Comprehensive SWOT Analysis of Edeka – The Largest German Supermarket Corporation

Quick Stats on Edeka

CEO	Markus Mosa
Year Founded	1907
Origin	Leipzig, Germany
No. of Employees	402,000+
Company Type	Private
Market Cap	N/A
Annual Revenue	$44,158.6 Million (2021)
Net Income/ Profit	$315.4 Million (2021)

 

Products & Services by Edeka

• Cash & carry/warehouse club
• Convenience/forecourt store
• Discount store
• Electronics speciality
• Home improvement
• Hypermarket/Supercenter/Superstore
• Other specialities, supermarket, & Cosmetics

Competitors of Edeka

The top competitors of Edeka are:

• Al Natural Health
• Metro Inc. 
• send-a-fish
• MyTime
• Lidl

Now that we have had a look at the company overview, let us move on to understanding the SWOT Analysis of Edeka.

SWOT Analysis of Edeka

The SWOT analysis framework allows a company to discover internal strategic elements such as strengths and weaknesses, as well as external strategic elements such as opportunities and threats. The purpose of conducting a SWOT analysis of Edeka is to help the organization analyze the business environment and formulate strategies that can aid in the growth of the company.

To better understand the SWOT analysis of Edeka, refer to the infographic below:

Now first let’s begin with the strengths of the company from the SWOT analysis of Edeka.

Strengths of Edeka

The term “strengths” refers to what an organization excels in and what distinguishes it from the competition. Following are the strengths of Edeka:

• Strong Brand Portfolio: Edeka has invested in developing a strong brand portfolio throughout the years. They sell a wide variety of goods, ranging from groceries to cosmetics. If the company wishes to grow into new product categories, this brand portfolio can be quite beneficial.
• High Level of Customer Satisfaction: Their goal of selling high-quality products at reasonable prices has resulted in a devoted customer base. Their CRM strategy has led to increased levels of customer satisfaction, making them a valued company.

• Adoption of New Technologies: The pandemic led to a shift towards the digital world. The rise of mobile apps opened up new opportunities for Edeka as well. Many consumers are looking for contactless payment options. 

As a result, Edeka created a solution for that as well in 2020. Customers can use Edeka’s new app “Scan & Go” payment function to scan things immediately on the shelves, confirm payment digitally, and then exit through an “Exit gate” without having to go through the checkout.

Bonus Tip: You can also climb the pillar of digitalization by starting learning the basics of digital marketing. For that simply enrol in several skill courses in digital marketing in which you wanna get expertise. Each skill is taught by an industry expert who has brightened the future of many candidates. So, if you want yours too then do check out the link…

• Exceptional Performance in New Markets: Edeka has developed competence in entering and succeeding in new markets. The expansion has assisted the organization in creating new revenue streams and diversifying economic cycle risk in the markets in which it operates.
• The Boom in Organic Products: Many consumers across the globe have become conscious about their eating habits and have shifted to organic products. For many years, the Edeka Group has prioritized organic products as part of a sustainable, responsible diet. The approximately 3,600 independent Edeka merchants provide a varied selection of organic products, including branded items, private label products, and fresh food from the region.  

Weaknesses of Edeka

Weaknesses prevent an organization from performing at its maximum potential. They are areas that the company has to improve to remain competitive. Key areas where Edeka has to work on: 

• Research and Development: Investment in R&D is lower than that of the industry’s fastest-rising players. Despite spending more on R&D than the industry average, Edeka has been unable to compete in terms of innovation with the industry’s leading firms. It appears to be a mature company eager to release goods based on market-tested features.
• Inability to Penetrate Successfully in Foreign Markets: Quite unlike global contemporaries like Target or Walmart, Edeka has restricted itself mostly just to Europe, the UK, and the USA. They have been lacking focus on Asia which has some of the most promising emerging markets like China and India.
• Low Current Ratio: The company’s current ratio, which measures its capacity to satisfy short-term financial obligations, is lower than the industry average. This could imply that the corporation will face liquidity issues in the future.
• Product Uncertainty: A few products have a large market share, while the majority of products have a small market share. Edeka’s reliance on a few items exposes it to external dangers if these few products fail for any reason.
• Limited Investment in Technology: Given the scope of the company’s expansion and the various geographies into which it intends to expand, Edeka must invest more in technology to unify operations across the board. Currently, technology investment is not keeping pace with the company’s objectives.

Opportunities for Edeka

Opportunities are external factors that can provide an organization with a competitive edge. Opportunities for Edeka are 

• Customer Acquisition Through Online Channels: Edeka has invested huge amounts of money into the digital platform in the last few years. Through this investment, they can tap into new areas to acquire customers and fulfil consumer needs using data analytics.
• Implementation of New Pricing Strategy: Edeka can use the new technologies to implement a differentiated pricing strategy in the new market. It will allow the company to retain its existing consumers by providing excellent service while also attracting new customers through various value-added offerings.
• Decrease in Transportation Costs: Reduced transportation costs as a result of decreased shipping prices can also reduce the cost of Edeka’s products, creating a chance for the company to either increase its profitability or pass on the savings to customers to win market share.
• Opportunity to Explore Other Categories: Stable free cash flow allows for investments in neighbouring product categories. With more cash in the bank, the corporation will be able to invest in new technologies as well as product divisions. This should provide Edeka with new opportunities in other product areas.
• Cost-saving Strategies: The expansion in education and training provided by different institutes has increased the number of skilled workers accessible in the country. This means that if Edeka can acquire skilled personnel, it will have to spend less on training and development, resulting in cost savings.

Threats to Edeka

Threats refer to factors that have the potential to harm an organization. Challenges faced by Edeka:

• Rise in Technological Advancement Among Competitors: New technological breakthroughs by a few industry competitors constitute a threat to Edeka since customers are drawn to this new technology may be lost to competitors, reducing Edeka’s overall market share.
• New Entrants: There have been various businesses that have entered the market and are increasing market share by acquiring the market share of current enterprises. This is a risk for Edeka because it may lose clients to these new entrants.
• Change in Taste & Preferences: Consumer tastes are evolving, putting pressure on businesses to constantly update their products to match these customers’ wants.
• Advertising: Increased competition in promotional activities has posed a danger to Edeka. Customers are flooded with various messages in most media, and there is more clutter than ever. This lowers the effectiveness of Edeka’s advertising efforts.
• Fluctuations in Exchange Rates: Since the company operates in several countries, it is vulnerable to currency changes, particularly given the turbulent political atmosphere in several markets throughout the world.

This ends our comprehensive SWOT analysis of Edeka. Let us conclude our learning below.