Christian Warning:
Yes. We’re really looking forward to being back in person again. Isn’t that right?

Mark Wohltmann:
Absolutely. Hey Christian, it’s been a long time being back in Germany finally, and our first in-person event. So you’re looking forward to that.

Christian Warning:
I can’t wait Mark, and I’m very happy that I can be kind of a co-host based in Germany for the NACS community and, it will be warm welcome to see you all guys again in person.

Chris Blasinsky:
Absolutely. Mark and I, along with our CEO Henry Armour and Michael Davis of NACS did a kind of a recon at the Berlin market, I believe in November of 2018. It feels like a lot has happened since then—the great understatement. And Mark, getting ready for this event you’ve been able to kind of retrace those footsteps a little bit and you covered a lot of it in the December 2021 issue of NACS Magazine. Really great write up there. I don’t know if we’re gonna get to every point, but at least listeners can go back and see that issue. But I think, just me reading that it seems like there’s been some change, even in that short amount of time.

Mark Wohltmann:
There has been a lot of change actually. So I have been back, end of last year and I just have been back once again, actually, to prepare our store tours for the Convenience Summit Europe. A lot has happened in Berlin. Berlin is a very thriving market, it is a very entrepreneurial market. And I would say it is a market for our industry that is really, really worth visiting because on the one hand side, you have all the small single stores that are really entrepreneurial, really innovative, coming up with the best and craziest ideas sometimes. And at the same time, you have all the big companies there as well and some of them choose Berlin for their trial stores when they have new concepts and we will definitely see some of those. So there is a lot going on in Berlin and I’m really looking forward to that. And it’s probably a little bit what I summarized in that magazine article back in December. Christian, you’re much closer to the market than I am and you are much more often in Berlin, so what’s happening?

Christian Warning:
Yeah, Mark, you know that Berlin is Berlin, it’s a one of a kind city like other global metropolitan cities. Whereas Berlin is maybe still the cheapest to live for the global party community, the artist community that gives a special feeling. It is a true global city and this is why we see a lot of different concept formats and entrepreneurial things like you mentioned also in your article. New food from around the world, large communities from all countries in the world—that makes Berlin really special. Although we have to bear in mind a bit that the German retail market is one of the most complex in the world. There are not many markets that Walmart failed in and I think [with the] delegates we have a great chance to see how German retail—that’s the country where Aldi was born, Lidl was born, their home turf, So very cemented market share across retail, high competition, one of the highest density of supermarkets per capita in Berlin and around the world and delegates will really see kind of highest profitability per square feet in many, many formats. And I think that’s very interesting.

Mark Wohltmann:
As you mentioned, this really is what our delegates usually look for, right? If you go into a store on a retail safari in a different country, you wanna look at how things are organized, how operations work. You also wanna look at design and assortments of course, but it’s always the most interesting part to look behind the scenes and see how everything is really working and what the numbers are. And, as you just mentioned, we’ll be able to see some of the most profitable stores that actually are around, right?

Christian Warning:
Yeah and I think we also see those big four trends, which are shaping the future of convenience and mobility here in Berlin. Mobility hubs are already here. We have H2 [hydrogen] sites in gas stations. We have LNG, CNG…we have all kinds of new fuel. There’s a lot around e-fuels in Germany. We are the auto country, so OEMs are looking into new formats. We have the three largest EV charging hubs in Europe. They are in Germany right now—it’s really going on in mobility and delegates will see in Berlin that growth and shared vehicles and any kind of shared possibilities and kind of intermodal—how we call it interfaces between public transport, go on an e-bike, rent and e-bike—’E-whatever’—and EV car sharing things. Autonomous, not yet but we will see that people prepare those things as well in general.

Mark Wohltmann:
Autonomous is a really good point. You’ve been mentioning just all the big trends that are heading towards our industry, right? It’s liquid fuels, it’s e-fuels, it is foodservice—it is all kinds of automation that is coming our way and just saying, ‘automated not yet, automated cars, fully driverless cars—maybe Germany is one of the more tougher countries when it comes to regulation to get that going. But nevertheless, wasn’t Germany one of the first countries with driverless little bots driving on campuses and business parks?

Christian Warning:
Absolutely. We have those robots, we have that in Hamburg delivering pizza to my house here so I have that customer experience already. And we have, from a legislation point of view, Germany is ready for autonomous and that’s backed by the government because we need to be at the forefront with our auto industry and who and what we are in Germany in terms of our DNA. That comes to the next point, what we see in Berlin is home delivery. Thirty months ago two companies were raised and founded in Berlin and they are unicorn, meanwhile, in terms of the valuation and have a global footprint like Gorillas and they deliver food within 10 minutes to your house. Another customer experience, and I remember with NACS in Shanghai at the CSA, I think one of the last in-person meetings somewhere … we said, ‘Oh, 30 minutes within three kilometers—that will never happen in our home countries in the next five, 10 years’ and it’s there—it’s 10 minutes here. That’s interesting.

