Real chief says own brand is the way ahead

Joel Saveuse traverses the Real hypermarket in northern Germany in search of "those little biscuits". Moving from toys to the freezer section, the 55-year-old, who runs the country's biggest big-box retailer, strikes gold in aisle 45.

"This is my favourite product," Mr Saveuse says, cradling a packet of chocolate-filled Mini Double Biscuits. "Look, here's a simple picture of the contents," he says as his finger moves across the packaging, "and top left is the 'Real Quality' logo."

Together with a handful of rivals, the Frenchman is fomenting a small revolution in Germany by replacing disparate in-house brands with a full own brand that links the retailer with a product range.

The aim is to raise in-house brand sales from 15 per cent up to 25 per cent of food sales in two to three years' time.

Mr Saveuse says that customers get top quality for at least 15 per cent less than they would pay for a name brand – and Real a better margin.

Such logic has seen Real's foreign rivals push true own-brand lines for decades. Real reckons up to 60 per cent of Tesco's UK sales come from its three Tesco brands, and Carrefour is aiming for a 30 per cent quota, up from 25 per cent now.

After mapping a concept since 2007, Real introduced 850 Real Quality items this September – fortuitous but "absolutely perfect timing" for the economic downturn that followed the collapse of US bank Lehman Brothers, the Real head says.

Although Mr Saveuse says that shopping habits at Real have not yet been tinged by economic woes, he stresses 2009 could see shoppers buying more own brands as they look for more value for money. "Crisis doesn't just bring disadvantages," he says.

Given the power of own brands in good times and bad, it is surprising that German retailers have launched distinctive lines only since 2007.

As with other instances of national retail exceptionalism, the cause lies with Germany's mighty discounters.

Aldi and Lidl have in the past generation helped corner 40 per cent of the food retail market – as against 6 per cent in the UK – by selling little else than a small range of own brands, a move copied by Real, with, say, its low-cost "Tip" range.

"But we're internationalising now," Mr Saveuse says. "In Poland and Turkey we're competing against Carrefour and Tesco, in Russia and Romania against Carrefour – that has forced us to focus on true own-brand as a way of building our presence."

Bolstering the Real brand is key to reviving the chain. A format held in check by discounters, Mr Saveuse reckons the German hypermarket has a future.

He should know. Until 2005, he was second-in-command at hypermarket pioneer Carrefour.

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