September 15, 2014

Aldi, Lidl and Scottish independence

Scottish bagpipers parade past a Marks & Spencer outlet (photo: Dave Conner_Flickr)
Marching for or against?
As Thursday's hotly contended referendum on Scottish independence draws ever closer, German discounters active throughout the UK look set to profit whatever the outcome. At first blush, this may sound counter-intuitive for nothing will change if the Scots vote No to independence and Aldi and Lidl would retain their status as foreign investors in the event of a "Yes Scotland" decision. But both no-frills retailers could gain a number of brownie points with Scottish consumers after the referendum, if they continue to play their cards right. Wisely Aldi and Lidl, who are rapidly growing their local store count (currently 55 viz. 90 outlets), have kept out of the debate. Both have been content to let fools rush in where angels fear to tread. These do not only include David Beckham or Mick Jagger, who have little or nothing to do with Scotland, but also most of the big retail multiples from south of the border.
August 29, 2014

When shops talk to customers

Iconeme technology at a Bentalls store (photo: Iconeme)
Date with a mannequin: A passer-by starts a smartphone dialogue
Feeling lonely in an ever more digitalised world? Don't despair, because you soon might be able to chat with storefront mannequins. Anyone with a smartphone strolling down Regent's Street in London's West End, for instance, can already use them for information purposes. Technology and design company Iconeme launched its "VMBeacon"-enabled mannequins in House of Fraser's Online Store (Aberdeen), Hawes & Curtis (London), Bentalls (Kingston upon Thames), and Jaeger (London) this month. The Bluetooth low-energy (BLE) beacons, installed directly into each mannequin or visual merchandising product, transmit information that has been programmed by the retailer. This enables customers to receive details via their smartphone about the clothes on display and allows retailers to engage directly with consumers who are shopping in, or passing by, a store. As customers are now just as likely to have a smartphone with them as their wallet, will the technology be a game changer?
August 28, 2014

Tesco and the German discount challenge

Tesco Brand Outlet discount shelves (photo: Steve Dresser/ Grocery Insight)
Tesco goes discount: Is this how the UK grocer sees competitors Aldi and Lidl?
Tesco's roll-out of a discount aisle in its larger UK stores since early 2013 continues to puzzle trade observers here on the Continent. According to trade press sources, the retail giant has already introduced these "Brand Outlets" to c. 180 Big Box stores in poorer catchment areas and wants around 100 more by the end of this year. The dressed-down, matt-orange shelves carry a range of groceries, pet food, beauty goods and household products, including top brands such as Surf, Persil and Tetley. In keeping with the marketing claim "Big Brands, Small Prices", items range from around 30 pence to £2.50. As Tesco established a "£1 section" in 50-odd branches only two years ago, the media interpret these Brand Outlets as another attempt to combat the increasing popularity of 'pound shops' such as Poundland. If, however, the Brand Outlets are also trying to compete with Aldi and Lidl UK, then the whole exercise looks counterproductive.
August 20, 2014

Douglas and the flowers of private equity

Shop front advertising at a Douglas perfumery in Germany (photo: Douglas)
Physical asset: Beauty is in the eye of the beholder, but a financial investor judgeth all things aright
The departure of Chairman Jörn Kreke from the supervisory board of Douglas Group has rightly been called the end of an era. The 74-year-old patriarch will leave the German company as per the end of September, more than one-and-a-half years after its takeover by Boston-based financial investor Advent International. Kreke and the family clan will retain their 20-per-cent stake in the group with estimated annual sales of around €4bn. However, his departure will inevitably give rise to questions as to the extent of their future influence. Insiders claim that Advent are now looking for a new CEO at the "Douglas" perfumery division to succeed Manfred Kroneder on the expiry of his contract as per September 30. Kreke's son, Henning, will assume the role in an interim capacity, but the new incumbent will need both international profile and the nous to take the company public again. If the rumours are true that Advent is planning an IPO for Douglas as early as next year, then the global private equity firm will be acting much as most observers had predicted. Given the obvious and logical things the Americans have done since coming to power, one wonders why the Krekes were not able to do the same when they ruled the roost?
July 31, 2014

TrueStart’s retail innovation hub in London

Young entrepreneurs at TrueStart in Victoria/London (photo: Mike Dawson)
Matt Truman: "Our life is increasingly dominated by people under 30 with fresh ideas formed in a digital world"
Matt Truman is a former investment banker with a mission. The founding partner & CEO of London-based companies True Capital and TrueStart wants to bring two very different parties together: big business groups and "the most innovative retail and consumer sector entrepreneurs in Europe". As in love, the happiest commercial marriages are usually when both partners' characteristics are complementary. Given that major retailers are not generally known for their imagination and that all too many new businesses fail through a lack of finance and business sense, Truman clearly has a valuable role to play as entrepreneurial matchmaker and midwife. But it is never wise to force a relationship. The best one can do is to create a propitious scenario where minds and souls can meet. In the case of TrueStart, which parent group True Capital uses to accelerate its own investment in young retail entrepreneurs, this is not a candle-lit dinner for two.
July 25, 2014

