Can Russian discounter Mere beat Aldi and Lidl at their own game?

Russian discount grocer Mere wants to conquer Germany with its low prices. The new supermarket is selling half a kilo of coffee for less than €2, almost half the price of Aldi and Lidl, but not everyone is convinced.

Cardboard boxes sitting on wooden pallets are the first thing you notice when you enter Mere. The newly opened Russian discount grocer on the outskirts of Leipzig looks more like a warehouse than a supermarket. Inside the boxes is fruit juice from the Czech Republic; and in the fridges, sausages from Hungary.

The groceries and non-food items sold at Mere are some 20 percent cheaper than Aldi and Lidl. Yet while its German competitors have several thousand shops across the country, Mere, so far, has just one.

Read more: German retailer Aldi set to build 2,000 homes above its Berlin stores

'Like Aldi used to be'

It's Friday morning. Around thirty customers are strolling around the shop, peeking inside the boxes. Ramona and Madlen, who live nearby, are here for the first time. "Before it was so full we couldn't even get inside," they tell DW. "The lines would stretch until the entrance; people were even queuing outside."

Nature and Environment | 23.05.2018

Russian retail giant Torgservis' first foray into Germany at the end of January made news not only in Leipzig. Less than a week after the company's discount brand, Mere, opened, the store had to close for two days when its entire line of stock sold out. The hype has since passed. Some customers never came back; others became regulars.

In Mere, groceries are sold directly from their boxes

Cornelia comes here every week to buy groceries for her family. "For people who don't have that much money it is a very cheap alternative," she says. "You can't do your complete week's shopping here, but you can get meat, sausages and canned goods at relatively low prices."

With its goods crammed into boxes on the floor, Mere reminds many customers of how German discounters used to lay out their stores. "It is exactly like Aldi used to be," says another customer, Stefan, nostalgically. "I bought some coffee here … for €1.97 ($2.23) , and it's drinkable!"

Read more: The true cost of Germany's cheap food

From Siberia to Germany

Mere's owner, Torgservis, is headquartered in the Siberian city of Krasnoyarsk. It has more than 800 discounters under the brand Svetofor (Russian for "traffic light") mostly in small Russian towns and cities but also in Belarus, China and Kazakhstan. The hard discounter's business model has proved very popular in Russia, mainly due to the economic difficulties of the past few years.

Recently the chain expanded west. The name Mere was used in Romania, and although Poland should have followed, Torgservis moved to Germany instead and set up a subsidiary, TS Markt, in 2017.

Mere's first German store opened on the outskirts of Leipzig in January

The owners of Torgservis are media shy, and they don't invest much in marketing. Their German sister company has adopted the same strategy. A company representative told DW: "We are not interested in advertising, we haven't invited the press, we wanted to start as quietly as possible."

She confirmed that "the first shop in Leipzig is doing well" and they are "happy to see many customers."

TS Markt is already looking to expand. According to the company's website, they are searching for 800 x 1200 meters (2,625 x 3,940 feet) premises in cities with at least 80,000 inhabitants in eastern German states. Stores are already planned for Zwickau and Chemnitz. And its strategy to rise in the east is not accidental: after all, there is still a large income differential between western and eastern Germany.

A country of discounters

Germany has no lack of discounters though. "There is no other country in the world where the discounters have such a big share of the market as in Germany — at 40 percent," says Michael Gerling, Managing Director of EHI Retail Institute in Cologne. Germany has also succeeded in exporting the budget supermarket business model.

Read more: Major grocery supplier to Germany accused of environmental crimes in Spain, report says

Discounters promise their customers low prices, which they do by saving on staff costs and rents, as well as by offering a limited stock. A typical discounter has on average 2,000-2,500 products, compared to five times as many at a regular supermarket. But German discounters have also had to adapt.

In recent years, their competitors have developed their own budget brands, so the price advantage was often minimal. "In the end, customers didn't know why they still needed to go to a discounter… so they had to change their strategy," says Gerling.

The aisles of the Russian discounter look more like a warehouse than a supermarket

Discounters have, instead, moved away from the ‘cheap at all costs' method. They've spent more on lighting and design, hired more staff, stocked more brands and even put bakeries inside their shops. They won back their share of the market, but at the same time left open a niche for a really hard discounter to enter the German market. And that is where Mere is hoping to squeeze in.

Read more: Oxfam slams German supermarkets over 'unfair practices'

No competition yet

The customers of Germany's discounters have also changed. Many come to supermarkets to find exactly what they are searching for and not to check today's special offers.

Low prices are no longer enough to beat the competition. A new discounter also has to offer good quality products, says Gerling. Recently, the German tabloid Bild carried out an independent survey of food quality and found out that at least one of the sausage brands sold in Mere was not safe for human consumption. The product quickly disappeared from the shelves.

