German Prime Retail

Part 1. €218 Billion a Year: Inside the EU's Largest Grocery Market

In 2025, while German industry endured another year of stagnation and the old label "the sick man of Europe" was back in circulation, Germany's food retailers turned over €217.8 billion before VAT — 3.8% more than the year before. Online, Germans bought only about €4.1 billion of food, less than 2% of that total on any like-for-like basis. Few markets in the world combine that scale, that stability and that stubborn loyalty to the physical store. For property investors the consequence is direct: behind a well-let German supermarket lies one of the most predictable consumer cash flows in Europe. This twelve-part series explains how international investors own a share of it — and what they need to know before they do.
Key takeaways
• German food retail turned over €217.8 billion in 2025 (EHI); on Eurostat's EU-wide measure, Germany overtook France in 2024 to become the European Union's largest grocery market — by about 1%.
• Online grocery remains marginal at about €4.1 billion a year, and the quick-commerce start-ups that promised to replace the supermarket have largely left Germany.
• Prime supermarkets and discounters yielded 5.0% in Q3 2026 (BNP Paribas Real Estate) — more than prime offices or logistics and about 1.5 percentage points above ten-year German government bonds — and yields are drifting upwards.
• Four retail groups account for more than 90% of the market: tenants of exceptional financial strength, with the bargaining power to match.

Food retail keeps growing while German industry stagnates

Food retail has kept its own rhythm through a difficult decade for the German economy: an energy shock, the sharpest rise in interest rates in a generation, and persistent weakness in construction, chemicals and car manufacturing.
Exhibit 1. Turnover grew in real terms in 2025; online stayed marginal
Indicator
Figure
Source
Food-retail net turnover, 2025
€217.8 bn (+3.8%)
EHI Retail Institute
Food-retail net turnover, 2024 (as first reported)
€209.7 bn
EHI Retail Institute
Real growth in food-retail sales, 2025
+1.1% (nominal +3.4%)
Destatis
Online food sales, 2025
€4.1 bn
bevh / EHI
Online share of food and drugstore goods, 2025
4.9%
HDE Online Monitor 2026
Population, 31 December 2025
83.5 million
Destatis
The engine is necessity, not exuberance: volumes grew in real terms in 2025 even as the wider economy hesitated.
Within the sector, Germany's supermarkets — the REWE and EDEKA stores at the heart of this series — are winning back market share from the discounters. Full-range supermarkets grew turnover by 6.5%, while discounters, which had gained share for years, grew by 2.7% (EHI). Supermarkets and large supermarkets together rose from 42.1% to 43.2% of food-retail turnover; the discounters' share slipped from 46.6% to 46.1%.

Germany edged past France, but its structure sets it apart

On Eurostat's measure, Germany's grocery trade turned over €276.6 billion in 2024, just ahead of France at €273.6 billion; in 2022 and 2023 France was ahead. The two markets form a league of their own: each is roughly twice the size of Italy's. Eurostat compares countries by the turnover of non-specialised stores in which food predominates — supermarkets, discounters and hypermarkets, but not bakeries, butchers or other specialist food shops. It counts the entire turnover of the companies in this class rather than store sales by format — one reason its figure exceeds the EHI total above; the ranking, not the absolute number, is the point.
Structure, not size alone, sets Germany apart, and each structural feature protects the income of an existing, well-located store. Its population is spread across a dense network of mid-sized towns rather than concentrated in one capital (Part 5), its retail market is dominated by a handful of financially powerful groups (Part 2), and its planning law makes new large stores hard to build (Part 3).

Loyal shoppers and thin margins keep online grocery a niche

The quick-commerce start-ups have largely left Germany, and the established retailers have taken a stake in online grocery rather than been displaced by it. Between 2020 and 2022, venture capital poured into German quick-commerce: Gorillas, Getir and Flink promised groceries at the door within minutes. The retreat was swift: Getir bought Gorillas in December 2022, and by mid-May 2024 both had withdrawn from Germany. Flink survives — with REWE among its largest shareholders.
German shoppers remain loyal to the physical store for practical reasons: shops are close, prices are low in a market where discounters take almost half of all food-retail sales, fresh produce is bought frequently, and the weekly shop by car to a supermarket with ample parking is a deeply rooted habit outside the big cities. None of this is immutable, but it explains why online grocery, after twenty years of e-commerce, remains a niche.
Thin margins explain the rest. In its review of EDEKA's takeover of the regional chain tegut in September 2026, the Bundeskartellamt, Germany's competition authority, found that average margins in German food retail, after costs, are in the low single digits — a few cents per euro of sales. That leaves little room to pay for a rider, a dark store and a ten-minute promise on every small basket.

