August 23, 2012

Populist crusades against retailers

Spanish protests (photo: Martin
Carrefour: One of several foreign retailers facing the ire of protesters in Spain
Are retailers Robin Hood or the Sheriff of Nottingham plundering farmers and consumers alike? They are certainly an easy target for a growing number of populist agitators throughout Europe. The current financial and economic crisis gripping the peripheral countries of the eurozone has not only hurt consumer pockets. It has also dramatically increased the number of the unemployed, marginalised, and disaffected. This leaves the door wide open not only for the sincere social reformer, but also for instigators, self-appointed tribunes of the people, and Pied Pipers of Hamelin. One political agitator, Juan Manuel Sánchez Gordillo, mayor of the small southern Spanish town of Marinaleda, seems to bear a particular grudge against foreign retailers.
August 17, 2012

German discounter-supermarket hybrid

Aldi North's latest German store concept in Castrop-Rauxel (photo: Georg Lukas)
Big moderniser: Aldi North's new, enlarged store concept in Castrop-Rauxel
Germans who shop at discounters such as Aldi or Lidl are increasingly confronted with stores that look like building sites. The leading no-frills retailers are not only competing with rivals Netto Markendiscount, Penny, Norma, and Netto Supermarkt. They are also trying to regain the ground lost to supermarkets over the past few years. German supermarkets have generally become more assertive on prices, introduced new assortments, and spruced up their stores. “Save yourself a trip to the discounter” could be their new motto. Meanwhile, Germany’s 15,660 discount stores have virtually saturated the market in terms of sites. Market researcher Trade Dimensions confirms that only 21 outlets have been opened since March on a net basis. This is by far the lowest opening rate for years. So what now?
August 13, 2012

Tengelmann CEO Haub talks multi-channel

Karl-Erivan W. Haub (photo: Georg Lukas)
Active in two worlds: LZ editors Silvia Flier and Mathias Vogel cross-examine Karl-Erivan Haub on his growing online empire
Call it chutzpah or simply get-up-and-go, Karl-Erivan W. Haub is an entrepreneur who has successfully reinvented himself. Since his appointment as Tengelmann CEO in 2000, Haub has presided over a steady implosion* at the once dominant family-owned company and has radically downsized the Mülheim-based retail group. However, anyone who thought this fifth-generation family representative was bidding adieu in instalments has seriously underestimated the man. Since 2010, Haub has also been enthusiastically building an empire of online businesses. A score of participations and a big learning curve later, Haub (52) is probably in a unique position as a retailer. He can compare the merits of clicks and bricks, and make as shrewd a guess as anyone regarding how best to combine them.
August 8, 2012

Metro Group's Asian headache

Metro CEO Olaf Koch: "No one is euphoric here"
In the heady, halcyon days of empire when Metro Group ruled the world, or at least thought it did, a little local difficulty in a minor country or two wasn't allowed to question the established order. After all, the German retail giant's C&C business was generally such a cash machine that it could afford to sub out the odd weak link in an otherwise golden chain. As earnings have fallen and look set to stagnate, those days are probably gone for good. Cost-efficiency is now the name of the game at head office in Dusseldorf. This makes it a field day, of course, for accountants and apparently also strategic consultants Alix Partners as they run their slide rule dispassionately over every national operation. This is denied by Metro who merely confirms that Alix Partners are reviewing the organisational structures of Metro Properties.
August 6, 2012

Müller burns fingers on cross-currency swaps

Erwin Müller (photo: Matthias Richter)
Exuberant spirits: Erwin Müller bet against the Swissie
Drugstore baron Erwin Müller obviously likes a swing on foreign exchange markets, but he isn't the type of punter you should ask for a tip at the Derby. The entrepreneur, whose minority stake in "lifestyle" group Douglas remains controversial, has clearly put his own money on the wrong horse. Drogerie-Müller's newly published balance sheet for 2010/11 is anything if not intriguing. The 630 outlets of the Ulm-based company grew annual net revenues by a healthy 10 per cent to €2.65bn, but profit for the year was a piddling €1.7m. The main reason for this scalping are continued negative effects from financial market transactions already witnessed in 2009/10. The cross-currency swaps have now incurred a book loss of nearly €87m and virtually erased group operating profit.
August 1, 2012