Chris Blasinsky:
So for home delivery then, basically COVID accelerated it absolutely the same within the U.S. So do you guys see the home delivery aspect sticking around? Let’s just say COVID is gone, it’s in the rear view mirror in a year. Is home delivery gonna survive that?

Christian Warning:
Absolutely. That that’s kind of the new customer experience and that will endure and that’s big pressure on the convenience market. We really have to look and brick and mortar—are we participating here in that? How we do that, I think, is a big issue we will also discuss within the conference, isn’t it?

Mark Wohltmann:
It will definitely be one of the topics that we will cover during the two-day conference that we will have to ask our global committees that we have for all the input: What are the key issues really that we need to talk about? I think you just mentioned them, that we can find them in Berlin, which is really awesome. You talked about delivery and two of the biggest companies in Germany, they actually have been founded and have headquarters in Berlin. So we’ll probably have a look at those as well to determine if these are competitors to our industry or are these actually partners for industry. I think every retailer’s approach is slightly different to that. The other thing that you mentioned that I think is really important here is electrification of mobility, surely something that we will cover on stage as well. We can also see that in Germany really large charging parks being built—and not just a big charging park somewhere with nothing else to offer, but around bakeries, around bistros … So it’s really smart connecting parts of our industry, the foodservice and convenience retail industry, with electric charging. Is that where you would say Germany is well ahead compared to other European countries?

Christian Warning:
I think yes. You have to bear mind, we are smaller than Texas but I think we have four times as many cars on the roads and people live very dense and that gives other possibilities in terms of electrification here than in other countries and those large countries like in the U.S. I’m very happy that I have created a pre-event study tour and will offer this to the CSE delegates together with our friend Dan Munford, who’s done that a lot around other NACS events as well. We will give delegates the chance to have a look at the largest EV charging parks, we will have a wine tasting in a gas station and that’s maybe also a German typical thing. So with NACS member and co-host Peter Herm, he will host that group in Southern Germany, and we will go to Berlin, see the latest sites in Munich, and I will guide the group with an ICA train for our train drive across Germany within 800 kilometers to Berlin and bring them to the NACS event if they want. So people can really make the most out of their in-person trip here into Germany.

Chris Blasinsky:
I think the last time we were in Munich, Mark, you were on stage with another company. You weren’t even with NACS yet.

Mark Wohltmann:
Yes, exactly. That has been quite a while.

Chris Blasinsky:
That’s how long it’s been, I think 2008 or 2009. It all blurs together, but I think that’s how long it’s been.

Mark Wohltmann:
Yep, it definitely has. And funny enough, Christian, that you just mentioned Germany is the size of Texas. I just met one of our U.S. members at our Kellogg Marketing Executive program. Don, if you’re listening I know you will come to Berlin. So he actually told me Berlin is ‘exactly that city that I want to go to, that I want to explore because so much is happening there.’ So really looking forward to that. Let me ask you one other question because when I just recently came over to have a look at the stores that we wanna line up for the store tours, I also had a look at tobacco sales in petrol stations. Germany is not a dark market, so you can still show everything, it’s fully open. But I saw some really innovative solutions for dealing with tobacco, also dealing with tobacco products in terms of age restriction in terms of shrinkage. Is there a lot of technology investment on that front?

Christian Warning:
There is, but it’s also kind of an uplift in personal operation and I think that’s the big object or point on any CEO’s agenda globally. Labor shortage and also in Germany we have a shrinking population and we really have to think about operational procedures: How can we automate things … 62% of our total sales in convenience stores are still tobacco in Germany … ways to find out how to automate those things and put your people into foodservice and other high margin areas, I think it’s a good way. People will see that as well as new things of check out opportunities and yes, digitization is of course within those big parts a and trends which shape the future that Berlin is ready and doing.

Mark Wohltmann:
That is true. And labor shortage, another topic that we will probably cover on stage there. I just had a conversation the other day with Professor Riaz Shah from the Hult International Business School who is specializing on labor skills development. He presented something really interesting about peak population. If you look at all the highly populated countries in the developing world, population is declining. Population growth until 50 years from now is really only happening in Africa. What that means for countries like Germany is that labor shortage will not go away. We have to deal with it and we have to find solutions for it. What I saw in Germany actually is a lot of investment on the technology side to really make sure that you can deal with the labor shortage. But at the same time making sure that you deploy your employees wherever it is really important to have a physical, personal interaction with your customer. And I found that really appealing. Do you, do you see that happening everywhere or maybe I just went into the two, three right stores to see that?

Speaker 4:
Not all, it’s everywhere and you have to bear in mind also in Germany, other than in other countries, we have 12 power centers. Berlin is special, but the German economy without Berlin would be 0.2% EBITA whereas the economy in the U.K., for example, without London would be 20% less or Greece without Athens would be 35% less I think. So that makes sure that those developments are around the country and not only in Berlin, but they are in Berlin so people can see and we can discuss that onsite live, what we all waiting for.

