August 29, 2012

Zalando – Germany’s online "shoe-ting" star screenshot (photo: sf-zalando)
sf-zalando Still looking to make a profit (photo: sf-zalando)
This company may sound like a white rabbit with long ears which the magician pulls from a top hat at the circus. In reality, it is the wonder boy of German e-commerce. In less than four years, online shoe and fashion retailer Zalando has developed from a tiny start-up operation to a major category killer. The Berlin-based operation more than tripled net revenues to €510m in 2011, and the €1bn-sales mark could be hit this year. This stunning growth has been fired by massive investment in colourful TV spots and catchy online banners. Nielsen computes that Zalando spent around €90m gross in advertising last year, giving the brand a 95 per cent recognition rate among German consumers. Meanwhile, Zalando has rapidly expanded into new markets and categories. The internet “shoe-ting” star is now active in twelve European countries.
August 24, 2012

Aldi plans health & beauty offensive

Aldi health & beauty department (photo: Georg Lukas)
Georg Lukas
Pretty discounter: Aldi wants to dynamise its own label offer with top health & beauty brands (photo: Georg Lukas)
Macho Aldi is getting prettier as the cultural revolution at Germany's largest hard discounter gains pace. According to trade sources, the Alpha males at the top are in advanced negotiations with suppliers to list top health & beauty brands. To date, Aldi has generally had little time for brand magic and only stocks own label products in this category. Talks are said to be furthest advanced with Beiersdorf, the maker of Nivea skin cream etc. Other frequently heard names include top brand manufacturers L'Oréal, Henkel, Procter & Gamble, Colgate and Nestlé. None of the parties concerned cared to comment on these rumours except for Nestlé who denies the reports. But the retail giant clearly wants to add more punch to its health & beauty assortment.
August 23, 2012

Populist crusades against retailers

Spanish protests (photo: Martin
Carrefour: One of several foreign retailers facing the ire of protesters in Spain (photo: Martin
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 (photo: Georg Lukas)
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 (photo: Georg Lukas)
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 (photo: Bert Bostelmann)
Metro CEO Olaf Koch: "No one is euphoric here" (photo: Bert Bostelmann)
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 bets against the Swissie (photo: Matthias Richter)
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 (photo: -
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)
Ludwig Heimrath
Metro head office in Dusseldorf: A gentleman's club for the consultancy industry (photo: Ludwig Heimrath)
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: A bird's eye view of Frankfurt's main shopping street (photo: LZ-Archiv)
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.