February 24, 2012

German retailers stay in Greece

Lidl Greece store advertising (photo: LZ-Archiv)
Solid as Mount Atlas: Lidl's 220 Greek discount outlets beat the company's average store revenues in Germany (photo: LZ-Archiv)
Like Spartan warriors on the narrow coastal pass of Thermopylae, Lidl, Metro and Praktiker refuse to abandon their posts as Greece fights again for its very existence. Despite a seemingly endless saga of economic woe, and much-publicised anti-German feeling, all three retailers confirmed that they have no plans to exit the country in its hour of need. During the current crisis, food retail sales in Greece have probably declined by an average of more than 20 per cent, and non-food lines such as shoes or household goods only byslightly less. German retailers have been not been affected quite so severely, but will clearly have taken a painful hit on their 2011 revenues. Although labour costs will presumably have fallen, this is a brave decision in view of the unforgiving terrain. In addition to excessive bureaucracy and rampant corruption, there has also been vandalism to stores, and considerable disruption to deliveries has caused frequent out-of-stocks.
February 23, 2012

What Walmart didn't say at the AGM

Mike Duke, President & CEO Walmart (photo: Walmart)
Mike Duke: "Every segment of our business is stronger than it was a year ago" (photo: Walmart)
This Tuesday in Bentonville/Arkansas, President & CEO Mike Duke and his chummy management team obviously didn't want to set off any firecrackers. In fact, there were no surprise announcements to make regarding Walmart's annual results for 2011/12. As expected, we heard all the usual superlatives, but with surprisingly little corporate gush. Even the word "great", almost irresistible for American businessmen, fell less frequently than in the past. True to form, the top dogs at the US retail behemoth said everything they were legally and ethically obliged to. They certainly met SEC regulations and, despite a temporary 4 per cent decline in the share price, probably also most analyst expectations. There were even perfunctory updates on sustainability and other politically-correct topics. But what Duke didn't mention in his folksy, southern drawl is what interests us today.
February 17, 2012

Schlecker's foreign drugstore empire

Lars Schlecker, son of Schlecker founder (photo: Thomas Fedra)
Lars Schlecker: "No foreign subsidiary will be made to file for insolvency" (photo: Thomas Fedra)
CEO Lars Schlecker made some bullish statements last week on the financial health of the foreign operations at Schlecker, the insolvent German drugstore group. "No foreign subsidiary will be made to file for insolvency," said the son of the founder. Schlecker Austria, whose results also include Poland, Belgium, Luxembourg and Italy, received his particular praise. "Austria is our best country, which without question will not be sold." Lars Schlecker also claimed that the Austrian division posted a "seven-digit" operating profit last year and that all its national subsidiaries are in the black. Really? We doubting Thomases have had a hard time trying to check the accuracy of these statements. Group structures are opaque, and the main operating arm was run by founder Anton Schlecker as a "sole trader".
February 10, 2012

Erwin Müller paralyses Douglas Holding

Douglas store facade (photo: Douglas)
Alluring scent: A battle is raging for the control of the "Douglas" perfumery chain in Europe (photo: Douglas)
Anyone for poker? Douglas, the health & beauty-cum-lifestyle group, remains in turmoil as it tries to rid itself of an unwanted host, competitor Erwin Müller. Swabian patriarch Erwin Müller, who already holds a stake of around 10.8 per cent in the retail multiple, was always a strange and uncongenial bedfellow for Douglas. However, suave and patriarchal Douglas Chairman Jörn Kreke as well as son Henning, CEO, have always been at pains to deny this in public. Behind the scenes, the Krekes, who pool around 12.7 per cent of Douglas's shares, are said to be looking for external investors in order to increase their holding in the company. It is also believed that they are exploring what it would cost them to take Hagen-based Douglas plc private.
February 3, 2012

German drugstore Schlecker's darkest hour

Anton Schlecker, founder Schlecker (photo: Schlecker)
Colourful drugstore baron: Anton Schlecker in happier days at the height of his power in 2000 (photo: Schlecker)
Meike Schlecker looked tired and nervous at this week's press conference as she strove to defend family honour. The daughter of Anton Schlecker, founder of Europe's once largest, but now insolvent drugstore empire, was at pains to stress that her family had not siphoned money away from the business. Meike Schlecker (38) also claimed that the family had invested a "three-figure million" sum in trying to restructure the business so that there was no longer "anything there" by way of personal fortune for insolvency administrators to claim. Our newspaper estimates that Schlecker has accrued losses of at least €250m ($328m) in Germany over the past four years. Good on a daughter for speaking up for a father, but Schlecker is no longer a family affair. The man firmly in charge at the helm of the Ehingen-based drugstore empire is now temporary insolvency administrator Arndt Geiwitz.
January 20, 2012

