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 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.

News from the German retail market week 21.

News from the German retail market week 21.

  • German retail market – Turn over week 21 + 19 %vs LY.
  • Significant and important changes on the German retail market!   

Turn over week 21= + 19% vs. LY.

My thoughts on that: Finally a plus compare to LY. Many retailers think it was due to the nice weather. In some parts of Germany the temperature showed almost 30 degrees. From my experience, the spring/summer collection in May is very dependent on the weather and what mood the customers has in April. Make sense of course but also interesting to see how the weather is affecting the consumers and their shopping mood. 

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

Significant changes on German retail market.  How international low-price brands have changed the playing rules on the German retail market.

The German (clothing) high street-retail industry is going through a significant change. It has been going on for a couple of years and according to some “retail-experts” in the market the brand that had the most significant influence in changing the rules on the market is Sweden’s H&M. Other as Zara and Primark and now also Uniqlo have followed within similar strategy pattern. There are very few boutiques and “specialized stores” in the crowded “A-locations” today, including both street location and shopping centres. The brands mentioned above are the ones who could afford to open up on the “golden” locations within the shopping centres or on the high-street locations. Although, we also see more openings in the “middle” price segment from S.Oliver, Tom Tailor and Tommy Hilfiger who I assume is targeting an “older” customer, 25 and up but there are of course exceptions also within this segment.

If we talk some more about the international low price brands their target customer is younger adults and teenager who are more trend sensitive and don’t want to spend that much money on each item but rather more quantity then quality.

Many experts believe in a slow “death” for the traditional boutiques and “specialized stores” where volume, passion and service are replaced by a faster pace and more muscles within the retail concepts. Volume and push-deliveries, weekly sales activities and a high creativity and newness within visual merchandising and product offering, is hard to compete with for the traditional retailer/whole sale where the manpower also is limited to the owner and the multi-tasking is a must to survive.

Additional thoughts from me: So will the international low price brands continue to dominate the high street retail market in Germany and could everyone with this strategy succeed?

I would say they are here to dominate but I also think we will see some changes since the competition is getting tougher and tougher. I have mentioned it before but I really think that Omni-Channel strategy and features in the stores will play a more important role.  My thoughts are based on the pricing strategy that for example Primark has been using, you could by a T-shirt for €2,50 and jeans for €13. When you have those prices you will need your volume to cash in on your margins. Those prices obviously creates an interest among the German younger customer, who dominantly are females. This is something we could see at an opening from Primark, H&M, Zara or Uniqlo where hundreds of youths or young adults are queuing to get in to the stores. Their footfall frequency is making the rest of the high street retail market green with envy. But also the low price strategy will reach is bottom and the customer preferences will also change and maybe shift over even more to sustainability. The shopping experience and loyalty program will also be as important as ever. 

To answer if everyone could succeed; No, of course not everyone could succeed. It took for example H&M 10-15 years to get to their position and not all brands have that financial endurance or power. What you also need to focus on is the customer and shopping experience to be competitive. Abercrombie and Hollister are smart and an exception from the lower price brands. They are a bit more expensive then H&M and the others but are offering a significant change in customer experience, with everything from interior, smell, merchandising and brand communication. They attract both male and female and communicate trend, coolness and quality, which mean for many teenagers and mid-20’s that they are cool and right to wear.

To sum up, focus on the Omni-channel features within your concept, also the customer experience and service together with a strong brand loyalty program to stay as a strong competitor on the German retail market. There is of course more to it but this is some of the ”key to success” aspects that will be more important for the future.

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

 

News from the German retail market week 20.

News from the German retail market week 20.

  • German retail market – Turn over week 20 was -7 %vs LY.
  • Openings: The development and future of the shopping centers on the German retail market.   
  • Info-graph, the development of department store chains on the German retail market.  

 Turn over week 20 = – 7% vs. LY.

My thoughts on that: The weather was extrem in most part of the country: cold, rainy and windy. It was hard to sell the spring/summer collection. 

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

Openings:  The development and future of the Shopping Centres in Germany.  

