May 17, 2013

Ever bigger Alliance Boots

photo: Alliance Boots
Stefano Pessina: "Our partnerships put us in a unique position to become the clear world leader in both pharmacy and pharmaceutical wholesale"
For the fourth consecutive year, pharmacy-led health & beauty group Alliance Boots has delighted its owners by increasing cash flow and earnings, while significantly reducing net debt. Revenues at the Swiss-based company for the year to the end of March 2013 declined slightly to £22.8bn but remained stable in constant currency terms. In a rare use of management-speak without hyperbole, Executive Chairman Stefano Pessina described 2012/13 as a "transformational year" at the company's annual press conference in London. The billionaire co-owner of Europe's largest drugstore & pharmaceutical wholesaler was referring to the strategic partnership with leading US drugstore chain Walgreens and the recent joint agreement with American pharmaceutical services company AmerisourceBergen. To date, dealmaker Pessina has proved he has the Midas touch. Undaunted by mountains of debt, the Italian has forged a global giant through international participations and partnerships. But will big always be beautiful?
May 16, 2013

PLMA's Brian Sharoff talks own label

Brian Sharoff klein
Mr. Own Label, Brian Sharoff: "No one should rest on their laurels"
Brian Sharoff is almost the archetypal New York business man and could sell ice to the Eskimos if he wanted to. Since assuming the presidency of the Private Label Manufacturers Association (PLMA) in 1981, when Ronald Reagan was US president, his name has become almost synonymous with own label. Doubters need only look at what this indefatigable 66-year-old has made of the annual PLMA exhibition in Amsterdam. Thirty years ago, the venue was just a few chairs and tables in a corner. Today, it has become a must-have for the whole trade with more than 3,800 exhibition stands and over 9,000 visitors from 100 countries. This year's get-together will be in Amsterdam's RAI Exhibition Centre from May 28-29. Are you coming too?
May 10, 2013

Western retail brands and Bangladesh

Rana Plaza debris (photo: Rijans Flickr)
Lest we fashion garment wearers forget: What remains of the Rana Plaza complex near Dhaka
The garments factory disaster on April 24 in Bangladesh throws more than a lurid light on local working conditions and those international retailers (Loblaw, Primark etc.) and brands with goods made on the premises. The tragic death of over 1,100 people through the collapse of the Rana Plaza complex near Dhaka also raises questions fundamental to our consumerist society. Are western customers prepared to accept such tragedies for cheaper goods? And can retailers and brands risk their name in the relentless pursuit of lower costs and higher margins? Judy Gearhart, Executive Director of the International Labor Rights Forum in Washington, argues for more workers' rights and for the trade to take a qualitative leap forward in corporate accountability.
April 25, 2013

German retailer online sceptics

© N O V U M / W a l t e r S c h m i d t
Dirk Roßmann: "We haven't found the key to internet retailing yet"
Some companies like to moan about the competition, but often what they are really complaining about is their own lack of ideas. And where there is a lack of innovation, the chances are that local cartel authorities have failed in their duty and allowed monopolies to arise. The bricks & mortar retailers on Germany's highly-concentrated market are a case in point. They have long identified Amazon and other online pure-players as their favourite bugbear. Therefore, it is easy to be cynical when retail bosses lament the difficulties of creating a viable online business. But, if they represent retail success stories, their statements assume a different character. So when Dirk Roßmann, CEO of Rossmann, Germany's second-largest drugstore multiple, admits that he still hasn't found the keys to the online kingdom, you've got to listen.
April 11, 2013

Rewe goes gastro

caricature: Oliver Sebel
S’il vous plaît?
If you shop in Cologne's Waidmarkt district this summer, feel peckish, and take a bite to eat in a local restaurant, look out for a bearded chef with a roguish smile and a French waiter. These could be none other than CEO Alain Caparros and board member Lionel Souque from Rewe Group headquarters just down the road. Germany's second-largest food retailer intends to open a 200m² stand-alone gastronomic concept in the city centre this June. The project currently runs under the "Made by Rewe" logo. This might still only be a working name, but Rewe established exclusive rights to the brand last June. Our suggestion would be "Chez Alain". The pilot bistro-type outlet will serve pasta, pizza, salads, sandwiches, soft drinks, and wine etc. on premise as well as to take away. Will it work?
April 8, 2013

Tesco USA soon to be Aldi USA?

