News from the German retail market week 32.

News from the German retail market week 32.

  • German retail market: Turn over week 32 +8% vs. LY. July’s turn over -7 % vs. LY.
  • Openings & Business
    – Zalando
    starts selling products from the Spanish brand Mango on their site. Around beginning of September are you able to buy Mango collection from Zalando’s E-shop.
    Woolrich opening in Hamburg: this is their third store in Germany (Munich & Sylt). The address is Hohe Bleichen 17 and is 300 sq. It also offers the whole collection from HAKA (Men), DOB (Women) and Children’s wear.
  • Trend & Top sellers: For women, the grey denim jeans are expecting to be a top seller for the AW14 season. For men, the thinner outwear jacket and blazer in different shapes and styles will hopefully bring in the cash.
  • Retail economics
    – The Tom Tailor Group increases their sales & earnings.
    This casual brand from Hamburg is growing their business. The groups first half year showed a growth of 4,5% to €425 million. The Tom Tailor brands stand for a growth of 11% to €271% million, meanwhile the brand Bonita had a decrease of – 5,4% to around €154 million.

Turn over week 32 = + 8% vs. LY.

My thoughts on that: Good result for the German retail market. Some parts of Germany are still on Holiday and this usually means a lot of travelling to Spain for the German tourist.

Source:(http://bit.ly/1nIwNSF)

Openings & Business

My thoughts on that: As I wrote last week, Mango seems to be experiencing a positive trend and change with its concept. Selling their collection on Zalando will probably be a move and a change in sales strategy to also offer wholesale, or maybe this change was already done but nevertheless, they will get a broader reach and customer target in the market.

Woolrich – the third store in Germany. I definitely think there is more potential to open up more stores in the market. I believe they have a solid and broad customer target, customers who are brand conscious and likes to spend money on their outerwear jackets.

Trends and Bestseller

Top Sellers for women: I can confirm the grey denim. My wife who is German just bought a pair.

(http://bit.ly/1pYJrhF) (http://bit.ly/1lOBCdu) (http://bit.ly/1uFRN26) (http://bit.ly/1uhMA3d)

Retail Economics

My thoughts on that: Tom Tailor from Hamburg is one of the first brands that I got acquainted with here in Germany. A casual middle price brand that attracts the German men who are not that brand conscious and don’t want to spend so much money on their purchases. They are practical but also with details and this is perfect for the suburban middle age men, both to wear on their spare time with their kids but also when they have a beer with the lads. I also think they have a broad and solid customer group on the market.

Source:(http://bit.ly/1vxmSsS)

 

News from the German retail market week 31

News from the German retail market week 31.

  • German retail market – Turn over week 31 +1% vs LY. 
  • Openings & Business
    – Mango
    opening in Frankfurt, this is their biggest store in Europe.
    – Birkenstock  the German shoe manufacturer is stepping into the international licensing business through a partnership with brand consultancy trademark one AG.
  • Retail economics
    – The Metro group
    who owns METRO Cash & Carry, Media Markt & Saturn, Real hypermarkets and Galleria Kaufhof showed a really weak third quarter.
    – Adidas will bring down their forecast for the present fiscal year. They now believe they will earn around€200 million less then the first forecast.

Turn over week 31 = + 1% vs. LY.

My thoughts on that: Finally, after seven weeks in a row with a minus vs. LY , last week showed a plus for many of the retailers in Germany. 

Source:(http://bit.ly/1xXGpi9)

Retail Economics

Metro Group the company showed a positive result after the first 9 month but the third quarter brought their result down from €119 million to around €52 million.

Adidas will bring down their forecast for the present fiscal year. They now believe they will earn €200 million less then the first forecast.

Source:(http://bit.ly/1tN2DFW ) (http://bit.ly/1zN8rj9)

My thoughts on that: The article doesn’t tell in detail the reason for Metro group or which business unit had the worst performance. I guess that kaufhof is not at the top of their game. As I have been writing before I believe that a lot of the larger department store chains have problems to keep up with the international expansion and the online and Omni-channel solutions that are growing in the market. Not sure how large their e-commerce business is compare to their physical sales. Although, running those huge department stores can’t be cheap.