There are 460 larger Shopping Centres in Germany and it opened 7 new ones during 2013. In the next few years, the German market is planning another 45 shopping centre to open up according to EHI Retail Institute and its Shopping-Centre-Report.

Development: An interesting fact is that 39 of 45 new shopping centres are planning to open up in the city instead of outside the city area as before. One of the most important reasons is the higher footfall in the city. This also means a change in building and construction plans for new shopping areas, since old department stores or supermarkets are often acquired and re-structured in the city area. It also means that the access to space is harder to get and hence the smaller spaces in the new shopping centres. For example, around year 2000 the average Shopping Centre had around 33.000 sqm and today is it around 31.400 sqm.

The new construction and design is also changing and the uses of a shopping centre according to the report. They are talking about “Mixed-use-Buildings”, where the trade and shopping will occur on the first and below floors and then offices and receptions are located on the higher floors.

Something to observe is also that a lot of the shopping centres that were built in the 90’s or earlier are requiring a refurbishment and reactivation. Just in 2014, 11 of these objects have decided to start and another 22 Centres are on the waiting list according to Marco Atzberger CEO for EHI Retail Institute.

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

My thoughts on that: It is a really interesting development going on in this part of the retail area. This could also effect the location valuation within the entry strategy. I have often been separating street locations and shopping centre location before since some concepts are more suitable for a shopping centre opening outside the city centre and others the other way around, e.g. some brands needs the footfall, adjacencies and brand awareness in the city. I also know that the structure and functions of the stores within the centres are changing to adapt to more multi-channel and Omni-Channel shopping.  More brands also wants to try out more Pop-up alternatives and this means that the real-estate companies need to be more flexible when it comes to the rent and how the shopping locations and conditions is structured.  Although, high prioritization as high footfall and to give the best shopping experience is always something that brands and the business needs to focus on. 

Info-graph, the development of department store chains on the German retail market.  

Infograph: Department store chains, development  on the German retail market.

Infograph: Department store chains, development on the German retail market.

 

News from the German retail market week 18.

German retail market week 18

  • German retail market: Turn over week 18 minus 5%vs LY.
  • Openings:  Danish womenswear brand Only is opening up a new Flagship store in Stuttgart on May 22 and the Italian sportswear brand Woolrich is opening a store in Sylt.
  • Figures:  Esprit showed a downfall in sales revenue vs. LY for the third quarter in 2013/14, minus -12,7 % after adjusted currency exchange. 
  • E & M – Commerce: Otto Group has a new start-up called Collins where they are reaching out to the new digital generation.

Turn over week 18 = -5% vs. LY.

My thoughts on that: not very surprised since it was a bank holiday on Thursday, first of May and many people took probably Friday off.

Source:( http://bit.ly/1mve8PT)

Openings:  Danish womenswear brand Only is opening a new Flagship in Stuttgart on May 22.  The Italian sportswear Woolrich is opening a store in Sylt.

With around 700 sqm this will be their biggest store in Germany. Only belongs to the Denmark –based fashion group Bestseller. They have planned an opening offer, 50 first clients will get a 50% discount on their entire purchase. In addition all customers will receive a 25% discount on all products the first three opening days.

Woolrich opens up a store in this exotic little island located in northern Germany. The store will be around 100-sqm and is operated by KUH Arctic GmbH, sister-company of the distributing agency Komet und Helden GmbH, owned by Mr Henrik Soller and Mr Florian Ranft.

Source:( http://bit.ly/St7Fb3) (http://bit.ly/1iQeIVW)

My thoughts on that:  Interesting opening from Bestsellers, this is a brand in the lower middle-price segment. The brand is represented with locations in approximately 57 different cities around Germany. The cities are medium large and I have mostly seen them on so called B-locations. I assume they will step it up a bit by locating their new Flagship in Stuttgart at an A-location spot. This is the second store in Germany for Woolrich and they are also planning to open up a flagship in Hamburg in July. I am a fan of their jackets, although their price level is sometimes a bit too high for my wallet. Up to now I have been valued it as good investments since the quality is really good. Sylt is an interesting place to open up in since it has a lot of wealthy people and the population is just around 21,000 and tend to be seasonal.

