In our previous blog, we had studied the dynamic SWOT analysis of Sainsbury’s, a supermarket chain in the United Kingdom. In this article, we will cover the SWOT Analysis of Edeka.
Edeka stores differentiate themselves as full-service providers primarily through customer proximity, advice, and a large selection of fresh food available every day. They are available in a variety of sizes and market types. What they all have in common is a strong emphasis on quality and service, which is consistent with the core message of the Edeka identity “We ♥ Food”.
The pandemic led to a significant shift towards the online platform, making purchases of daily items extremely easy. Due to the vast advancement in technology and 24×7 availability of online services, customers could now order daily essentials with a few taps.
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Before diving into the SWOT Analysis of Edeka, let us first have a look at the overall history and operations of the company.
Edeka is the largest supermarket chain in Germany – similar to Walmart in the US and Sainsbury’s in the UK. Edeka offers its customers a wide range of products ranging from basic to premium, organic foods to drinks and cosmetics, all at a reasonable price. They aim to support regional producers and provide high-quality products to their customers.
The E.d.K cooperative was established in 1907. It was renamed Edeka in 1911. EdK did not have its brand at first, but in 1911 it purchased several well-known brands.
The young company, however, quickly felt the strength of its competitors, the industry’s big retailers. Retailers put pressure on suppliers to not sell Edeka goods at a discount, claiming that EdK was too small to qualify for the discounts given to these retailers. As a result, EdK was boycotted by 44 supply companies. When compared to today, it is the largest supermarket chain in Germany comprising over 6000 stores.
|No. of Employees||402,000+|
|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
- Other specialities, supermarket, & Cosmetics
Competitors of Edeka
The top competitors of Edeka are:
- Al Natural Health
- Metro Inc.
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.
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- 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.
Edeka is the largest supermarket chain in Germany and they could expand their business by tapping into the digital platform more effectively. Through the SWOT Analysis of Edeka, we learned that proper research and product development based on customer wants can help them gain maximum market share in all product categories.
Prevalence on online platforms will also help acquire new customers if their digital marketing strategies are in place. Experts in the field can help formulate strategies to engage with the audience and boost revenue. You can check out the 3 Month Digital Marketing Course offered by IIDE to upskill and learn digital marketing tactics.
We hope this blog on the SWOT analysis of Edeka has given you a good insight into the company’s strengths, weaknesses, opportunities and threats.
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