Aldi goes to school

Photo of the Dawson brothers in school uniform in 1964 (photo: Ken Dawson)
English tradition: Two boys in school uniform
Aldi's audacious entry into the UK school uniform market has savagely undercut the big local multiples by at least 40 per cent. Marketing an entire kit (two polo shirts, a sweater and a pair of trousers or skirt) for just £4 (€5) at the beginning of the school summer holidays certainly looks a winner. However, the move has rekindled public debate in the media as to whether the German hard discounter is loss leading on non-food items. And, in the wake of the Rana Plaza tragedy in Bangladesh, commentators have also asked whether such a low price is possible while adhering to international labour & safety standards. Meanwhile the average German, fascinated by this institution for English children, looks on with amusement. At the very least, Aldi has shown once again that it can burrow into the social fabric of this strange island people and be more British than the Brits themselves.
July 9, 2014

Karstadt merry-go-round keeps on turning

Eva-Lotta Sjöstdet (photo: Karstadt)
Couldn't get the man in the background to define his colours: Eva-Lotta Sjöstedt
Now that didn't last long, did it? Eva-Lotta Sjöstedt's brief, but heart-warming guest appearance as chief executive of troubled German department store chain Karstadt has come to a dramatic end. After only five months, the likeable Swedish lady has thrown in the towel. The announcement of her sudden departure on Monday came with bitter recriminations against principal owner Nicolas Berggruen. The former IKEA executive had always looked a somewhat naive figure in a trade dominated by ruthless middle-aged men. She tried to give a human touch to the thankless task of reviving the ailing fortunes of the high street retailer. Whereas previous top management seemed remote and aloof members of the international jet set, Sjöstedt demonstratively manned the tills and tried to relate to Karstadt's long-suffering staff. Sjöstedt's brief tenure at the helm is now over. The bitterness in her departing letter is palpable, and the wording is damning.
June 27, 2014

Foreign retailers rediscover Germany

A merry scene from Munich (photo: Romadboed Flickr)
Back to Germany: A new taste for things German
The return of British DIY retailer Kingfisher to Germany could be part of a new wave of international investor interest currently sweeping this country. Japanese convenience store operator 7-Eleven admits that it is sounding the market again. And a press office denial that London department store group Marks & Spencer will return to Germany after a recent comeback in France and the Low Countries did not sound particularly convincing. Only a few months ago, Dutch grocer Ahold reiterated its commitment to the German market following the opening of its first "AH to go" convenience outlet in North-Rhine Westphalia in September 2012. Meanwhile, Swiss giants Migros and Coop Schweiz continue to invest substantial sums in their relatively new German operations. This is all the more surprising when one remembers that a dozen or so top global retailers have burned their fingers badly here since the 1970s. So why this new interest?
June 25, 2014

Kingfisher re-enters German DIY market

Screwfix in the UK (photo: Kingfisher)
Tool of conquest: A customer places an order in a Screwfix catalogue showroom
Despite extravagant attempts at secrecy, Kingfisher looks on the verge of opening its first "Screwfix" store in Offenbach, near Frankfurt. Europe's largest DIY retailer with annual revenues of around €13bn could re-open for business in Germany as early as next month. CEO Ian Cheshire announced last October plans to open three other test outlets here, including Dreieich, on the perimeter of Frankfurt, and the Hessian town of Darmstadt. Screwfix is thriving in its British homeland and pushed revenues by 17 per cent to €827m last year. This has clearly motivated Cheshire to make the banner his spearhead: "We have 350 outlets in the UK which is less than half the size of Germany, so we see a big potential market." But former management at the London-based Plc failed to make the "Castorama" Big Box concept work in the Federal Republic between 1998 and 2003. Also a stake in local DIY player Hornbach, sold in March this year, always looked incongruous, given the fiercely independent nature of the family owners. So will the Brits be successful this time?
June 23, 2014

Talk with The Consumer Goods Forum

Peter Freedman, MD, The Consumer Goods Forum (photo: The Consumer Goods Forum)
Peter Freedman: "Consumer trust is in danger"
This year's Global Summit of The Consumer Goods Forum in Paris has again focussed attention on the world's largest retailer and consumer goods organisation. The parity-based industry network brings together the CEOs and senior management of some 400 retailers, manufacturers, service providers and other stakeholders across 70 countries. Its new Managing Director, Peter Freedman, has a tough task ahead. Nearly everyone in the trade can see the benefits of joining a global network and community. But the fierce competition among retailers and their generally tough negotiating practices with suppliers make true co-operation within the industry about as easy as a climb up the north face of the Eiger. Freedman's leadership of the organisation once known as CIES also comes at a time when digitally savvy consumers are calling retailers and suppliers into question more radically than ever before. So what does the new kid on the block propose to do about it?