Figures: Esprit showed a downfall in sales revenue vs. LY for the 3 quarter in 2013/14, minus -9,9%.

The main reason for the downfall is the poor business in Asia and the closing of some own stores.

– Own-retail showed -5,6 % worldwide after adjusting for the closing stores.

– Europe is still a solid market with -1% vs. LY, while Asia-Pacific area showed -18,2%.

– Wholesale, had a downfall of 14,3%, Asia took most of the downfall with – 58,1%. The main reason for Asia was less shopping space/location and clearing old stock. Europe sank with -9,1% also with less shopping space as an action.

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

My thoughts on that: I like their latest changes they have done with their store concept. Not sure why it isn’t working in Asia, maybe due to distributors or market strategy? They have been struggling also in Sweden awhile but still going strong in Germany. I think they need to work more on their market positioning. Not sure what the concept Esprit tells you other then that it is a casual middle price segment brand?

E & M –Commerce – Otto Group has a new start-up called Collins where they are reaching out to the new digital generation.

Interesting idea where they are using an Internet platform called aboutyou.de which also external users could create apps for the purpose of reaching out to the digital generation. The end-users could log in and create their own profile, similar to a Social Media Community and this will also generate a useful buying pattern for the brands. The end-users could also use the platform and integrated apps to get styling tips from Hollywood or custom made for their needs, basically what is “HOT and IN” right now.

Source: (http://bit.ly/1q76Jrq)

News from the German retail market week 16.

German retail market week 16

  • German retail market – Turn over week 16 minus 17% vs LY.
  • New study on Mobil-commerce in Germany and Europe- the growth in sales from Tablets and Mobile phones are expecting to double during 2014, info graphic included.
M-commerce Germany & Europe

M-commerce Germany & Europe

Turn over week 16= -17% vs. LY.

My thoughts on that: Not surprisingly since it was one less day of trade this year compare to LY. Also LY had a plus 19% compare to LY. Many retailers are have started their mid-season sales in the middle-price and low-price segment. I don’t think this week is going to bring a high plus since Monday was no trading day.

Source:( http://bit.ly/1f0iNpZ)

The growth in sales from Tablets and Mobile phones are expecting to more then double during 2014.

– This is an international study from the internet-company Deals.com. The expectation in figures from Germany: expecting a turn over of €6.6 billion during 2014, €4.1 billion from Smartphones and €2.5 billion from Tablets. This means a 16,8% share of the total online-market in Germany. Other interesting facts from Germany, from total online trade last year, €34.4 billion were €3.1 billion were purchased from a Mobile gadget (9,1%), €2.1 billion from Smartphones and €1.0 billion from Tablets.

– There are 37 million smartphone-contracts in Germany, over 45% is owned by adults. Every forth who owns a smartphone has visited an online-shop.

– The total online business is expecting a 22 % growth 2014 and for the Mobile-business an astonishing 112% growth.

– The German Internet user, 86% are using Internet over a laptop and 10% are surfing on their smartphones and 4% on their tablets.

– The British people, over 35% are using Internet over their mobile gadgets. It is a good reason for them to be number 1 in the Mobile-commerce in Europe, consuming around €5.8 billion in 2013.

– Spain, Italy, Netherland, Sweden and Poland consumed around half a billion each.

– The whole European Mobile-commerce is expecting a growth of 13,1% in 2014, to reach €23.4 billion. The leading market will be Great Britain with an amount of €9.4 billion or 40% market share.

Source:( http://bit.ly/1mv2ykp)

My thoughts on that: Really interesting figures for both Germany and Europe. Also interesting to see how much of this will be added value sales to the physical sales and not taking shares from it. How will the physical stores avoid acting as an advisory service for the online sales? Many retailers are discussing this now and trying out different types of activities. A thought could be to make the purchases more digital and mobile in the physical stores, if the store is considered as a business unit and the BU is getting its allocated share from the online purchase then this could be a start to reach a solution to the challenge. Another point on the growth in Mobile-commerce, it will be interesting to see how the mobile payment solution are used and developed.   