Adidas, I am a bit surprised that Adidas are lowering their expectations and forecast. I believe that the World Cup wasn’t as successful as expected or that their “normal” business with clothing and shoes hasn’t performed as expected. Although not sure which market is performing.

Openings & Business

The Spanish retailer MANGO opened up the biggest store in Europe. The location is direct on Zeil in Frankfurt city. The former occupant was the Brand Pohland, the location is around 3000 sq. sales area and in 5 different floors. The brand will show all their collection from DOB, HAKA, KOB, Accessories, Sport, underwear and large sizes for women.

Birkenstock’s strategy is to conquer new strategic business segments, market and target groups. The brand is synonymous with health and convenient and comfort shoes and this is the area where they are going to expand and focus their product offers. Their product lines expansion lies in: living and sleeping, work environment, feet plus running and lifestyle.

Source:( http://bit.ly/1AOujfv) (http://bit.ly/1orIwcy)

My thoughts on that: A great A- location in Frankfurt. I think this will fit their target customer pretty well. The rent is of course in the top league, but I think the footfall and the buying potential are really good. I have to say that the concept Mango looks better and better, their stores looks more structured and attractive and it will be interesting to follow their performance.

Birkenstock, the brand was chosen the “Brand of year” in the US 2013 and is already commercialized in more then 80 countries around the Globe. With that kind of brand awareness and their “ new” product mix I believe they have some really good condition to grow even more on an international level.

News from the German retail market week 30

News from the German retail market week 30.

  • German retail market – Turn over week 30 -5%vs LY. 
  • CPD – Collection Première Düsseldorf – International Fashion Fair in Düsseldorf takes place from 26th to 28th of July.
  • The German retail brand Esprit partners up with PETA.

Turn over week 30 = -5% vs. LY.

My thoughts on that: The second week in row shows the German retail minus vs. LY. It feels like it is less visitors or at least fewer customer with shopping bags on the streets. I think one reason is that the e-commerce is still growing and taking more and more from the physical sales. The brands that can’t follow the development on multi-channel solutions will loose to the benefits from the e-commerce market.     

Source:(http://bit.ly/1oCb0AY)

CPD – Collection Première Düsseldorf – International Fashion Fair in Düsseldorf takes place from 26th to 28th of July.

The Düsseldorf fashion fair is busy and running its last day today. Many of the brands and exhibitors do miss the German customer, the reason is that many already made their orders at the Berlin fashion fair two weeks ago or in their central buying office. The fair gets a lot of visitors from abroad and eastern Europe as Russia.

Source:http://bit.ly/1mUfHkl)

My thoughts on that: Düsseldorf is a well-reputed fashion city for whole sellers and retailers. A lot of brands and fashion agencies have their head office or showroom located in the city or nearby. The geographical location is great, in the middle of Europe and close to Amsterdam, where also a loot of large and significant international brands have their head offices for the European market. Since the German market is very much divided in regions makes it sense for the international companies to participate in different fairs around Germany. Although, if you are looking for volume I think it is better to be focus on the central buying department and the earlier fairs. I am not the biggest fan of these kinds of fairs since I think and hope that the platform and fashion forum will develop more digitally. I understand the visual aspect and touching part of the buying process but this could be demonstrated more digitally and in a more personal forum. I will explain more in detail and the advantages in an upcoming blog.

The German retail brand Esprit partners up with PETA.

Esprit has partnered up with the animal rights organization People for Ethical Treatment of Animals (PETA) to introduce PETA approved vegan hangtags to mark Esprit’s vegan shoe styles.

Vegan models are available in Europe and on their e-shop. The collection consists of PETA approved vegan trainers, made from eco-friendly faux leather and canvas.