Mark Wohltmann:
We just had some, I think it was two months ago, we had our International Committee meetings virtually … and we always ask the question, ‘What are the key things that are are happening that are keeping you awake?’ It’s slightly different from region to region of course. There’s a different focus but what everyone agreed in Asia Pacific and Europe, Middle East and Africa, as well as in Latin America, is that the change that is coming to our industry is as big and as fast as never before. And the change for the next 10 years will be much, much bigger than the change we experienced over the past 10 years. Is that something that you see over there as well?

Christian Warning:
Yeah, of course. I think that the next big inflection point, how some people also tell the mobility changes, is only one aspect. But it’s like 100 years ago when horses and carriers were replaced by cars. We now are in an even faster situation. Those delivery examples, those new companies coming up … this week another unicorn from Germany, Infarm, has raised another finance and those things are very interesting to see and how fast they grow, what new elements they bring into the consumer behavior and how fast people adapt in cities like Berlin—those new offers. And then once they have the customer experience, they don’t get away from it.

Chris Blasinsky:
So back up for a second for that concept, that was the—refresh my memory—that was the vertical farming, the hydroponic farming inside the stores, where you see the fresh lettuce and everything underneath?

Christian Warning:
Exactly. And people will see that in many supermarkets we go into as well as the bakery shops. We have 40,000 bakery shops—that’s convenience because in every other market those local corner store locations are positioned are possessed by convenience stores in Germany. Lots of bakeries. And that’s also interesting. I had a study tour recently, I hosted a group from around the U.K. and Ireland and they were firstly in Norway and they thought, okay, Norway is a bread country. And then they came over to Germany and said, ‘no, no, Germany’s about bread.’ So that will be an interesting for people.

Mark Wohltmann:
Germany has more than 200 different types of bread or something like that. … Having so many bakeries, it is kind of part of our industry because I think what we saw over, over the past decade or even even two decades is that bakeries expand into FMCG sales. So they try to become a little bit more like convenience stores here and there. And at the same time I would say it really helped our industry, the core convenience stores and the petrol station stores, to up their game when it comes to selling bread products. I remember, Chris you mentioned our visit to Munich some years ago already more than a decade ago, but I do remember everyone really looking at those bread rolls and how they are being presented in petrol station shops and really looking appetizing and good. I think having that type of competition makes for a lot of innovation actually coming into the market.

Chris Blasinsky:
Yeah, absolutely. I remember that was one of the themes that we wanted to talk about when we visited Berlin in 2018 was the bakery and the coffee. I don’t know if we talked about coffee. Did we talk about coffee yet? Can we talk about bread without coffee?

Speaker 4:
No, we can’t. They will enjoy the most sophisticated new kind of ideas of coffee shops. That’s the entrepreneur spirit here. If people say, ‘oh I have a coffee program,’ yeah you might but you haven’t seen the newest kind of dirty coffee, mixing coffee with tea or whatever. There are so many drip coffee innovations and that’s interesting to see that entrepreneur spirit. Little coffee shops can not only survive but make a good business around good old coffee. .

Mark Wohltmann:
Dirty coffee. I haven’t had that. I haven’t seen that but you intrigue me. So I have to try that,

Chris Blasinsky:
Well you know how it goes—when we go to other countries, we try everything. We’ll try everything once. That’s my theory.

Christian Warning:
Don’t forget the sausage though, it’s the global capital of the currywurst. People will remember maybe from 2015 when we have been with NACS in Berlin the last time, that experience. I will make sure everybody has got that experience in 2022.

Chris Blasinsky:
Christian, every time you come to the United States you manage to do the quintessential American things. You go to baseball games and you catch foul balls. You go to Green Bay to a Packers game and you get your big cheese head. So we’re gonna lean on you for the German experience to show everybody around. I’ve heard about the late nights, I don’t know if I can do it but I know you usually get a good crowd to experience what Berlin is like after hours.

Christian Warning:
You have my word on this and you can be sure. I can’t wait to come to the U.S. next year and we’ll have some other sports experiences as well again.

Chris Blasinsky:
I believe you know where the best currywurst is too.

Mark Wohltmann:
We really can’t wait to get back to Germany, really looking forward to having our Convenience Summit Europe in Berlin in summer 2022, looking at all these amazing new concepts, these really entrepreneurial outlets including the dirty coffee—I have to remember that. I have to try that next time. I think the craziest thing I saw in Berlin was the independent, small convenience store operator who had a hidden door as an entrance to a nightclub. And the hidden door actually is the cooler. So you can walk through the cooler into a night club, which was a really cool thing. Not sure if that is scalable for any larger organization…

Christian Warning:
I had a similar experience in Boston when I bought sneakers at bodega. I went into the convenience store, the hidden door to go into the sneaker heaven. That was amazing.

Chris Blasinsky:
Absolutely. Well guys, thank you. This was a great conversation. And for anybody who is wanting to know more about how to attend this event we’ve been talking about it’s Convenience Summit Europe, it’s convenience.org/cse. And again, those dates are May 31 to June 2. So again, thank you guys, and thank you to the listeners. If you would like to hear more on convenience matters, because we talk about lots of fun stuff like this, you can subscribe to our podcast wherever you listen to your podcast. So thanks again, guys. Talk to you soon.

Convenience Matters Outro: :
Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.

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