Ex-Aldi UK boss Paul Foley goes eCommerce

Paul Foley, senior partner CONplementation (photo: LZ-Archiv)
Paul Foley: “What you absolutely don’t want as a retailer is for people to visit your store, look at the product, and buy it online elsewhere"
What's Paul Foley up to these days? This question has been spooking the trade for quite some time. Since his surprising departure as Aldi UK boss in 2010, after a long and successful career with the German discounter, Foley seemed to go completely off the radar. Then, out of the blue, this energetic Londoner suggests a meeting at his new office in Vienna. Foley and eastern European retail expert Peter Györffy are now two of five senior partners at CONplementation, a strategic management consultancy specialised in retailing. Foley, who has become something of an online convert, leads an internal project team dedicated to multi-channel retailing. They have conducted some revealing market research into the world of eCommerce and the online buying habits of consumers in western and eastern Europe. But can a discount veteran really become a cyber-freak overnight?
January 17, 2012

Retail experts predict 2012 and beyond

Forward view 2012+ (photo: bkingzen-Flickr.com)
Forward view: Trade gurus scan the horizon (photo: bkingzen-Flickr.com)
At the end of each year, we ask experts from the international retailing & the fmcg industry to guess what the future holds for the trade. A dozen or so pundits from banking to design 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 not even the brightest minds can reinvent the wheel, their answers logically point to known phenomena such as the growing importance of eCommerce, an increasing cost base, sustainability, the euro crisis etc. However, their comments go beyond a mere summary of the status quo and provide the interested reader with a chance to take stock in some highly intelligent company. As their replies are self-explanatory, they are given below without commentary and in alphabetical order:
January 17, 2012

Waitrose lady talks brands & innovation

Sam Dickson, Head of Brand Development & Product Innovation, Waitrose (photo: Waitrose)
Sam Dickson: "Quality, value, service and fairness can still be applied via an iPad" (photo: Waitrose)
Sam Dickson is Head of Brand Development & Product Innovation at Waitrose, probably the UK's premium food multiple. Waitrose operates 243 supermarkets, superstores and convenience stores in the UK and posted 2010 revenues of around €5.5bn. This makes it number six in the trade with a market share of around 4 per cent. Waitrose is probably the fastest-growing retailer in England and intends to nearly double in size by 2020. Like its parent company John Lewis Partnership, Waitrose is staff-owned and sets international standards for corporate democracy and the way it cares for staff. Its roots go back to 1904, and the first store under the "Waitrose" banner was opened in 1953. This seniority could make the grocer appear somewhat middle-aged to today's smartphone-toting generation of consumers. Indeed, Waitrose has been accused of being a Middle England shopkeeper for a "salt & pepper" clientele. So what is Sam Dickson doing to refresh the brand?
January 17, 2012

German retailers in India?

Indian ladies at a street stall (photo: Gretel Weis)
Land of contrasts: Modern self-service retailing is still the exception in India (photo: Gretel Weis)
A new twist occurred last week in the tortuous game of snakes and ladders India has been playing with international retailers. After much vacillation, the cabinet of the ruling Congress government has agreed to open up its retail sector to permit full foreign ownership of so-called “single-brand” stores. This means that Adidas, Ikea and Marks & Spencer etc. will be allowed to do business in the $450bn India without a local partner, provided they source at least 30 per cent of their products from local SMEs. The initiative towards liberalisation could speed Ikea’s plans to enter Asia’s third-largest economy. It will also strengthen the hand of Marks & Spencer, even though the UK fashion and food specialist wishes to continue with its local partner. The news won’t come as much comfort to “multi-brand” retailers such as Walmart, Carrefour or Tesco, though, with whom the government has been playing fast and loose for years.
November 25, 2011

Edeka steps back from C1000 deal

Edeka logo (photo: Lars Krüger)
Omnipresent: You can see the Edeka logo virtually everywhere in Germany, but nowhere else in Europe (photo: Lars Krüger)
In a very fast move, smacking a little of desperation, Jumbo Group clinched the purchase of fellow Dutch supermarket retailer C1000 yesterday. Multiple-cum-independent-franchise operator Jumbo paid €900m for 423 "C1000" stores making the combined company the second-largest food retailer in the Netherlands after Ahold-subsidiary Albert Heijn. Pending cartel office approval early next year, Jumbo's store base will grow to 725 outlets with annual retail revenues of around €7.5bn. Combined market share will now be 23 per cent compared with Albert Heijn's immense 34 per cent. C1000 already co-operates with Jumbo via Bijeen, a joint buying alliance created last year. Bijeen is now the third-largest purchasing group in the country after Albert Heijn and Superunie. So Dutch retailing has now become a two-horse cart race between market leader Albert Heijn and Jumbo/C1000.