ANNUAL REPORT 2004 - REWE Group

6
The Primary Aim is to
Strengthen Earning Power.
Rewe Group achieved good results last year once again -
and in contrast to the general market trend. Our 200,000
staff and employees in Germany and in13 other European
countries focused their hard and dedicated work on attaining
this outcome. We are grateful to them for their
efforts. We will continue to expand our very strong position
among the leading group of European food trading
companies on this basis in future.
The pressures of competition domestically and
abroad will continue to build. Tough overall economic
conditions, especially in our German home market, hardly
give us cause to rest on our laurels. Every day we have
to face the challenge of attracting and retaining new
customers in sustainable way, both to our core food trading
business and to our travel and tourism services.
This is not to imply growth at any price; profitable
growth is the only option we are willing to consider. We
have seen again and again that it was strategically wise to
develop new growth markets in Europe at the beginning
of the 90s and in this context it is to mention that Rewe
Group increased its turnover in Eastern Europe alone by
ten per cent in the last year. We experienced the fastest
growth rates in Romania and Bulgaria, countries that will
become future EU member states. The country with the
strongest turnover was the Czech Republic. We will concentrate
our activities on these countries, where we can
attain a top position in our industry in the medium to
long term.
As the Management Board of Rewe Group, we are glad
to accept the challenges of the German market and of international
competition. We certainly know that Rewe's
unique culture of entrepreneurial spirit, independence
and responsibility gives us a solid foundation to build on:
values with decades of tradition that have lost none of
their importance to Rewe over the years.
We are focusing on three areas to develop this
second-largest non-stock-market-listed European
company internationally:
– Securing and strengthening the earning potential of
the overall group
– Increasing the profile of and sharpening all sales
concepts
– Strengthening the efficiency and effectiveness of our
organisation nationally and internationally.
Once the German regulations on special offers fell in
2001, the retail industry finally shifted its sights squarely
to the pricing factor. Better and better specials were to
awaken consumer interest again. But the opposite occurred:
the hoped-for boost in sales failed to materialise.
The margins and results simply melted away. This was a
development that also left its mark at Rewe. We are thus
all the more vehement in our view that even the mildest
hint of an improving consumer climate is an opportunity
to overcome the superstition of a turnover-oriented pricing
policy. A results-oriented pricing policy strengthens price
image and customer loyalty - factors without which a
permanent improvement in performance is unthinkable.
This is true for Germany just as much as for Europe.
Our core competency is most easily observed in our
marketing concepts. We have to continue to keep these
up to date and to develop them. Our marketing formats
are experiencing conditions of predatory competition in
our German domestic market. Unlike the past few years,
signs are beginning to appear that consumers are paying