Despite the interim decline in returns, food retail in Germany continues to offer real estate investors attractive investment opportunities. This was the finding of the recent market study “Food Retail in Germany – Market Structure Data 2016” carried out by bulwiengesa for TLG IMMOBILIEN AG. The trends most relevant to the evaluation of investment opportunities in this segment are a relatively constant supply of selling space, generally increasing turnover, a persistently low share of online turnover and the ongoing process of concentration that favours the business types relevant to investors.
The area of selling space in the retail sector in Germany currently amounts to around 123.7 m m² (2015). This corresponds to retail space of 1.51 m² per person, placing Germany fourth in a Europe-wide comparison. In this context, around 35.6 m m² of selling space is attributable to food retail. The amount of available selling space has increased by just 1.8% since 2010, having remained relatively constant in recent years. In contrast, retail turnover has increased by around 13.1% since 2010, reaching €483bn in 2016, with the share of online retail at 10.9%. In food retail, at 16.6% the increase in turnover was even higher, whereas the share of online retail in the turnover of the food segment was significantly lower at just 1.5%.
Relative to the total consumer spending of private households in Germany, the share of spending on food, drink and tobacco products was 13.7%. This represents a slight proportionate decrease as spending on these goods made up 14.3% of the total private consumer spending in 2015, yet the total of this spending increased significantly in the same period. Whereas it totalled €180.0 bn in 2015, it reached €215.2 bn in 2016, which represents an increase of 19.6%.
With the proportion of people over the age of 65 in Germany currently at 21.4%, it is expected to increase to 33.7% of the total population by 2060. Retail will therefore have to focus increasingly closely on the requirements of older people and, for example, provide for wider aisles, lower shelves, larger product labels and more seating. At the same time, regional differences will also intensify in future. Whereas the population in densely populated areas is expected to remain stable, the population in many rural regions and in areas of eastern Germany is expected to decline considerably by 2060.
