xCitigroup of New York is expanding its European supermarket, CitiChoice, in early May beyond the United Arab Emirates, Bahrain and Brussels to include Germany.
Although supermarkets are a new concept to European investors and most banks continue to offer only their own funds, Citigroup is hoping to get in early on what it sees as a major new distribution channel in Europe, said Bill Sheridan, Citigroup vice president of business development, based in London.
Only a handful of other banks and broker/dealers have begun to offer supermarkets in Europe, most notably Deutsche Bank and Consors Discount Broker, said Magnus Spence, director at Sector Analysis, a mutual fund research and consulting firm in London.
However, Citigroup is in a good position to expand its supermarket business in Europe because its name is well known on the continent and in the U.K., Spence said. Besides, European investors are beginning to demand choice from their banks and brokers, so CitiChoice will be responding to a growing need, Spence said.
Supermarkets in Europe will grow as competitors begin to realize the importance of this new distribution channel, Spence said.
Citigroup has signed up 12 leading mutual fund companies, most of them U.S.-based, to participate in CitiChoice Germany, Sheridan said. The supermarket will offer German investors a choice of 400 different funds, he said.
U.S. participants in CitiChoice Germany include Alliance Capital Management of New York, Fidelity Investments of Boston, Goldman Sachs of New York, Invesco Capital Management and Janus, both of Denver, Colo., and Scudder Kemper Investments of Boston.
Alliance joined CitiChoice Germany "because teaming up with a significant global player that has many branch outlets throughout Germany gives us a great entree into that market," said Kurt Schoknecht, director of Alliance Capital Management Offshore.
Since Scudder Threadneedle of London joined CitiChoice in Belgium last September, sales have "exceeded expectations," said Richard Eats, communications director at Scudder Threadneedle. Eats declined, however, to disclose sales figures.
"It's been very interesting to work on the first cross-border supermarket in Europe," Eats said. Scudder Threadneedle's success so far with CitiChoice Belgium persuaded the firm to join CitiChoice Germany, he said.
Citigroup first introduced CitiChoice in the Middle East last spring, and then expanded to Belgium in September, said Spence. Citigroup's largest presence in Europe is in Belgium and Germany, so offering a fund supermarket through its existing branches in those markets is a logical step, Spence said.
"You walk around the streets of Germany and you see lots of branches of Citigroup," Spence said. "The man on the street sees them as a major supplier, and they are in a strong position to become a major fund distributor throughout Europe."
