October 16, 2014

Talk with Kingfisher CEO Ian Cheshire

Sir Ian Cheshire, Kingfisher CEO (photo: Kingfisher)
Happy DIY boss: Ian Cheshire (centre) opens Screwfix's first foreign store in Germany
Wake up German DIY, the Brits have come! Kingfisher Chief Group Executive Sir Ian Cheshire clearly believes that "Screwfix" has a good chance of success in Europe's richest country. Only four of these small 600m² to 1,000m² outlets opened in the Rhine-Main area on September 10, but they could be the thin edge of a very thick wedge. Along with French subsidiary Brico Dépôt, Cheshire clearly wishes the multi-channel concept to spearhead his international plans. Kingfisher, probably better known for its B&Q Big Box outlets, is already active in ten countries, including China, Russia and Turkey. Nearly half of group earnings are, however, achieved in France via the Castorama and Brico Dépôt banners, which Kingfisher hopes to supplement by the acquisition of Mr.Bricolage. With annual revenues last year of around €14bn, net cash in excess of €630m, and a stock market valuation that has more than doubled under Cheshire's tenure as CEO since 2008, the London-based plc is in an excellent position to invest further in western Europe. But why start the internationalisation of Screwfix on one of the world's hardest markets?
October 16, 2014

Greenpeace hits Lego to hurt Shell

Greenpeace uses Lego toys to protest against Shell (photo: © Jiri Rezac / Greenpeace)
Harmless or harmful: Plastic toys have lost their innocence
Most people would agree that Lego is one of the most innocuous brands on the planet. In fact, the Danish toy-maker enjoys some overwhelmingly positive connotations: childhood, creativity, and imagination. The very name conjures up intelligent, well-adjusted kids playing with coloured plastic bricks while developing their manual dexterity and cognitive skills. Lego, like many others in the industry, also uses marketing agreements to promote sales, including one with Shell. But CEO Jørg Vig Knudstorp has just announced that the family-owned company will not be renewing its 50-year partnership with the oil giant after three months of relentless pressure from Greenpeace. In a devastatingly effective global campaign the environmental organisation has attacked the Danes for their association with Shell. This has included a video on YouTube, showing an Arctic Lego landscape drowning in oil, viewed nearly six million times, as well as an online petition signed by more than one million people. How then did the Danish angel fall from grace? And could the brands who supply petrol forecourt shops be next to feel the wrath of the green warrior?
September 15, 2014

Aldi, Lidl and Scottish independence

Scottish bagpipers parade past a Marks & Spencer outlet (photo: Dave Conner_Flickr)
Proud bagpipers: 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 soon you 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

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)
Eva-Lotta Sjöstedt: Couldn't get the man in the background to define his colours
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?