German discounters are yet to see Mere as a potential competitor. Klaus Gehrig, the head of Schwarz Gruppe, which owns Lidl and Kaufland, said the new discounter has had no effect on the firm's turnover and predicted the speedy demise of their Russian competitor, reported German tech publication, CHIP.

Michael Gerling is sure that Aldi and Lidl are following the developments in Leipzig closely and will seek to lower prices for specific products if they find that Mere is stealing customers from them. But it is still early days.

Food costs in Germany are already relatively low, compared to other western European countries, which could mean that Mere will struggle to beat Lidl and Aldi with its "the lowest prices every day" concept.

11 useful tips on German supermarkets

Know your different types of supermarkets

The different categories of grocery stores in Germany can be confusing for newcomers. A few chains are actual supermarkets, while a growing number of stores are rather categorized as discounters. The "bio" markets sell exclusively organic food. If you're planning on cooking a Middle Eastern recipe, Turkish markets are your best bet; Asian markets provide everything you need for Oriental cuisine.

11 useful tips on German supermarkets

Trade variety for price at 'discounters'

While typical supermarkets offer a wider selection of products, discount chains concentrate their offer on fewer brands and merchandise, which can make it frustrating when you're searching for something specific. Still, the no-frills, cut-price approach has made German discount chain giants Lidl and Aldi so popular that they now have stores throughout Europe and the world.

11 useful tips on German supermarkets

Bring a coin to unlock your shopping cart

Many expats are amused to discover that shopping carts in Germany are shackled to each other. The €1-coin you need to unlock a trolley probably wouldn't stop anyone from stealing it, but that's not the point. Rather, the euro motivates people to return the cart to its designated spot after being used. The coin — or any token of the same size — is released once the cart is locked back up again.

11 useful tips on German supermarkets

Amaze your friends abroad with cheap prices

The low price of a pudding (currently €0.25 / $0.30) at a discounter store created a diplomatic uproar when an Israeli anonymously posted his grocery receipt on the now-defunct Facebook page Olim L'Berlin (literally, "Let's ascend to Berlin"), as evidence that the cost of living in the German capital was unbeatable. Israeli politicians were enraged that people would "abandon Israel for a pudding."

11 useful tips on German supermarkets

Don't look for eggs in the refrigerator

Any North American would look for eggs among the chilled products in a grocery store, but they're kept on normal shelves in Germany. Why? Eggs in the US are sanitized to prevent salmonella before being sent to the stores. However, the process destroys the egg's outer protective layer, so they need to be kept in the fridge. In the EU, it's illegal to wash the eggs; chickens are vaccinated instead.

11 useful tips on German supermarkets

Plan your Sunday meals ahead

Most stores are closed on Sundays, so fill up the fridge a day ahead. Laws regulate opening hours to allow workers to have a weekly "Ruhetag," or resting day, a concept that's still strong in Germany. There will always be smaller convenience stores open if you're desperate for a bite or drink. And stores are exceptionally open on a certain number of Sundays, known as "verkaufsoffener Sonntage."

11 useful tips on German supermarkets

Shop for the apocalypse before a long weekend

For holidays like Easter and Christmas, families often celebrate with festive meals. But supermarkets are closed an extra day on top of the Sunday. Grocery shopping just before they close feels like the entire country is preparing for an upcoming nuclear blast. If you happen to only need, say, bread or chocolate on such a day, avoid supermarkets and go to a bakery or convenience store instead.

11 useful tips on German supermarkets

Expect chaos if an extra checkout lane opens

The stereotypical German sense of order is quickly abandoned whenever a new lane is about to open. Instead of letting those who'd be next in line in the already existing queue go first, it's often a free-for-all run to the next lane to save a few minutes of waiting. The unspoken rule to justify the shoving appears to be: "I was smart enough to guess that the lane would open, so I get to be first."

11 useful tips on German supermarkets

Know the importance of checkout dividers

The little bar placed between two clients' items seems extremely important in Germany. You could start putting your groceries onto the conveyor belt without setting your checkout divider, thinking this simple task can be taken care of later, since your items are still meters away from the till. But some elderly person is bound to remind you that this priority just can't be neglected.

11 useful tips on German supermarkets

Notice the cashiers get to sit down

These are cultural differences that one might quickly forget if you've been living in Europe for a long time, but in most North American supermarkets, cashiers are required to stand while doing their work. The fact that cashiers are sitting in Germany doesn't stop them from being extremely effective...

11 useful tips on German supermarkets

Be ready to pack quickly

It has become a running gag among expats' complaints: The space to pack groceries in Germany is usually very small and, especially at discounters, the checkout is super fast, so people find packing very stressful here. Remember the importance of the checkout divider? Once the items have been scanned, the strict separation of the next person's groceries no longer matters. Just get out of the way!