As part of a query about current trend topics and the mood in retail, you said in April: Retailers are increasingly reducing their involvement in the online sector and investing in operational excellence in the stationary sector. Will this trend continue?
Absolutely. Simply because of the cost pressure. Operational excellence means automation of standardized processes. This has to be at the top for efficiency reasons, for reasons of value creation and of course for reasons of resources. Retail currently has little prospect of exponential sales growth, but enormous cost increases. So he has to optimize his part of the value creation process in terms of costs. An effective way to do this is to automate and digitize as much as possible: the entire purchasing process from documentation to accounting and also other administrative processes in the company. This is a very big topic, and the large companies, because they have a broader personnel base, may have understood this a little quicker than the medium-sized and smaller ones. But everyone has to make sure they manage their costs.
This year, too, retailers increasingly addressed the question of whether they should close individual departments such as children’s shoes or men’s shoes or replace them with new concepts. Are you also noticing this trend at SABU?
Every retailer needs a clear profile towards the end consumer. The center is also sustainable if it has a clear profile. Specialization can be an issue here. When we look at the specialist store area, the customer appreciates the breadth and depth of the range and that they can find everything. This is also a form of specialization. The specialist store concepts are extremely successful for us. Customers appreciate the offer and the price-performance ratio. Another possibility of a special offer can be a concept like Laufgut. It is a semi-franchise concept with precisely regulated CI components. The concept is a complete solution. Because we also have inquiries about running gear as a department, we also offer such a solution: For us, it goes under “Desire for Comfort”. On the subject of children’s shoes: We had a GfK/Yougov analysis carried out that was specifically tailored to us. It turned out that the utilization rate of children’s shoes in specialist stores is 60%. This means that retail here remains far below its potential, whereas specialist markets achieve a strong 120 to 125%. Some specialist shops no longer offer children’s shoes. I think this is a mistake in principle, but it may make sense in one case or another. I would advocate the motto “all or nothing”. Dragging the issue around and making it more bad than good wouldn’t be good for the image of the business. Then you should leave it alone. But I still see good potential in children’s shoes. You just have to do it right.
The consolidation of small retailers has continued this year. When do you expect this development to end and to what extent will smaller houses be taken over by larger ones?
The consolidation is not over yet, simply because of demographics. The baby boomers are now in their 60s. And there are a few more to come. We can assume that in the next ten years there will continue to be entrepreneurs who will retire and possibly look for a successor for their company. The crucial question is: Is there a sensible, viable and sustainable business model? Then you have a chance of finding someone who wants to continue the business. Moving on, that can mean different things. It can also be integration into a branch concept. We will certainly continue to see takeovers, but a certain number of companies will still have to close. The remaining businesses can certainly benefit from this, although not to the full extent. We typically see a 20 to 30% increase in sales when another shoe store closes in the area. Basically, I expect an increase in branch openings. The number of SABU POS has remained relatively constant for ten years. The number of customers and companies has decreased by around 30% in the same period.
What do you expect in the area of online trading?
We see a further increase this year, although the graph is flattening slightly. The business model of platform sales is very challenging for a hybrid retailer due to high commissions, rising freight costs and high return rates. On the other hand, this is absorbed by the D2C business, which suppliers operate through their own online shops or through the use of platforms. The hybrid business models lose and D2C channels are the winners.
