Fulda-based regional German grocer tegut… is undergoing renewal and expansion under the ownership of Swiss retailer Migros Zurich. Warren Beaumont spoke with head of corporate communications Stella Kircher.

Thirty years ago, tegut… was one of the first retailers in Germany, which offered organic grocery. Today, organic and fair trade products are still its main aims, and the mission to push more eco-farming and to help consumers make the right decision for sustainable products.

A regional retailer with 290 stores in Hessen, Bayern, Thüringen, Göttingen and Mainz, where it enjoys 2.59% of the grocery market, tegut… holds about 1% (one percent) of the market share in Germany. In a move of expansion, in 2012 the Swiss retailer Migros Group acquired the tegut… stores.

Tegut… operates 131 company outlets and 125 franchised Nahversorger or local retailer, a format introduced since 2000. The Nahversorger enjoys a sales area of 1200-4000sqm with self-service. Some of the stores offer external and local butcher and bread shops. The range of lines on display are on average about 7,000 -12,000 products. The new partnership with Migros Zürich will not change this structure.

Being a smaller retailer, tegut… has the opportunity to focus on the needs of its customers and its target group, which are consumers that care for their health and value premium, sustainable and regional grocery.

Germany is a large market but also very competitive, with other chains such as Rewe and Kaiser opening new concepts, including organic stores.

However, since tegut… became part of Migros Zürich, the focus is now on revitalization and expansion. There are opportunities for tegut to also open new formats.

According to Ms. Stella Kircher expansion is ongoing with new store openings in the home region and outside. Tegut… had 19 store refurbishments planned (Nahversorger & Supermarket) for 2013. In 2014 the goal is to refurbish 29 stores.

“In the beginning of 2015 we will open a store in Stuttgart (Baden-Württemberg) to test customer reaction relating to our range in other regions,” says Ms Kircher. “We are looking for new places independent of the Nahversorger format or Supermarket”.

“Customer spend per shopping basket is going up, while so far, the new partnership with Migros Zürich has not influenced numbers of consumers or average shopping basket.

“Generally the number of consumers is decreasing in the German food retailing for every competidor, including tegut…. In 2012 we closed about 25 stores.

“But the positive thing is, in 2013 we have registered a higher average shopping basket than in 2012 and our consumers come not so often, but they are spending more money.”

Sustainability, support for farmers important

“In every channel of communication we try to inform about quality of food, the steps of the supply chain and the challenges of producers and retailers along the way until the purchase,” Ms Kircher says. “The understanding and appreciation of many tegut… consumers for the products is rising and they are willing to choose these products and to pay more. Because they know, the price they are paying is the wage for the producers, which gives them the opportunity to produce in the future.” Among the firm’s projects is the introduction of fair trade foods during the “fair trade week” in Germany that runs in September and the “Fabi-Award” of Trans-Fair.

Ms. Kircher points out that the grocer has a long tradition in “Vertragsanbau” (contract agriculture) with regional producers, where the quality and amount of organic or conventional products is fixed under contract for a long time. “In 2011, when we had in Germany the scandal about EHEC (e coli), we paid our contract agriculture partners, although we could not sell the products, to secure the future of the producers and our partnership,” she says.

The german consumers trust organic or fair labels, which may be branded tegut…, combined with different standards for the products, such as EG-Bio-Zeichen, Bioland, Naturland, Demeter, tegut Bio, fair trade and tegut… fairbindet. The grocery chain sounds out the opportunities for labeling with the producers of tegut… label before a product listing.

Tegut… is a full range retailer with a focus on organic products and grocery. Organic and natural cosmetics are also found in all its shops, including the smallest ones and sales in those segments continue to rise.

Growth drivers in the range of organic and natural cosmetics are shower, shampoo and skin care categories. The retailer aims to increase the percentage of sales (now 25%) generated from organic products.

Consumer & customer service awards keep coming

Customer service is very important for tegut… and its employees. Recent recognitions include a Gold Award for Sustainability Communication from the federal association of consumers, and Best Meat Counter in Germany from Food & Drink magazine. “We want to know what the customer needs are and what they are thinking about”, Ms. Kircher says.

“Every employee has a “Kundenblock” (memo pad). So every employee can note the needs of customers over the day and in the evening send it via email to headquarters. This is one example of the way we talk with our customers and to show how important they are for us,” she says.

“To offer good service and know-how for healthy food and nutrition, organic and fair products we have a lot of education and advanced training for these topics for employees. We also have a free call center for questions about healthy food and nutrition. Everyone can check out our book for nutrition on our website with helpful advice for free.”

Tegut… also has a card-based consumer loyalty program “gute Karte”. In the council of customers, everyone can be a part of tegut… and discuss things such as new products and policies.

“In September we gained the first place and award of the consumer survey Kundenmonitor of the Service Barometer AG München for the fourth time”. tegut… has been rated the customer-friendliest supermarket ahead of other chains such as Sky, Rewe and Edeka.