Supermarkets out-yield prime offices and logistics but rely on one tenant

On BNP Paribas Real Estate's figures, the prime yield for single supermarkets and discounters is above that of prime offices and logistics (other brokers measure differently: CBRE puts prime food stores at 4.6%, below its 4.9% for retail parks). In our view this reflects lot size more than risk: single stores are small tickets that most institutions cannot buy efficiently (Part 4), which leaves room for private investors with patient capital. The premium is not entirely free, however: a single store depends on a single tenant, and in a market where four groups take nine-tenths of sales, the pool of replacement tenants is small (Part 2).
Exhibit 2. Supermarkets out-yield retail parks, logistics, offices and government bonds
Prime net initial yield, Q3 2026
Supermarkets and discounters
5.00%
Retail parks (Fachmarktzentren)
4.75%
Logistics
4.70%
Offices (average of the seven A-cities)
4.56%
Ten-year German government bond (7 October 2026)
3.55%
Sources: BNP Paribas Real Estate, Investment and Retail Investment Market Germany Q3 2026; Deutsche Bundesbank.
Food stores and retail warehouses drew almost half of the €6.5 billion invested in German retail property in 2025 — about €3.1 billion (BNP Paribas Real Estate) — and foreign buyers provided 51% of that food and retail-warehouse volume.
2026 has been harder: in the first nine months retail investment was a quarter lower than a year earlier, foreign buyers' share of it fell from 50% to 31%, and prime yields edged up — for supermarkets from 4.90% at the end of 2025 to 5.00%, with BNP Paribas Real Estate expecting further increases by year-end.

Eleven parts answer what an investor needs to know before buying

Exhibit 3. The parts follow an investment from the tenant to the final tests
Part
Question
2
Who are the tenants, and how strong are they?
3
How are new stores developed — and why are new sites so rare?
4
Who invests in German supermarkets, and why?
5
Metropolis or market town: where is the income most secure?
6
Should you buy a completed store or fund one under construction?
7
What must due diligence establish before you sign?
8
How does the notarial closing protect the buyer?
9
Which holding structure, and how is it taxed?
10
What does the landlord pay, and what does the tenant pay?
11
How much cash actually reaches the investor?
12
Which seven tests must a core supermarket investment pass?

Implications for investors

1. Focus on existing, well-located stores. Germany's dense network of mid-sized towns, its concentrated retail market and its restrictive planning law each protect the income of a store that already trades from a good site.
2. Capture the small-ticket premium, but underwrite the tenant first. In our view the yield premium reflects lot size more than risk, yet a single store depends on a single tenant, and where four groups take nine-tenths of sales, the pool of replacement tenants is small (Part 2).
3. Price on current yields, not last year's. Prime yields for supermarkets rose from 4.90% at the end of 2025 to 5.00%, and BNP Paribas Real Estate expects further increases by year-end.
How to read German market numbers: EHI reports food-retail turnover net of VAT, by store format; Destatis publishes growth rates, not euro totals; bevh's online figures include VAT, so any online share is indicative. Eurostat's EU comparison uses a different, enterprise-based definition and appears almost two years after the year it describes. Broker yields differ by method — BNP Paribas Real Estate puts prime supermarkets at 5.00%, CBRE prime food stores at 4.6% — so compare yields only within one broker's series, and always at the date stated.

About Gordon Real Estate Group

Gordon Real Estate Group is a family-led real estate advisory firm based in Freiburg, specialising in German food-retail property for international private clients and families. It has held a broker licence under § 34c(1) sentence 1 no. 1 of the German Trade Regulation Act (GewO) since March 2005, extended in February 2017 to the brokerage of loans other than consumer real-estate loans (§ 34c(1) sentence 1 no. 2 GewO). The firm sources and brokers acquisitions and sales of supermarkets, discounters and food-anchored retail parks, arranges bank financing, coordinates legal, technical and tax due diligence with specialist advisers, and provides asset management for its clients' properties across Germany.
Sources: EHI Retail Institute (via Lebensmittel Rundschau, September 2026, and LEBENSMITTEL PRAXIS); Destatis press release no. 038 of 2 February 2026 and population statistics (31 December 2025); bevh/EHI online food sales 2025; HDE Online Monitor 2026; Eurostat structural business statistics (NACE 47.11, 2022–2024); WirtschaftsWoche on Getir/Gorillas (2024); Supermarktblog on Flink (May 2026); Bundeskartellamt press release of 28 September 2026 (margins); BNP Paribas Real Estate, market reports Q4 2025 and Q3 2026; CBRE retail investment Q3 2026; Deutsche Bundesbank yield curve, 7 October 2026; Gordon Real Estate Group experience (interpretation of yields).
Photo: Mathias Konrath / Unsplash
This article is general information and not investment advice. Market data reflect the sources and dates stated and change over time.
2026-10-09 12:12