In the next decade, we anticipate further growth for organised players – partly to the detriment of traditional channels. Consolidation among large players should also occur when the returns on investment on marginal new selling space fall to a level where M&A is an appealing alternative. Magnit and its four largest competitors hold 19% of the market. In Western Europe, the top five players usually hold around 70%.
We expect a small number of companies will emerge to dominate the space. Robust long-term structural trends can offset potential cyclical headwinds, and market leaders can depend on multiple levers of growth: market expansion, a shift towards organised retail, and consolidation.
We invest in Eastern Europe to take advantage of this type of trend: the “catch-up” phenomenon, which provides exceptional long-term investment opportunities – not just in food retail, but also banking/insurance, internet services, and transportation.