 

News from the German retail market week 15

German retail market week 15

  • German retail market – Uniqlo opened up their biggest store in Europe last Friday in Berlin. S.Oliver, the boxer Klitschko will be their new brand ambassador. H&M is the most valuable retail brand in Europe 2014. H&M also opened up their new Flagship store in Munich. Turn over in the German retail market week 15 + 1% vs. LY.
  • New study from Germany, the amount of traditional retailers (physical stores) is going to drop dramatically in year 2020.

Uniqlo’s new opening in Berlin.

Uniqloas every Uniqlo store since 2006, the Berlin flagship was designed by Tokyo-based architecture / interior design company Wonderwall of renowned designer Masamichi Katayama. A light atmosphere containing wooden, stainless steel and mirror/glass elements characterizes the sales space. Highlights are an animated LED display showing the names of all Uniqlo locations worldwide and rotating display mannequins. Düsseldorf-based architecture office Schwitzke & Partner was responsible for the local implementation of the global retail concept and reconstructed the former Nike town space within five months.

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

My thoughts on that: I have mentioned it before but this is one of my favourite retail brands. They are really bringing their image and concept feeling into their collection and stores. They are one of the few retail volume-concept that actually delivers a bas-range collection that still looks exciting and delivers decent quality. I haven’t been to their opening in Berlin yet but it will happen soon. The store is 2700 sqm and their biggest store in Europe.

S.Oliver

Klitschko will debut as official brand ambassador of S.Oliver on the 26th of April 2014, during the world championship combat against Alex Leapai. For the kick-off of this sponsorship, Klitschko will wear branded combat trousers and jacket in the ring, while his support team is going to be equipped with S.Oliver clothing.

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

My thoughts on that: This is a retail brand that I think is boring and are struggling with their brand identity and awareness. It is low quality and typical German in a negative sense that doesn’t give anything into design, quality or fitting. The have done some ok suit-campaigns that you could see in the German GQ edition, but the concept doesn’t bring its attitude or image into their stores and collection. This is why I don’t believe in the brand. Hopefully Klitscho could influence the company with more images and quality.

H&M

Is the most valuable retail brand in Europe 2014. Impressive to see, they also opened up a new flagship store in Munich. The store is located on Weinstraße 8 (Ex-Schlichting), and 2800 sqm with five floors.

Source: (http://bit.ly/1m1XtCo)

My thoughts on that: The competition is getting stronger on the German retail market and the three biggest international players are making their territory. After Uniqlo’s new opening in Berlin, I think H&M needs to show the competition who’s the biggest player on the market. Inditex and Zara also have their position with locations and territory in Germany and are not that happy to give up their position.

New study from Germany, the amount of traditional retailers (physical stores) is going to drop dramatically in year 2020. Two scenarios, Discount 2.0 & City Revival 2.0 vs. E-basic 1.0 & E-motion 1.0.

 Source: (http://bit.ly/1jEezTu)

My thoughts on that: This study is coming from the institution for trade and research, Handelsforschung (IFH) in Cologne. The study is called trade-scenarios 2020, Handelsszenario 2020 and is based on 8 different industries and illustrates the trade format from industry, price-level, vertical-integration and online. They are also considering 2 scenarios each for stationary & physical sales and online sales: the Discount 2.0 and City Revival 2.0 for offline and E-basic 1.0 and E-motion 1.0 for online. This means that development for the physical trade could either go into the discount areas or value-added with more sustainability and environmental friendly efforts. In either case they think the psychical sales will drop their businesses with around minus 4 billion Euro or 59% in 2020.

This is of course the effects of the strong growth in E-commerce and how it will demand another definition from the physical retail business. We have already seen developments in Multi-channel and Omni-channel and this is something that also will affect the business even more. 

News from the German Retail Market week 14.

German retail market week 14

  • German retail market – Zara and the German trade union Ver.di have agreed on a new collective agreement, the agreement will effect and include around 4000 employees working in stores.
  • Turn over week 14 plus 17% vs. LY, a solid growth although this week had one more trade day then LY. The trade from LY was also down -8%. vs. the year before.

