German supermarket group Rewe is assessing strategic options for its Penny Market operations in Italy, weighing either a partial divestment or a complete exit from the market that has been home to the discount chain since 1994.
Penny runs almost 500 stores across Italy and generates roughly €2 billion ($2.3 billion) in annual revenue. Rewe's review includes scenarios ranging from selling the business in full to breaking up operations, according to the reporting.
Potential buyers mentioned in the coverage include Germany’s Lidl and Aldi. Both retailers have been expanding across Europe and have been increasing their footprints in Italy. A transaction involving Lidl or Aldi would represent a notable change in approach for those companies, which historically have grown through organic expansion rather than by acquiring established chains.
Rewe is no stranger to retreating from parts of the Italian market. More than a decade ago the group reduced its exposure by selling its Billa supermarket business; most former Billa stores were taken over by French retailer Carrefour and the Italian cooperative Conad. Observers cited the Billa divestment when suggesting that a similar carve-up of Penny's network could be among the options under consideration if a sale proceeds.
The move to re-evaluate Penny’s future comes against a backdrop of mounting headwinds for supermarket operators in Italy. Slowing consumer spending, fierce price competition and demographic trends have squeezed margins and pressured returns, prompting consolidation within the sector.
Illustrative of those pressures, last year Carrefour agreed to sell its Italian operations to food group NewPrinces for a symbolic equity value of €1, underscoring the difficulty some international retailers have had in securing sustainable profits in Italy's fragmented and low-margin market.
While Rewe examines its options for Penny, neither Rewe nor Penny immediately commented on the report.
Implications and context
The deliberation over Penny’s fate signals a potential reshaping of Italy’s discount grocery landscape. A sale or breakup of Penny could further accelerate consolidation and alter competitive dynamics, particularly if Lidl or Aldi were to acquire stores. Any such transaction would have implications for suppliers, regional distribution networks and local retail employment, depending on how operations are transferred or reorganized.