February 19, 2010

Talk with Rinascente CEO Vittorio Radice

Vittorio Radice, CEO La Rinascente (photo: La Rinascente)
Vittorio Radice: "Retailers need footfall"
An interview with La Rinascente CEO Vittorio Radice is a bit like a trip down the memory lane of UK retailing. Radice was the creative Italian who turned Habitat (later acquired by Ikea) and Selfridges around in the 1990s. He then had a brief stint on the board of Marks & Spencer in 2003. During his seven years at London-based Selfridges, Radice transformed what had become a rather dowdy department store operator into a cool, swinging operation. In order to do so, he didn't flinch from introducing loud pop music, body-piercing salons, or extravagant annual promotions, including mass photo shoots with naked customers.
February 19, 2010

Aldi calls Rewe Group's price bluff

Rewe price guarantee advertising (photo: Rewe)
Naughty: Rewe's new ad campaign for own label range "ja!"
It wasn't likely to have been a Valentine's Day card coming from Aldi Süd. But insiders at Rewe Group insist that the warning letter they have received from Germany's largest discounter was politely written. Perhaps Aldi could have lived with and quietly smiled at Rewe's new ad campaign slogan "Niemand ist billiger" (No one is cheaper) for its 400-line, price-entry own label range "ja!". However, the sub-text was asking for trouble with an 800-pound gorilla: "Daily comparison of ja!'s lowest prices with German discounters such as Aldi. If the price of any comparable product is found to be lower, the ja! price will be adjusted downwards to match this." Clearly, Rewe's controversial marketing initiative reflects the perceived need of the multi-channel, full-assortment retailer to improve its price image with consumers, especially now that arch-rival Edeka is pushing its own price-fighter range.
February 12, 2010

Lidl trims its sails

A Lidl store in Germany (photo: Thomas Fedra)
Pause for breath: Lidl is slowing the pace of its frantic expansion
After years of double-digit growth, Lidl's expansion seems to be flagging. Revenues at the hard discount subsidiary of secretive Schwarz Group stagnated in Germany during 2009. Also, for the first time in many years, Lidl's substantial foreign empire is unlikely to contribute further rapid growth. According to market research company GfK, Lidl posted revenues of around €14bn on its home market – a mere 0.2 per cent increase despite 80 new stores. Lidl is experiencing a growing cannibalisation effect on its home market where new outlets increasingly rob sales from existing stores. Profits have also come under pressure as archrival Aldi lowers prices, but net margins are still estimated at 2.5 per cent. Meanwhile, Netto Marken-Discount, the discount subsidiary of Germany's largest food retailer Edeka, has been transformed into a national rival through its recent merger with Tengelmann soft discount subsidiary Plus.
February 7, 2010

Aldi leads the pack

Aldi Süd (photo: LZ-Bildarchiv)
A successful run: Aldi Süd's net margin of 4.9 per cent beats all major German rivals
Despite a decline in priced-adjusted revenues at Aldi Nord (3 to 4 per cent) and Aldi Süd (1 to 2 per cent), both sister companies managed to keep earnings stable in 2009. This is particularly impressive as the north and south divisions of Germany's leading hard discounter lowered prices on more than 250 lines within their limited assortments last year. Following solid gains in 2008, Essen-based Aldi Nord posted a 5.5 per cent rise in revenues to €10.3bn, and Mülheim-based Aldi Süd grew 5.2 per cent to €12.5bn. But just look at those lovely net margins! Aldi Nord (3.2 per cent) and Aldi Süd (4.9 per cent) continue to lead the local trade. Doubtless much to Aldi's annoyance, Lebensmittel Zeitung ploughs through the many separate figures for its various companies each year and publishes a results estimate. This tour de force is necessary because the secretive privately-owned group circumvents German balance sheet law by dividing its vast empire into small regional companies with only a limited statutory obligation to disclose results. This is quite legal, but provides a happy hunting-ground for trade journalists
February 2, 2010

Talk with sherry dynast Tomás Osborne

Tomás Osborne, CEO Osborne Group (photo: Osborne)
Tomás Osborne: "I am open to everything"
Rarely are journalists paid for having pleasure. A visit to Grupo Osborne in the sun-drenched Andalusian region of Jerez from the depths of a German winter surely rates as such. Nestled snugly in Spain's "sherry triangle" is the town of El Puerto de Santa María (Cádiz) from where Columbus set out on what also proved to be quite an interesting business trip. Since 1772 this has also been the home of the Osborne family, purveyors of sherry & wine, brandy & spirits, ham, water and juices. As soon as you arrive at Jerez airport, you know this is Osborne country. Imposing metal signs of "El Toro de Osborne" (the Osborne bull) loom over roundabouts and roadsides or from hill tops. Grupo Osborne (2008/09 net revenues: €270m) is, after all, a local hero. With orange trees flowering under an egg shell blue sky, the locals were unlikely to be grim. There were smiles from rough-looking taxi drivers to hotel receptionists, all astonished to meet a visitor in December. At Osborne headquarters, laid out in classic hacienda style, guests are greeted cordially by family Chairman, Conde Tomás Osborne Gamero-Cívico.
January 22, 2010