German Retail Blog goes audio

On the air (photo: -
Sound option: For those who like to hear what they read
Dear newsletter subscribers & English-speaking friends of Lebensmittel Zeitung, Observant readers will doubtless already have noticed that we have celebrated the third anniversary of German Retail Blog by creating an audio version of our weekly texts. Interested users can either click the podcast sign at the end of each text or the "Subscribe to our podcast/iTunes" buttons on this site. Why have we decided to do this? Obviously, an audio version personalises the texts* and adds an extra dimension to our media product. Slightly to our surprise, we have found that German Retail Blog also provides a teaching service! Although most subscribers of German Retail Blog are from the UK and the USA, it is read by many Germans and other non-native English speakers from 180 countries who wish to improve their business and trade-related vocabulary.
July 31, 2012

Metro Group loves consultants

Metro Group head office (photo: Ludwig Heimrath)
Metro head office in Dusseldorf: A gentleman's club for the consultancy industry
Troubled Metro Group can't seem to get enough of consultants. According to trade union sources, Germany's largest retailer by annual sales has paid €260m in consultancy fees to McKinsey, Roland Berger, Bain, and Alix Partners etc. over the past years. Works councils and trade union Verdi are peeved. The McKinsey-driven restructuring programme Shape 2012 hardly seems to have kick-started the floundering giant: the jobs went, but the growth didn't come. Verdi computes that 19,000 jobs have gone world-wide over the last years. Meanwhile, Metro's latest consultancy-inspired project, "Foundation", aims to reduce personnel and material costs by a further €100m per annum. The company denies these assertions.
July 30, 2012

Germany's hottest shopping street

Die Zeil, Frankfurt's main shopping street (photo: LZ-Archiv)
Die Zeil: Frankfurt's main shopping street
Frankfurt's so-called "Zeil" has more than 13,000 visitors an hour at peak times. According to real estate services firm Jones Lang LaSalle, this makes it Germany's busiest shopping street ahead of the Schildergasse in Cologne and Kaufingerstrasse in Munich. Overall, the number of customers visiting Germany's 170 most important High Streets has declined 6 per cent since last year. These figures surprise given that retail sales have been relatively robust in Germany despite the economic downturn in most of Europe. Experts therefore believe that lower customer frequency in inner cities has nothing to do with this year's poor weather. Instead, they point to an increase in online shopping and a tendency among younger consumers to take fewer shopping strolls.
July 26, 2012

Schwarz Group defies crisis

Klaus Gehrig (photo: Schwarz Group)
Klaus Gehrig: "The European economic crisis is also a chance"
Schwarz-Gruppe is bringing home the bacon. The secretive discounter wants to hit €66bn in revenues this business year after making €63.4bn to the end of February 2012. "We are faring well and growing our like-for-likes throughout Europe," says Klaus Gehrig, CEO of group holding SUT. The operator of Lidl hard discount and Kaufland superstores admits that currency rates have been adverse in some countries. The thrifty Swabians therefore want to play it safe and will not be expanding into any further countries, such as the USA, for the time being. The one exception could be Serbia. Overall, however, Neckarsulm-based Schwarz Group has managed to profit from the European crisis as growing numbers of middle-class consumers become more price-conscious and start to shop with discounters.
July 23, 2012

Olympic peace for retailers

London Olympics (photo: Steve
Summer Olympics 2012: London in sports euphoria
Few on this planet will not wish the London 2012 Summer Olympics well. At best, they could inspire a generation of young people to health and fitness, regenerate a neglected part of London, and promote international understanding. The London Organising Committee of the Olympic and Paralympic Games, the delightfully eccentric Mayor of London Boris Johnson, and the UK authorities have strived to make the games as enjoyable and as safe as possible. Among other security measures, troops have been drafted into the metropolis on a massive scale and surface-to-air missiles stationed on rooftops. However, are retailers in London and other cities safe from a recurrence of the violence, arson and plunder witnessed on UK streets only last summer?