Fresh & Easy_photo_Central_and_Adams
Not Fresh & Easy: Tesco's adventure in the US has proved costly and time-consuming
What is to become of Tesco's ailing US subsidiary Fresh & Easy? CEO Philip Clarke is due to update shareholders at the preliminary results (2012/13) meeting in London on April 17. This will conclude a four-month strategic review after accumulated losses since 2007 touched an estimated €920m on a total investment of around €1.2bn. Doubtless the Tesco share price will jump briefly on the news of any sale, but Fresh & Easy has surely been a painful experience for the UK's leading retailer. British daily "The Sun" seems to believe that Fresh & Easy's 220 convenience-oriented supermarkets in Nevada, Arizona, and Southern California will be purchased by German hard discounter Aldi. Are we in the realms of fact or tabloid fiction?
April 4, 2013

Qataris interested in Karstadt and Kaufhof?

Maurizio Borletti, CEO Borletti Group (photo: Frédéric Réglain)
Savvy investor: Maurizio Borletti could sell his stake in Printemps to the Qataris
Three years ago it was Harrods and, pending a statutory meeting with the unions in Paris tomorrow, it could now be Printemps. Clearly, Arabs from the tiny Emirate of Qatar are doing more than just their shopping in Europe. Their $100bn sovereign wealth fund, the Qatar Investment Authority (QIA) with its direct investment (Qatar Holding) and real estate (Qatari Diar) arms, is fuelled by oil and natural gas. As in other Gulf States, the QIA's investment decisions are believed to be heavily influenced by the ruling family. Measured by their track record, the sheiks seem to have a marked propensity for infrastructure projects, luxury labels, and prestigious European retail brands.
March 26, 2013

Welcome letter to Lucy Neville-Rolfe at Metro

Lucy Neville-Rolfe, Metro Group supervisory board (photo: Davis Plas)
Lucy Neville-Rolfe: The former Tesco director has been nominated for election to Metro Group's supervisory board
Dear Lucy, Your appointment to the Supervisory Board of Metro Group now looks a mere matter of form. After all, you are nominated for election at the AGM on May 8. This is surely one of the most exciting developments in German retailing for a long time. As a former board member of leading UK grocer Tesco, you will bring expertise from a company which has long been benchmarked by top German retailers. As a foreigner, you will be a rarity on a German retail board. We have a few Frenchmen here at Rewe and one Englishman at Karstadt, but that’s about it. As a woman at the top, you could well qualify for endangered species status. May a fellow Brit, who has lived for yonks in Germany, be permitted to give a few tips on adjusting to the local culture?
March 25, 2013

EU commissioner Dacian Cioloş talks sugar

Dacian Cioloş, EU Commissioner for Agriculture (photo: European Commission)
Sweet complexity: Dacian Cioloş, EU Commissioner for Agriculture, tackles the sugar quota question
Good news for sweet tooths — the Council of the European Union has agreed its negotiation position on sugar quotas. The bureaucrats would like them to expire as from October 2017. The hopes and prayers of the sweets industry could thus be heard at last — or at least in part. Three main scenarios remain and reflect the interests involved: The Commission wants the sugar quota to end in 2015; Parliament desires an extension of the quota until 2020; and the Council wishes expiry in 2017. In typical Brussels fashion, what everyone could get in the end is a compromise. So what happens now? The Commission, the European Parliament, and the Council have to hammer out a deal as part of the CAP reform package. As EU Commissioner for Agriculture Dacian Cioloş says, it’s clear that the quotas will go, the only question is when.
March 22, 2013

Metro Group's earnings massacre

caricature: Oli Sebel
CEO Olaf Koch hits the button again at Metro
It has almost become a tradition. With depressing regularity, a Metro Group board member gets the chop just before the announcement of the annual results. This year with its sharp decline in earnings was certainly no different. Long-serving C&C boss Frans Muller has to pack his bags by the end of the month. The list of sacrificial lambs in the Metro C-suite is growing ever longer and the number of top managers with operational experience ever shorter. Muller is the fifth board member head to roll at Germany's largest retailer since 2010. Last year it was the unenviable turn of Joël Saveuse who had been touted to succeed Eckhard Cordes as CEO. In 2011 “vice-CEO” Thomas Unger and veteran Zygmunt Mierdorf found themselves in the ejector seat. These ritual purges, with further staff cuts planned this year, do not make Metro look a happy ship. Perhaps this is why the company prefers to euphemistically call its Robespierre-like reshuffles "simplifying the organisation of ... top management". Who will walk the plank next?