catchment areas. Rewe Group’s discount banner is to revamp 800 of its more than 2,100 stores by 2028, focusing on locations with less than 700 square meters, according to Lebensmittel Zeitung. The updated mini-market concept addresses the challenge of presenting a full range of discount products in a limited space. More fresh produce and a stronger convenience focus are intended to differentiate the retailer from channel competitors Lidl and Aldi, who predominantly operate stores with sales areas of more than 1,000 square meters and aim for commercial standardization. In order to be able to focus on the essential ranges next to the convenience segment, the discounter will reduce the amount of space devoted to promotional and seasonal items compared to larger stores. The ‘Market Hall’ concept, introduced in the German market in 2021, divides the shop floor into mission-based categories such as breakfast, cooking or sweets. Organized into ‘U’ shaped niches that branch off from the main aisle, it allows customers to save time when shopping.

Penny’s range is particularly well suited to small, urban stores, positioning it as the most convenience-focused discounter in the market. The retailer’s standard concept includes over 130 convenience items displayed in two ‘Penny-Ready’ wall coolers. One is located next to the fruit and vegetables department at the entrance of the store and offers ready-to-eat items such as sandwiches, prepared salads, chilled juices and chilled coffee drinks. The second, located next to the meat department, offers ready-to-heat and ready-to-cook meal options. In addition, Penny offers several dozen single-sized portions of charcuterie and sliced cheese in a dedicated ‘Fresh Pack’ chiller, which are vacuum-packed in multiple pockets to keep them fresh for longer.

Rewe Group is the most advanced of the top retailers in Germany, when it comes to convenience segment. The acquisition of Lekkerland, a distribution company that specializes in supplying convenience stores, gas stations, and other small retail outlets, has propelled the retailer into a lead position in this niche in 2019.

The strategic step also aims to increase store productivity, especially if considering higher rental rates in city center areas. According to the author’s estimations, Penny in 2023 generated 4.5 million euros net revenue per store in Germany, notably less than channel competitors Aldi Nord, who came up to 6.5 million euros, Aldi Süd at 8.5 million euros and Lidl at 9.0 million euros.