January 27, 2013

Karstadt out of touch

A Karstadt department store in Germany (photo: Karstadt)
High stakes: Karstadt's delay in filing a financial statement with the German authorities raises questions (photo: Karstadt)
It doesn't look good whatever the reason. Department store group Karstadt has failed to publish a financial statement for the business year to 30th September 2011 in the German Federal Gazette. The statutory publication date in this official publication, similar to the US Federal Register, was 30th September 2012. The Federal Office of Justice confirmed to our newspaper that it initiated fine proceedings against Karstadt in October last year. This was for non-disclosure as per Section 335 of the German Commercial Code. The authorities also stated that the Essen-based company did not react to the threat of a fine and would therefore be charged the legal minimum sum. The former plc and now private company was given another six-week period in which to file a statement and threatened with a further fine in the event of non-compliance. Theoretically, this process of warnings and fines can go on indefinitely until the company reacts. The minimum fine in such cases is €2,500, but can increase to a maximum of €25,000. There is no limit to the number of fines which may be imposed. Thus, continued failure to comply could mean multiple fines of €25,000. So why is this reluctant pupil so late in handing in his homework?
January 25, 2013

Migros revamps Tegut superstores

Jörg Blunschi, CEO Migros Zurich (photo: Dominic Büttner)
Jörg Blunschi: "We've still got a lot to do" (photo: Dominic Büttner)
Jörg Blunschi is obviously a man who likes a challenge. Otherwise, the CEO of the Zurich branch of Swiss consumer co-operative Migros, wouldn't have surprised the world by buying Tegut. The acquisition of the struggling German superstore multiple for an undisclosed sum as per January 1 hasn't daunted Blunschi's optimism, however. The doughty manager is even looking to turn a profit at the loss-making regional chain by the end of 2014. In an exclusive interview with our newspaper Jörg Blunschi also hopes it will achieve a net margin of 2 per cent in a food retail culture dominated by hard discount. At least the Swiss, not generally renowned for extravagant euphoria, have a road map for Tegut, but will it get them to the Promised Land?
January 22, 2013

Online delivery service Food.de wants to grow

Food.de delivery van (photo: Food Direkt)
Food Direkt
In the fast lane: Food.de wants to expand its online home delivery service rapidly throughout Germany (photo: Food Direkt)
Berlin-based online supermarket Food.de has ambitious plans to extend the geography of its home delivery service. After Berlin and Leipzig, the start-up operation will now also provide its service in Dusseldorf. Consumers in this Rhenish city, famous for its ale and advertising companies, will be able to choose from a range of more than 10,000 lines, including fresh produce and frozen food. The company uses its own temperature-controlled van fleet to guarantee same-day delivery. Alternatively, customers can choose a two-hour time slot for any of the seven workdays subsequent to their order. The goods are supplied "by a local C&C wholesaler in each metropolis," says Karsten Schaal, founder and CEO of limited company Food direkt GmbH (Food.de). Sounds good, but will it work?
January 11, 2013

Aldi earns less

Aldi Castrop Rauxel (photo: LZ-Archiv)
New look: Aldi North is busy modernising stores and revamping assortments (photo: LZ-Archiv)
Trying to gauge the current state of health of Germany's largest discounter is like driving with only a rear-view mirror. Aldi Süd and Aldi Nord (Aldi South & North) are divided into regional companies who report their figures individually and in a leisurely manner. Thus, despite their vast total size, the company skilfully delays unwanted financial scrutiny. So every year a retrospective view has to be pieced together. At least, however, we can now update Germany's fifth-largest food retailer to the end of 2011.Aldi Süd boosted 2011 revenues by 4.4 per cent to a record €13bn, while sibling Aldi Nord grew only 0.3 per cent to €10bn. Meanwhile, both companies got fewer bangs for their buck.
January 10, 2013

German consumers won't drive-in

Rewe Drive (photo: Thomas Fedra)
Thomas Fedra
Thank God, a customer: Most German drive-ins need more frequency to make a profit (photo: Thomas Fedra)
Germans make good cars and like to drive 'em fast. They are also big spenders when it comes to consumer electronics. They love their mobile phones, pads and laptops — almost as much as their cars. But your average hard-working Hans or Lieselotte Schmidt doesn't seem nearly so keen on click & collect pick-up points (drive-ins). Dedicated collection points for customer online orders didn't appear at German food stores until November 2010 and there are still only around 40 of them: Edeka runs the most with 23, followed by Rewe (13), real,- (2) and Globus (2). Customer frequency is generally low with focus groups and blogs criticising limited ranges and confusing websites. So why don't Germans shop when they beep?
January 2, 2013

