May 30, 2013

Best Buy vs.

Best Buy store facade (photo: Best Buy)
Best Buy: A brightly-painted bricks & mortar dinosaur? (photo: Best Buy)
Is Best Buy on the way up, or will prove its nemesis? US business media and Wall Street analysts have pounced on Best Buy’s Q1 results for 2013/14. True to form, they interpret each set of quarterly figures as proof of their own views. Some pundits believe that the world’s largest electronics retailer is failing, others that it will rise again like a phoenix from the ashes. Best Buy, who challenged German hero MediaMarkt/Saturn on entering Europe in 2008, was certainly savaged by the bears last Christmas, sending the share price to a historic low. They regard the Richfield/Minnesota company as a natural victim of "showrooming". But is the US giant's demise really such a slam-dunk case?
May 22, 2013

Aldi Nord gets a facelift

Aldi Nord store facade (photo: Hans-Jürgen Schulz)
Aldi Nord: Larger, more modern stores (photo: Hans-Jürgen Schulz)
In our internet-obsessed times, dominated by Amazons, Yahoos, Apples and Samsungs, it is a sign of Aldi's continued significance that any change to its physical store base still hits the headlines. Germany's leading retail brand remains a potent social force and is almost a cult in Europe's most prosperous country. After years of stagnation, revenues at Aldi Nord, the northern branch of Aldi's vast empire, are growing again "at more than 5 per cent". The company sees this success as confirmation of its decision to begin a huge modernisation programme. This has included the upgrading of 4,300 of Aldi Nord’s 5,000 European outlets over the last 18 months as well as a quiet revolution in traditional merchandising strategy. But why is Aldi revamping its store network in an increasingly online world?
May 22, 2013

German retailers welcome Croatia EU entry

Lidl tourist holiday advertising (photo: Jörg Konrad)
Pioneer: German discounter Lidl was one of the first to realise that Croatia has more to offer than holidays (photo: Jörg Konrad)
If all goes to plan, beautiful Croatia is set to become the 28th member state of the European Union as per the beginning of July. Whatever EU entry may mean to its 4.4m consumers, the opening of this small Balkan market will certainly facilitate the expansion of foreign retailers. To date, most of Europe's Big Boys (Tesco, Carrefour, Casino, Auchan etc.) have given the Istrian republic a miss. As Croatia only offers annual retail sales of around €16bn, they have clearly decided to concentrate on larger Poland and Hungary. Meanwhile, the nearness of Germany and Austria to Croatian borders has given their national retailers a head start. So Lidl, Kaufland, Spar Austria, Rewe Group (Billa, Bipa), Metro C&C, perfumery group Douglas, drugstore operator Müller, and DIY leader Obi now look set to profit from their first-mover bonus.
May 17, 2013

Ever bigger Alliance Boots

Stefano Pessina, Executive Chairman (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" (photo: Alliance Boots)
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

PLMA President Brian Sharoff (photo: PLMA)
Mr. Own Label, Brian Sharoff: "No one should rest on their laurels" (photo: PLMA)
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

Retail brands and Bangladesh

Rana Plaza debris (photo: Rijans Flickr)
Lest we forget: What remains of the Rana Plaza complex near Dhaka (photo: Rijans Flickr)
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

Dirk Roßmann, CEO Rossmann (© 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" (© N O V U M / W a l t e r S c h m i d t)
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

Alain Caparros & Lionel Souque as waiters (caricature: Oliver Sebel)
S’il vous plaît? (caricature: Oliver Sebel)
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 store in US (photo: Central and Adams)
Not Fresh & Easy: Tesco's adventure in the US has proved costly and time-consuming (photo: Central and Adams)
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 (photo: Frédéric Réglain)
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.