August 20, 2014
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 company 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
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
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
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
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
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
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?
June 20, 2014
Clear view: Mobile eye tracking technology reveals what a customer really sees
Once you pass the high-security doors, having solemnly promised not to take photos, it looks like something straight out of Star Trek. But despite the hush-hush, GlaxoSmithKline (GSK) is clearly immensely proud of its new Shopper Science Lab. The high-tech facility stands only 300 yards away from the global healthcare group’s headquarters in Brentford/West London. The Brits state that they have invested "a significant amount" in the new research complex and that Metro C&C and European buying alliance EMD already number among its 35 retail customer users. Given that GSK (think Sensodyne toothpaste or Dr. Best toothbrushes) spends £3.4bn (€4.2bn) annually on R&D in vaccines, medicines and consumer healthcare products, "significant" will not mean peanuts. Like Diageo’s Customer Collaboration Centre, only a few miles down the road, this is a world-class shopper insight facility waiting to be discovered. In fact, the Shopper Science Lab is the largest of its kind in Europe and makes science look like an art.
May 23, 2014
Hans-Otto Schrader: "The future of retailing is neither purely physical nor purely online, but omni-channel"
Almost like a profession of faith to an old religion in an ever more cyber world, German retailer Otto Group intends to open more stores on both sides of the Atlantic. This is an unusual step when competition from the internet is forcing many retailers to prune their store base and to reduce or reassign sales space. "Physical stores are most certainly not dead," CEO Hans-Otto Schrader proclaims. All too often such statements represent little more than the attempt to make the best out of a bad job: A traditional retailer is saddled with 20 to 30-year rent contracts and/or has invested huge sums in bricks & mortar, so management sing an appropriate song. Although Otto Group runs around 400 stores under various banners and numerous shop-in-shops, they only account for 11 to 12 per cent of net revenues (€12bn). Online makes up nearly two-thirds of the business which also gets the lion's share of the capex (more than €300m for 2013 to 2015). So why does Schrader say that it is "essential to fly the flag and open more stores"?
May 16, 2014
Digitalisation: Mfi is offering customers more high-tech services in its shopping centres
If you build a big shopping centre of 20,000m² to 50,000² in Germany, it can cost you or your investors anywhere between €150m and €300m. Now that’s a lot of dough. Once upon a time, before the age of the internet, there was a rule of thumb in the business: "Entertainment electronics retailer Media-Markt plus two other anchor tenants and investors will queue at your door!" Those halcyon days, however, are fading fast, and for how long will today's consumers want to buy their TVs, washing machines or laptops in a shop? Shopping centre operators such as Mfi are therefore revising their strategies in order to maintain customer frequency. They don’t really have a choice; otherwise their temples of consumption will turn into retail deserts.