My thoughts on that: I think it is a good action and cause from Esprit. In my opinion the brand has been a bit plain so this is definitely something that will an effect on their brand awareness. The purpose is also good due to the ecological trend in Germany I think they will reach out to a broader customer group

Source:( http://bit.ly/UwO61P)

 

News from the German retail market week 29.

News from the German retail market week 29.

  • German retail market – Turn over week 29 -4%vs LY. Latest trends and best sellers in Germany during June.
  • Zalando shows positive figures in their second quarter 2014.
  • The German brand Marc O’Polo expands in Germany, Russia and China.

Turn over week 29 = -4% vs. LY.

My thoughts on that: Most high street retail stores are offering 70% discount to try to clear the rest of their summer SS14 stock. Kaufhof are using 70% offers in their newsletter and the department store Wöhrl is offering 25% further discount on already reduced items.

Source:(http://bit.ly/1qY0EtH )

The latest trends and best sellers for Men and Women in Germany during June.

Men’s fashion: World cup in Football did of course affect the trade but best sellers for Men in Germany where printed T-shirts and summery Jersey-style. Here are the results per product group vs. LY: Knitwear +5%, Suits -1%, Jeans -2%, Outdoor-Jackets -4%, heavy knitwear -5%, Paints -5%, Sport Jackets/Blazers -6% and Shirts -11%.

Women’s fashions: The best sellers for women were almost the same as in May. Skirts and dresses dominated the sales. The results per product group: Skirts + 7%, Dresses +7%, Blouses +2%, Paints -1%, Jeans -4%, Knitwear -6%, Indoor-Jackets -13%, heavy Knitwear -17% and Outdoor-Jackets -17%.

Source: http://bit.ly/1wQgPuR

The German online company Zalando shows positive figures in their second quarter 2014.

The company shows a turn over between €520-560 million for the last three months in 2014. This is a growth between 19-28%, and would mean a break-even results on EBIT for the second quarter. In comparison to last year figures where the first half-year showed a -9% on EBIT, this is a significant improvement. The board is although careful and cautious about the growth and refer the reasons for the growth from actions within buying, logistic and marketing department. They also believe that the new logistic centre they invested in starts to pay of itself. Further figures and details to the first half year 2014 will be released end of August.

Source:( http://bit.ly/1rDEVbZ)

My thoughts on that: Zalando has been receiving a lot of criticism together with another large online operator Amazon due to poor working conditions in Germany. The company also didn’t have a great success with their launch of physical sales channels in Scandinavia. I think this is one of few times I read about black figures for the company. I think their business model and their previous financial conditions also has been a reason for the poor result, e.g. when I was dealing with them they were offering conventional wholesale agreement. Another cost trigger most have been their high returns and poor inventory management since this is affecting their net margin. I also assume that the contribution to cover the higher marketing (Television) costs wasn’t enough. Interesting to see that they are growing due to internal actions.

The German brand Marc O’Polo expands in Germany, Russia and China.

The company Marc O’Polo from Stephanskirchen in Germany signed a master franchise contract in China earlier this year. This means they will in Fall 2014 open up their first store in Shanghai and in Chengdu.

Russia, following two store opening in Moscow in April 2014, they will open up a store in October 2014 at the shopping centre Kuntzevo Plaza. Marco O’Polo is represented in 15 monobrand stores and one shop-in-shop store in Russia. Another store in Estonia, in the Ülemiste Centre will open up in October.

Germany, the womenswear and menswear store in Kassel will merge together to a single store with a sales area of 350 sq. Another two franchise stores will open up: one womenswear in August in Kleve and also a menswear and womenswear store in September in Recklingshausen. The brand is represented with 54 own stores and 91 franchise stores in Germany.

