Habona Report 2019


Habona Report 2019 - Germany

Key Takeaways
The Anticipated Population Decrease Failed to Happen

The high rate of incoming migration compensates for Germany’s low birth rate more than expected. German society and its consumption patterns are diversifying, while consumers get older and more mature. That being said, the demographic trend varies considerably from one region to the next.

Consumption is Becoming the Stage of Desires and Good Resolutions

In an ageing society, security, health, enjoyment and tradition are ideals pursued not just by the elderly. Mass consumption and the instant gratification of needs should be secondary to retirement planning and high-quality expectations. In addition, grocery shopping is increasingly turning into an expression of lifestyle and values.

Grocery Retail as Demographic Winner

Food and drugstore markets were quick to respond to the socio-demographically motivated trends in the needs of an ageing society for shorter distances, more convenience and higher quality. They are now at the forefront of a general modernisation drive in the retail sector, as evidenced by impressive revenue growth.

Desire for Authenticity Favours Mixed Uses

All of the demographic trend groups prefer authentic shopping environments and options for socialising. Using mixed-use concepts to structure grocery retail locations comes particularly close to meeting this need while offering time-saving coupling effects. Experiential value, convenience and well-being are gaining in appeal.

Groceries and Gastronomy – Two Sides of a Coin

Fixed routines like set meal times are dissolving. These days, people will eat wherever and whenever it suits them. Supermarkets therefore not only offer more and more products for direct out-of-home consumption, but are also developing new concepts for in-store consumption.

Customer Centricity – the New Benchmark

Business types like discounters and supermarkets increasingly resemble each other, not least because the boundaries between their customer groups are dissolving. The distinction between business type as such is being replaced by the single angle of customer needs.

Not Online Retailing but Data Analytics is the Key Criterion in Digitisation

Information technology will pace the future of retail, because efficient data exchange is the only way to create the prerequisites for the pinpoint fulfilment of customer requests. The question whether the eventual delivery is made online or offline plays a secondary role.

While E-Grocery is Making Waves, its Revenue Potential Remains Low

Due to the special requirements for freshness and quality, online food retailing remains a major logistical challenge. From the customers’ point of view, the question also presents itself just how appealing it is to have the accustomed flexibility of in-store shopping compromised by scheduled deliveries.

Grocery Retailing – a Core Investment

Compelling criteria of this investment type include long-term leases, high net worth tenants and the idea of fulfilling basic needs close to the client base. Safety-oriented investors appreciate the reliability and the low management intensity. Opportunistic investors, by contrast, are gradually backing away from the segment – which suggests that the asset class has undergone a maturing process.

Grocery Retailing en Route to Become a Distinct Asset Class

In the years since the credit crunch, specialisation has emerged as the essence of sound real estate investment strategies. But specialising in a niche is the first step toward the development of a distinct new asset class. Grocery retail property presents opportunities outside the mainstream that thrive on success factors rooted in fundamental needs.