March 26, 2013

Welcome letter to Lucy Neville-Rolfe at Metro

Lucy Neville-Rolfe, Metro Group supervisory board (photo: Davis Plas)
David Plas
Lucy Neville-Rolfe: The former Tesco director has been nominated for election to Metro Group's supervisory board (photo: Davis Plas)
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 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 (photo: European Commission)
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's earnings massacre

Metro CEO Olaf Koch (caricature: Oli Sebel)
Oli Sebel
Boing: Metro CEO Olaf Koch hits the button again (caricature: Oli Sebel)
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?
March 15, 2013

Rewe's pious results

Alain Caparros, CEO Rewe (photo: Mario Vedder)
Mario Vedder
Alain Caparros: Praying for profitable acquisitions in food retailing & tourism (photo: Mario Vedder)
"Habemus good results!" With this topical reference and a roguish smile on his increasingly bearded face, CEO Alain Caparros announced Rewe's results for 2012 yesterday. Looking decidedly too worldly for a supreme pontiff, the alpha male of Germany's second-largest food retailer could well be absolved for assuming a beatific tone. Rewe has beaten its own goals on a tough home market. Above all, the Cologne-based retailer cooperative-cum-multiple has done so both at home and abroad via solid organic growth and good-old operational strength. And after a fall in 2011, new CFO Christian Mielsch must be singing a Te Deum after a big jump in earnings.
March 8, 2013

Beisheim and Metro's lower dividend

Otto Beisheim & Jürgen Wolfskeil (photo: LZ-Archiv)
Lebensmittel Zeitung
Otto Beisheim (left) in his heyday in the mid-1960's with Jürgen Wolfskeil, former senior editor of Lebensmittel Zeitung (photo: LZ-Archiv)
Metro Group has proposed lowering its dividend from €1.35 to €1 per ordinary share hardly two weeks after the decease of co-founder Otto Beisheim at the age of 89. Beisheim had already reduced his stake in the world's third-largest retailer to less than 10 per cent. Therefore, any attempt to establish a relationship between the two events might seem like straining a point. However, surely they are connected by a long chain of causality? It all began in the heady 60's when the young started growing their hair and shocking the establishment. Certainly, it is hard today to convey the sheer excitement created by such retail visionaries as Beisheim, Defforey (Carrefour hypermarkets) or Cohen (Tesco). Perhaps the nearest recent comparison would be when techno freaks slept in the street overnight in order to buy the first iPhone at their local Apple store the next morning.
March 1, 2013

Talk with the World Wildlife Fund

Danone's Activia (photo: Danone)
Instantly recognisable: Danone prints the WWF emblem on its Activia yoghurt (photo: Danone)
There are countless non-governmental organisations (NGOs), but few are so well-known as the World Wildlife Fund For Nature (WWF) run by International Director James P (Jim) Leape. Presumably, the WWF's global brand recognition has something to do with the more than $1bn it has invested in 12,000 conservation projects since 1985. Its noble causes include "saving endangered species, conserving the world's most precious natural places, and reducing our impact on the planet". In a touchy-feely world consumers increasingly expect retailers and suppliers to occupy the moral high ground. Therefore, it doesn't surprise that many of them have partnered with the WWF in order to improve their corporate social image. So all things bright and beautiful for trade creatures great and small?
February 15, 2013

Horsemeat scandal hits Germany

horse & cow (caricature: Oli Sebel)
Oli Sebel
A problem of definition: Doesn't that cow look a little like a horse? (caricature: Oli Sebel)
The European horse and pig contamination scandal has now reached Germany and set alarm bells ringing throughout the trade. As numerous national Food Standards Authorities belatedly scramble to look active, German retailers have also started to pull own label products containing processed beef from their shelves. To date, checks are being made at six big German retailers after warnings were received from the European authorities. Already, lightning consumer surveys show that four out of ten German consumers intend to refrain from buying ready meals containing beef. In an attempt to calm nerves, Metro Group hypermarket subsidiary "real," has recalled its "Tip" own-label, deep-frozen lasagna after traces of horsemeat were found in samples. Edeka, Germany's largest food retailer, also confirmed to Lebensmittel Zeitung that it removed its "Gut & Günstig" own-label lasagna bolognese from stores on Tuesday for the same reason. All seem surprised, but, in reality, the whole "horsegate" affair was an "accident" waiting to happen.
February 9, 2013

Talk with designer outlet group McArthurGlen

McArthurGlen designer outlet center in Neumünster (photo: McArthurGlen)
Popular destination: A McArthurGlen designer outlet center in Neumünster, Germany (photo: McArthurGlen)
For a company vilified by some as "the undertaker of German retailing" in the mid-90s, McArthurGlen Group has proved a patient international investor. In a country known for its love affair with red tape, designer outlet centres provide those who fear Anglo-Saxon retail concepts with ample scope to delay planning permission. Thus, McArthurGlen has only managed to open two sites in Germany to date: Wustermark, near Berlin, in 2009 and Neumünster, near Hamburg, last year. Gary Bond, Managing Director Development, explains why Europe's leading owner, developer and manager of designer outlets still keeps the faith.
February 8, 2013

Fressnapf pet food shops take an online bite

Torsten Toeller, CEO Fressnapf (photo: Georg Lukas)
Georg Lukas
Torsten Toeller: "If our prices are undercut, we will match them mercilessly" (photo: Georg Lukas)
Online competitors are making it a dog's life for category killers. Even Fressnapf, Europe's largest specialist chain for pet food and accessories, is starting to feel the heat. Pure players still only take around 6 per cent of the biscuit, but they are on the prowl and rapidly growing market share. Clearly, these dachshunds could become Great Danes. So how does Fressnapf founder & managing partner Torsten Toeller intend to keep them in their kennel? To date, Fressnapf, which means "feeding bowl" in German, has done a pretty good job defending its patch of bricks & mortar territory. After seeing off most of the smaller "zoo retailers" since its creation in 1990, the group has also met the challenge from up-and-coming rivals Futterhaus and Zoo & Co. As Fressnapf's annual revenues and market share continue to rise, even the big German High Street grocers and DIY groups, who still account for around two-thirds of the total pet market, seem to have lost their enthusiasm for the category. So why worry?
January 31, 2013

Online retailer Zalando scares the toys trade

Zalando warehouse in Erfurt (photo: Goodman)
Business in a box: Controversial shoe & fashion online retailer Zalando has caused a stir at this year's International Toy Fair (photo: Goodman)
Rumours have surfaced at this year’s International Toy Fair in Nuremberg that Zalando wants to muscle into the toys business. It is alleged that the German shoe and fashion online retailer has already contacted leading toy brands and could be using the Spielwarenmesse, beginning today, for further discussions with suppliers. The "shoe-ting" star strongly denies the story, so why is everyone getting so hot under the collar? Eberhard Fuchs, the strident owner of specialist retailer Rofu, claims in an open letter that Zalando is recruiting staff for the autumn and Christmas seasons “in order to cater for its new toys assortment”. He also calls on the trade for a show of solidarity against the increasing encroachments of online operators who offer rock-bottom prices allegedly with virtually no margin merely in order to gain market share.