Source: (http://bit.ly/1llRkw5)

My thoughts on that: Impressive development in Germany. I have had some problems to identify the brand’s position and concept for a while. Except the obvious that they are a casual brand in the higher middle-price segment, I have been wondering who their target group are? After watching the menswear market in Germany some more I am not surprise that the brand are growing. I do think they attract and are more popular in the middle and southwest part of Germany but I could be wrong. A lot of the men in Germany wear suits to work and this brand attracts and fulfills the need of the leisure part of the day and week. The customer with money  and status brand focus will of course buy Ralph Lauren, Tommy Hilfiger or Gant or another italian designer brand but I think Marc O’Polo have potential to attract a broader segment.

 

News from the German retail market week 25.

News from the German retail market week 25.

  • German retail market – Turn over week 25 -14%vs LY.
  • Online returns: German online companies working to push down their return rates.
  • New brand Reserved from east Europe and Poland is entering the German market.

Turn over week 25 = -14% vs. LY.

My thoughts on that: One less trading day on Monday in some parts of Germany affected the trade. The stores are displayed with heavy sales signs, but this didn’t help the trade. Since almost all summer items are on sales, the stores are soon starting to communicate a stronger pre-fall message. Important is to get a smooth transition from one season to another so you margins doesn’t fall too much. 

Source:(http://bit.ly/T3ghEv)

Online returns: German online companies working to push down their return rates.

The online boom in Germany is not surprisingly showing its side-affects through high return rates. A study with the 30 largest online companies done by the consulting company BearingPoint shows that the toughest challenges lays within return rates and inventory management. The study also shows that almost 2/3 of the asked companies prioritize and value core competences as: logistic solution including receiving goods and quality check, stock holding, consignment and picking meaning managing distribution, returns and sending goods.

Most of the companies also prefer to run this part of the supply chain within their own organisation and without external services. The advantages are better control over the product flow process and also more control over internal product and customer data information. This leads to lower product damages and lower costs.

One partner, responsible for the study, Matthias Loebich from BearingPoint points out that companies within the textile and clothing industry should put more focus on finding better technical solutions and to be more responsive to the demand. With the right algorithm you could optimize your demand forecast and stock levels. He also sees opportunities in improving the package and product descriptions to lower the return costs.

The study also shows that 69% of the companies who were asked admitted that their sites could be user-friendlier. For example, the shoe industry could improve their product presentation and visuals by implementing 3D-measurement technic to improve the fit and accuracy of the purchase. This will also give the company opportunities to collect import customer data.

My thoughts on that: I think this study is very interesting because I assume it is not just a challenge for the German companies but on an international level. The focus should not only be on the supply chain management (SCM) solutions but also on the site and product presentation which they are mentioning in the study, according to a simple cause and effect analysis.  Many of the companies that participated in the study are multichannel companies, which also means they have a choice of either work together with both sales channels or separate the online process within their inventory  management. 

One SCM driver that are mentioned here are the inventory management including product planning calculation, which goods are responsive and which is not and what safety stock level is right for us? A decent product categorization with: volume-based products, season goods and trend teasers could also make it easier to decide what amount to by on stock and on demand. What calculation tools you should use to optimize the demand calculation as was mentioned in the study could of course differ. It is depending on your complexity of product mix, % of change in products or services, storage location costs, supply chain locations, planning cycle and seasonal or fluctuation in demands.

The other driver that are mentioned is information system and I would also like to push for an intelligent information system that complements your ERP (Enterprise Resource Planning) and SCM system. The technique RFID (Radio Frequency Identification) is for many companies expensive to implement but gives you a very good stock update and a transparency in tracking goods (RFID 24-7). Which helps your inventory management planning.

As mentioned in the study, the product presentation and the user-friendliness are not to underestimate. The earlier you could prevent the customer from choosing the wrong size or product the better it is. Also think which options you are showing and that the product information will help the customer to choose the right items.

Source:(http://bit.ly/1ljCfij)

New brand Reserved from east Europe and Poland is entering the German market.

The company LPP SA is a Polish fast fashion retail company – selling clothes and accessories under 5 brands: RESERVED, CROPP, HOUSE, MOHITO, SINSAY. They will enter the German market with an online shop on the 1 st of July.