Tesco CFO Laurie McIlwee talks money

Tesco CFO Laurie McIlwee (photo: Tesco)
Laurie McIlwee: "Aldi and Lidl were our greatest threat"
Laurie McIlwee, Group Finance Director at UK grocer Tesco since February 2009, is a rare breed among CFOs. This down-to-earth Northerner can actually discuss financial strategy without talking Persian. Despite his unfazed attitude, 2009 must have been something of a baptism of fire for McIlwee (47), the youngest member on the Tesco board. After all, it was nearly the year of global financial meltdown and the worst recession on many national markets, including Tesco's core UK one, since 1945. Admittedly, the former distribution director and ex-PepsiCo man is steering a pretty big ship to ride out the heavy seas. As per the business year to the end of February 2009, Tesco posted group sales, including VAT, of £59.4bn. This makes the British market leader the world's third-largest food retailer. With a pre-tax margin of 5.5 per cent, Tesco is also one of the most profitable mass market retailers. Probably, Tesco today is the most exciting kid on the block.
January 15, 2010

Professor Simonetta Carbonaro talks retailing

Professor Simonetta Carbonaro, REAL_ISE (photo: Matthias Richter)
Simonetta Carbonaro: "Less, please, but of the best"
It is perhaps unusual for an interviewee to kiss the photographer. This is easily explained, however, when one remembers that Professor Simonetta Carbonaro is not only a leading academic, but also a warm-hearted Italian. Carbonaro probably knows more about consumers and their psychology than anyone on this planet. It is this insight which leads her to believe that most retailers, brand manufacturers and marketers are barking up the wrong tree. And when she offers a direct challenge to trade group think her views carry weight. The researcher and co-founder of the Karlsruhe-based marketing and design consultancy REAL_ISE is a world-leading analyst of consumer behaviour and an expert in innovation management and strategic design. Among her many intellectual surprises, there was even some praise for much criticised US supertanker Walmart
January 8, 2010

Visit to food temple Eataly in Turin

Eataly in Turin
Mecca for Slow Food lovers: 8,000 customers a day visit Eataly in Turin to buy, taste and learn about natural Italian food specialities
Visitors who admire the spacious piazzas and baroque facades of Turin's elegant city centre do not usually stray into its grey urban sprawl and commercial zone. Since January 2007, however, they have a very good reason to do so: Eataly. This shrine to good food was founded by local entrepreneur Oscar Farinetti. When the CEO arrives at his office every morning, he passes "Saturn", the entertainment electronics subsidiary of German Metro Group, and a "PAM" superstore on the other side of the road. He ignores them both for they remind him of two worlds he no longer wishes to be associated with. Farinetti sold his majority holding in the family consumer electronics (CE) business in 2002 for the modest sum of €500m, but says it wasn't for the money. Instead he is convinced that the whole segment has lost its creativity and is racing down the price-driven, low-margin, mass commodity route to nowhere very fast. Thus his new business venture, Eataly, can also be seen as a form of philosophical protest.
January 8, 2010

Talk with Eataly founder Oscar Farinetti

Oscar Farinetti, CEO Eataly Distribuzione S.r.l. (photo: Eataly)
Oscar Farinetti: The founder and CEO of Eataly in Turin gives Slow Food a good name
There was a time when only fashion icons had philosophy. Over the past decades, the pages of our fashion sister publication TextilWirtschaft have been replete with interviews where the Armanis, Saint Laurents and Versaces of this world pepper their brand-speak with "Zeitgeist" and "Weltanschauung". By contrast, most German food retailers have remained strangely reticent on any message they may have, except, of course, for the hard discounters who permanently praise their own low prices. Recently, this has begun to change – at least among an avant-garde of "food philosophers". What unites this disparate bunch is their stand against the global fast food or food-as-fodder industry and their preference for local, seasonal, and/or organic produce. These new thinkers criticise the utilitarian approach which typifies our mass consumer markets. They defend local food traditions, crop varieties, artisan methods of production and sustainable agriculture. They also see good food as neither elitist nor frivolous, but as a collection of nutrients and an essential component of human culture. Eating to them is pleasure, conviviality and social communion. One should certainly count Oscar Farinetti, the owner and founder of Eataly ("eat" + "Italy"), among their number.
December 30, 2009

Insead and Harvard professors talk retailing

Insead-Professor Marcel Corstjens (photo: Insead)
Insead-Professor Marcel Corstjens
An invitation from Marcel Corstjens to a transatlantic videoconference on the globalisation of retailing is a challenging proposition. Corstjens (60) is Unilever Chaired Professor of Marketing at INSEAD. Among his best-known publications is the retail classic "Storewars: The Battle for Mindspace and Shelf Space", co-written with his wife Judy, on strategies in the consumer goods industry. Corstjens' intellectual sparring partner on the other side of the pond was Rajiv Lal, the Stanley Roth Senior Professor of Retailing at Harvard Business School, where he supervises the retailing curriculum. Among other things, Professor Lal is a recognised expert on India. The teleconference was ably flanked by Jean Jacques (JJ) Vandenheede, senior retail industry analyst for ACNielsen Europe.