  • The Mobile payment company PayPal will try out Beacon on the German market – In the US, PayPal is trying out the Bluetooth Low Energy Technic in over 10.000 stand-alone locations. They will also try out the technic in Germany as a pilot in the next coming months.
  • & Other Stories opens up in Cologne – They are continuing their expansion in Germany with opening a new stand alone store in Fall at Ehrenstraße 43 in Cologne.
  • A German online site, Wirtschaftswoche are listing companies in Germany who they predict are going to loose a lot of business to the online market– The list shows companies that are on the red list and in a real danger to loose business to the Online market.

 

German retail market – Zara and the German trade union Ver.di have agreed on a new collective agreement, the agreement will effect and include around 4000 employees working in stores.  

My thoughts on that: It will affect their P&L in the short run but I do think they will get more quality within their staff organization. Hiring staff for stand-alone stores seems difficult almost everywhere on the retail-map, except for a few exceptions. I have experience from Scandinavia and Germany and it differs from status, working mentality to leadership culture. It is a subject in itself on how to find the right team and I could give some good advices if you are interested. On the Zara subject I think it is interesting that a huge International brand as Zara is doing this. Although, with their size and potential publicity it is almost necessary for them to act in a good behaviour to avoid to end up with a reputation like Amazon and a few more. The agreement gives the employees additional payment on Sundays, although in Germany you are only trading on 4-5 Sundays per year. The conditions regarding termination and giving notice seems also to have improved for the employees.   

Source:(http://tiny.cc/bdeydx)

Turn over week 14 plus 17% vs. LY, a solid growth although this week had one more trade day then LY. The trade from LY was also down -8%. vs. the year before.

Source:(http://tiny.cc/0feydx)

PayPal will try out Beacon on the German market – In the US; PayPal is trying out the Bluetooth Low Energy Technic in over 10.000 stand-alone locations. They will also try out the technic on the German as a pilot in the next coming months.  

Source:(http://tiny.cc/aieydx)

My thoughts on that: Arnulf Keese the German CEO for PayPal is giving his thoughts in an interview with the German magazine Der Handel. The interview is covering the subject on where and how mobile payments are being used today and in the future. The payment setup is already on the German market and could be used for example in the grocery chain Rewe where their competitor Yapital already has sold their services. You could also use PayPal’s app and services there, although you have to consider the transaction fees. PayPal have a setup and technique where distributors and retailers could use their own app or integrate it to your own, like the app Uber has done. This is an interesting development and the core benefit; to avoid standing in line in contradiction to safety is something that the German customers need to understand.

& Other Stories opens up in Cologne – They are continuing their expansion in Germany with a new stand-alone store in fall at Ehrenstraße 43 in Cologne.

Source:(http://tiny.cc/kneydx)

My thoughts on that: This is a really interesting concept that makes something more out of a traditional store. They are very close to the living room and closet experience and integrating the shopping pattern that a lot of women have. In finding a great location they are of course benefitting from the impressive work and position that H&M has put them self on the German market. I have been talking to some real estate companies here in Germany due to openings and not everyone loves them. As much as everyone wants them due to footfall drivers they also set their demands too high and usually get what they want in their agreement, at least in most cases. Nevertheless, they have not reach this position over-night but have had many years of struggling before they finally reached their position. Cologne is a very interesting city with a more younger and casual street-wear feeling then for example Düsseldorf. This is a town with a lot of tourists and a solid shopping culture, so this is a very interesting choice of H&M.

A German online site; Wirtschaftswoche is listing companies in Germany who they are predicting will loose a lot of business to the online market.

Source: (http://tiny.cc/7peydx)

My thoughts on that: This is a list that is not that serious as it sounds. There are some really huge companies on the list, for example, P&C, Karstadt and Media Markt. Although, I think this is a good wakening for some of the brands on the list, but the bigger players are already working on their business model and Multi-Channel solutions and will find solutions to combine offline (physical sales) and the Online-sales to benefit the overall result for the company. The question is just how much the will invest and how their Omni-Channel strategy is looking? Many of these companies also have an older clientele and customer base that are still not adapting the Online-sales to the fullest. Although, these customer are getting older and the brands need to be prepared for the younger customer and their ”newer” shopping preferences and behaviour.