My thoughts on that: The competition is getting harder and especially in this segment, lower price segment, which offers 1-2 new deliveries per week to a relatively low price. They will challenge brands like H&M, New Look ,ZARA and Primark. If they also are going offline (physical store) I guess their first store will be in a shopping centre in one of the 10 largest cities.

Source: (http://bit.ly/UAkNM5)

Infographic: Supply Chain Management

 

Trends within supply chain

Trends within supply chain

Retail economics fact from Switzerland

Retail economics fact from Switzerland. Interesting facts from Switzerland, member of the World Cup in Football 2014.

For more information to complete your commercial due diligence and market strategy please contact me on my email: contact@johanblixt.eu

Retail economics fact from the interesting retail market Switzerland.

Retail economics fact from the interesting retail market Switzerland.

Retail economics fact from Belgium.

Retail economics fact from Belgium. Interesting facts from Belgium, member of the World Cup in Football 2014.

For more information to complete your commercial due diligence and market strategy please contact me on my email: contact@johanblixt.eu

Retail economics fact from the interesting retail market Belgium.

Retail economics fact from the interesting retail market Belgium.

 

News from the German retail market week 24.

News from the German retail market week 24.

  • German retail market – Turn over week 24 -4%vs LY.
  • Bikini Berlin: Is it a success? If you ask the landlord yes, but the tenants have a different opinion.

 Turn over week 24 = -4% vs. LY.

My thoughts on that: With one less trading day it is hard to perform better then LY.

Source:(http://bit.ly/1pbtfg5)

Bikini Berlin, shopping centre in Berlin. Success or a miscalculation?

This is a relatively new shopping centre located in the centre of Berlin. Since the opening of the new concept beginning of April have 12 new stores opened. Two new stores are planning to open up in the coming months. The occupancy rate is around 90%.

This is a shopping centre where gastronomy interior and fashion clothing brands meets under the same roof. The size of the stores goes from 85 to 250 sq. m and the building consist of different floors.

The theme and question is if this is where you want to be with your brand?

According to the landlord, of course he will say yes and if not he or she is not doing their job correctly. If you ask the tenants most of them would probably say something else. They have for example been expecting a higher footfall and interest. The target group and location of the mall is criticized since the brands feel that they are missing out on the trendier and more creative customer. Bikini Berlin is located in the area of Charlottenburg and nearby Westbezirke. The neighborhood and clientele is relatively financial strong and maybe not that “bohemian-fashion” conscious and vanguard. But more mainstream and into brands like Polo Ralph Lauren. Also the main parts of the Russian tourists that are an important customer group for many brands Germany are missing out. Mostly because they are more interested in brands like Louis Vuitton and Prada then in smaller upcoming creative brands. The criticism is also directed towards the malls concept and communication. It is missing out on a clearer message and attraction towards their target group in comparison to the trendier areas as Berlin Mitte, Prenzlauer Berg and Kreuzberg.

My thoughts on that: I know that the mall is planning on more activities to attract the younger trendier customer that many of the brands are screaming for today. They are doing collaboration with Bread & Butter and hopefully also more activities towards the end-users. I do think the mall could be a great opportunity for a “trendy” or interesting brand from either Scandinavia or UK to open up and especially if it gives you more opportunities and possibilities to work with the Pop-up concept. The mall is also promoting the concept “new buying” which could be interpreted as new shopping and payment techniques, new brands or new shopping experience. I think they are missing out on a stronger brand and concept that could actually help them in clarifying and to make the message clearer to their target group. It could also be a good opportunity for a mixed concept brand to enter the mall and to make it a win-win for both tenants and landlord.

Source:( http://bit.ly/1kJ5BSb)

News from the German retail market week 23.

News from the German retail market week 23.

  • German retail market – Turn over week 23 +8%vs LY.
  • The online business for Eyewear and corrective glasses are growing in Germany.  

