Tegut Supermarkets to Close in Germany: Edeka and Rewe Take Over Stores

The Tegut supermarket chain is set to disappear from the German retail landscape. Parent company Migros has announced plans to exit the German market entirely, a move impacting nearly 7,400 employees and the future of approximately 300 stores. The decision, framed as a necessary step after years of struggling to achieve profitability, marks a significant loss of 600 million euros for the Swiss cooperative.

Migros Cuts Losses on German Expansion

The unraveling of Migros’s German ambition began with the recognition that Tegut, acquired in 2013, was proving to be a costly endeavor. Despite efforts to streamline operations and reduce losses – cutting them by more than half in the past year – the German market remained stubbornly challenging. According to Migros, the business was deemed “long-term economically unsustainable.” The company’s assessment points to a combination of intensifying competition and declining sales volumes as key factors driving the decision.

This isn’t Migros’s first retreat from a foreign market. The Tegut exit follows a pattern of ambitious international expansions that haven’t always delivered the expected returns. The scale of the losses – estimated at 600 million euros, equivalent to roughly 570 million Swiss francs – underscores the financial strain the German operation placed on the cooperative’s balance sheet. For context, Migros Zürich’s equity capital currently stands at approximately one billion Swiss francs.

Edeka to Acquire Majority of Tegut Stores

The immediate future of many Tegut locations appears to be with Edeka, one of Germany’s leading supermarket groups. A deal has been signed for Edeka to acquire a “substantial part” of Tegut’s nearly 300 stores, along with the associated workforce. The agreement also includes Tegut’s logistics center in Michelsrombach, the Herzberger bakery, and Smart Retail Solutions, which operates the Teo convenience store format in Germany.

However, the transfer isn’t yet complete. The acquisition requires approval from the German Federal Cartel Office (Bundeskartellamt), a regulatory hurdle that could potentially reshape the final outcome. While Migros expressed confidence in securing approval, the process introduces an element of uncertainty. According to reports from 20min.ch, negotiations are “advanced.”

Impact on Employees and the German Retail Sector

The sale will undoubtedly have a significant impact on Tegut’s nearly 7,400 employees. While Migros prioritized preserving jobs during the sale process, the transition to Edeka ownership will likely involve restructuring and potential redundancies. The Tegut employee council has already expressed concerns, noting that workers are understandably “affected” by the news, as reported by Fuldaer Zeitung.

Beyond the immediate impact on Tegut’s workforce, the move reshapes the competitive landscape of the German supermarket sector. Edeka’s acquisition will bolster its market position, while the disappearance of the Tegut brand removes a niche player focused on organic and regional products. The German retail market is already highly competitive, with established players like Edeka, Rewe (Rewe), and Aldi vying for market share. The recent insolvency of Feneberg, another Edeka-affiliated chain, highlights the pressures facing smaller supermarket groups (Merkur).

Deal Mechanics and Regulatory Review

The sale to Edeka represents a strategic retreat for Migros, allowing it to cut its losses and redeploy capital elsewhere. The deal structure involves the transfer of a significant portion of Tegut’s assets, including stores, logistics infrastructure, and personnel. The involvement of the Federal Cartel Office is crucial. The agency will assess whether the acquisition would create an anti-competitive situation in the German supermarket market. The review process will focus on potential impacts on pricing, consumer choice, and the overall level of competition.

What’s Next: Cartel Office Decision and Integration

The immediate next step is the review by the Bundeskartellamt. The timeline for this review is uncertain, but a decision is expected in the coming months. If the acquisition is approved, Edeka will begin the process of integrating the Tegut stores into its existing network. This will involve rebranding, supply chain adjustments, and potential changes to store formats and product offerings. A smaller number of Tegut stores are expected to be acquired by Rewe, though this portion of the deal is also contingent on regulatory approval.

Migros, meanwhile, will focus on its core businesses in Switzerland and explore alternative growth opportunities. The company’s exit from Germany serves as a cautionary tale about the challenges of expanding into foreign markets and the importance of careful strategic planning. The 600 million euro loss represents a significant financial setback, but Migros appears determined to learn from the experience and refocus its efforts on areas where it has a clear competitive advantage. The NZZ reports that the cooperative is now prioritizing closing this chapter and moving forward.