Retail experts predict 2013 and beyond

Looking forwards (photo: Heike_pixelio.de)
Through the glass darkly: Trade gurus scan the future horizon (photo: Heike_pixelio.de)
Who can look into the seeds of time and say which one will grow? Answer: no one; so it is best to take an educated guess. At the end of each year (cf. 2012 & 2011), we ask international retailing & fmcg experts for their take on the future of the trade. Pundits from banking and private equity to design and advertising were invited to answer the question: "What do you see as the most exciting development in retailing/the fmcg industry and the most important challenge for the future?" As their intriguing and sometimes unorthodox predictions are self-explanatory, we give them below without further commentary and in alphabetical order of surname.
December 27, 2012

German retail winners & losers in 2012

Rückspiegel (photo: elvira-gerecht/Fotolia.com)
Glance in the rear mirror: A retrospective view of German retailing in 2012
Our newspaper closes each year with a review of the most important news stories of the last twelve months in the German trade. However, this does represent a pretty substantial Yule-tide read. Also, it would be a shame to take our English-speaking readers away from their healthy Christmas pudding, beautifully behaved children, and delightful in-laws. Therefore, German Retail Blog summarises and interprets the most compelling events of 2012 so that our readers have more time to devote themselves to the joys of the festive season. The year began with a big surprise. Schlecker, hitherto Germany’s and Europe’s largest drugstore operator by sales, was obliged to file for insolvency. Few ever loved the business model of founder Anton Schlecker, and company critics were legion. However, the sheer speed of the final fall from grace was nothing less than breathtaking. But it’s an ill wind that blows nobody any good. Like the year before, 2012 held rich rewards for insolvency administrators.
December 18, 2012

Diageo's Customer Collaboration Centre

Diageo_Customer_Collaboration_Centre (photo: Tim Bishop)
Tim Bishop
Virtual reality: A high-tech way to optimise shelf merchandising and sales promotion displays (photo: Tim Bishop)
On an uninspiring industrial estate in a nondescript western suburb of London stands an unpretentious building without a name. Who would have thought that this edifice belongs to the world's largest spirits group and houses something to make even the most hard-bitten retail buyer’s jaw drop? In reality, this is the Western European Customer Collaboration Centre (CCC) of Diageo, the maker of Johnnie Walker, Smirnoff, Baileys, Guinness, and various other high-octane refreshments. After reporting at reception, visitors access the main complex via a long corridor. The walls are punctuated with illuminated display boxes illustrating convivial occasions in the life of the average consumer. These are entitled "Casual Get Together", "Party Time" etc. but, surprisingly, don’t contain any branding.
December 13, 2012

Edeka plays poker with Netto

Netto Stavenhagen (photo: Carsten Milbret)
Carsten Milbret
Discounter with Scottie dog: Netto Supermarked makes good money in Germany (photo: Carsten Milbret)
Edeka Group's supervisory board meets on Friday, December 14, to decide the fate of its 25 per cent stake in Danish discounter Netto Stavenhagen. The top brass at Germany's largest food retailer are also likely to review its buying cooperation with the Dansk Supermarked subsidiary. Both parties refuse to confirm this story. However, our newspaper believes that Edeka wants to sell its minority holding in Netto Stavenhagen and to let the joint-buying agreement expire at a still unspecified date. Apparently, Edeka and Dansk Supermarked have not been able to agree a price. The original stake was transferred to Edeka for an alleged sum of €60m in 2005, when French retailer ITM (Intermarché) exited Germany. Why is this happening and why now?
December 7, 2012

Lidl hits the debt brake

Klaus Gehrig, CEO Schwarz Group (photo: Lidl)
Klaus Gehrig: The Schwarz Group frontman wants to put a lid on Lidl's indebtedness (photo: Lidl)
The Swabians are canny people when it comes to money and have been justly compared to the Scots. Hard discounter Lidl wants to reduce its indebtedness to banks. This is partly a cautious reaction by parent company Schwarz Group to the current crisis in the eurozone. However, Lidl clearly also believes that future capex requirements will be lower than in former boom years. Since 2007/08 (February 29), balance sheet debt has jumped by around €2.5bn to €10.1bn (not including France) on net annual revenues of €45bn. This follows an explosion of overall indebtedness from 2002 to 2009 in the wake of aggressive foreign expansion. The vast European empire of the Neckarsulm-based group currently spans 28 countries. The entry of sometimes three new foreign markets a year required an annual capex of up to €3.5bn. Who can wonder that plans to enter new markets have now been scaled back?