 Turn over week 23 = +8% vs. LY.

My thoughts on that: A week with temperature up to 35 degrees, summer products where high in demand: shorts, summer dresses and sandals.

Source:(http://bit.ly/1l3cMcC)

The online business for eyewear and corrective glasses is growing in Germany. 

The eyewear brand Mister Spex is challenging the German eyewear market by offering faster online solutions. Their sales comes 80% from corrective glasses and that makes them a significant online competitor to the dominators as Fielmann and Apollo Optik. Their production is made in Germany and the technic for adjusting the spectacles frames is done by an anatomic setting and have an 80 % customer satisfaction fit rate. If the fit still isn’t satisfying then the customer is offered help in a nearby location or at “Meiers Optik Lounge” in Limburg. The return rate is relatively low according to the brand and there are also certain standards with the grinding area but they are relatively the same. The brand has put a lot of effort and time in investing in a system that could handle different standards after request, e.g. the grinding with the varifocal glasses where their standards “could” be better then stationary eyewear brands. They also offer express-delivery where you could order the glasses until 3pm and get them delivered at latest 12pm the day after.

Source:( http://bit.ly/1nvwUUD)

My thoughts on that: This is an interesting concept that is giving this relatively conservative eyewear market a new dimension and playing rules. Smarteyes from Sweden have tried “win” the market in Germany with an “IKEA rip off” for eyewear but this has not turned out NOT to be very successful. They have also focused their concept and business idea on to offer low prices for almost every model. According to Mister Spex everything is “Made in Germany” and with the combination of fast deliveries with a high quality they are expecting to win market share, which is interesting.

 

News from the German retail market week 22.

News from the German retail market week 22.

  • German retail market – Turn over week 22 +6%vs LY.
  • The Mall of Berlin, will this Mall change the shopping pattern in Berlin?

Turn over week 22= +6% vs. LY.

My thoughts on that: Good for the retailers in Germany. The bridging day last Friday of course played a big part but nevertheless it is some positive figures.

Source:( http://bit.ly/1nJEs9s)

The Mall of Berlin, will this Mall change the shopping pattern in Berlin?

My thoughts on that: This is a very interesting Mall that could change the shopping pattern in the city of Berlin. Why, because the location is Leipziger Platz, which is an interesting place where a lot of people and tourists are in movement.

Harald Huth who is the “Bauherr” or constructor and in charge of the opening has announced that the opening is pushed forward to an unknown date but not before end of July. They were supposed to open end of May, so there will of course be consequences from the brands and retailers who are know ready to open up with their new staff. If they are not being compensated for the rent then it could be some tough times before the opening.

I was in a meeting with Harald Huth when he was in the phase of looking for new tenants to the Mall. I represented two other brands that could have been interesting for him. Although, we where asked about this project when he already had an 80% rental coverage and he was in a pretty good position already to negotiate. Nevertheless, the brands I was representing weren’t that keen on Berlin at the moment so we turned it down which I thought was unfortunate because I think this Mall could change some of the shopping pattern in Berlin. The city and its residents doesn’t have a significant high buying power but it is streaming a lot a of tourists yearly and this is of course also an important target group. I also think the city has a decentralized shopping pattern or locations. You have the Friedrichstraße, Kurfurstendamm, Tauentzienstraße and Berlin Mitte who are well-known “high-streets”. They are not naturally connected to each other except for Kurfurstendamm and Tauentzienstraße  which I think could be a challenge for the footfall of the retailers in Berlin. Maybe I am wrong and maybe the dynamics of Berlin makes it so interesting to be there. When Harald Huth presented the project it felt like an interesting ingredients in the shopping climate in Berlin. The shopping centre is or as he presented it more high profile, probably like Gallery Lafayette and it will be interesting to see how a huge shopping centre (70.000 sqm) with a high profile like that will perform in the centre of Berlin.

Source:( http://goo.gl/VXW72u)