Welcome to the hachmeister+partner Newsletter 02/2020

Keynote

Dear Business Associates of hachmeister + partner,

“Things will only work out bilaterally” read the headlines of TW last week hitting the nail right on the head. Past models for cooperation and terms & conditions must urgently be put to the test in view of Corona. New individual solutions are called for that can only be agreed on in an honest partnership between retail and industry. At the end of the day everything comes down to net revenue in Euro per square metre. h+p partner Ole Schartl will address this topic in this Newsletter.

And if there’s one other thing that is perfectly clear, then it’s this: Corona will accelerate the digitalisation of the value chain. We will no longer place orders the way we did 20 years ago, in showrooms with order books in hand – our B2B operations will in future be just as digital as our B2C operations. In a few days hachmeister + partner will launch the digital Order Optimizer with its external partner mobimedia. h+p-Partner Christoph Schwarzl has very interesting things to share that you can also find this Newsletter.

CRM is the sharpest weapon for retail – sharper than any aggressive pricing. Reaching out to shoppers in a very personal and individual way is as important as ever. h+p partner Uwe Seibicke deals with this central strategic issue.

Furthermore, we cover the topic of rental costs so crucial for revenue. This topic has been on everyone’s lips since the adidas controversy, if not before. We want to de-emotionalise the topic because rental space is commercially worthless in times of a lock-down. Best suited to report on this and support you in rental negotiations is our external partner Frank Reinhold.

Enjoy reading and stay safe!

Yours,
Klaus Harnack 
Managing Partner

hachmeister+partner

Successful Together – only if both sides are prepared to act

 

Successful Together – only if both sides are prepared to act

Cases-4

“We can only be successful together” has been one of the most frequently used slogans by brand owners and retail players not least since COVID-19. Unfortunately, statements repeated so often are occasionally doomed to bore us sooner or later or prompt us to adapt and/or even negate them in the face of latest developments. In such a case you should not only leave the statement as it is but even underscore it. The Corona crisis exponentially increases the pressure to act in concert as the number of infections rises globally. But this is not the end of it – business models have to change, too…

There are many cooperation models in operation with retail at present; some only revolve around terms and conditions, while others cover improved cooperation between the parties alongside terms. So the question reads: what should actually change or what is needed today and in future. In this connection, the points of criticism raised so far are important. Criticism mostly concerns imbalances between income and expenses as well as different objectives and non-compliance with allegedly agreed terms. Of course, all of these are issues that could have been optimised or changed already – it does not take the crisis of a century to arrive at this conclusion. New cooperation models must therefore be balanced or they are not worth their name. There has to be an unambiguous shared objective and compliance with the defined processes and parameters. Many issues are as current as before the crisis. The key changes required in future particularly concern the basic precepts of existing business models rather than just the interplay between the two partners.

In general, models are simplified representations of reality. They do not cover all the components and parameters of reality but basically only the required and/or selected ones. Applied to our industry this means a simple reflection of the existing business models between manufacturers and retailers. In a nutshell, the business model of manufacturers is the sourcing and selling of garments to retailers, while that of retailers can be boiled down to the sourcing and selling of garments to end users.

This is precisely the point where fundamental change is needed. In future, it will no longer suffice to improve cooperation alone without re-defining the business models and their organisational schemes and processes from scratch. Some brands have already done this very successfully – for both sides.

In terms of content, business models will have to undergo the following changes:

  • Both business models must be oriented towards the profitable sale to end users
  • Incentive schemes that work towards this objective
  • True change in seasonal rhythms geared to consumers
  • Collection architectures and collection sizes that follow this seasonal rhythms
  • Markedly shorter lead times – only possible if order / purchasing process steps are changed fundamentally
  • Considerably more flexibility between first allocation and demand-driven re-orders
  • Temporal decoupling of merchandise and finance flows
  • More flexibility in earnings and/or invoicing models
  • Permanent synchronisation of information for both sides – consistent data and KPI basis
  • Securing purchases within the framework of the joint plan
  • Economic viability for both sides up to approx. -10% vs. budget
  • Regaining a sense of value among end users
  • Coordinated goods management at the POS
  • Sufficient and skilled sales staff
  • Holistically attuned marketing models

 

On the basis of these demands manufacturers and retailers have to change their business models first and should only then define new ways of cooperation that embrace the spirit of cooperation – i.e. the improved and/or secured success on both sides.

The key problem is to change and/or replace business models in actual operations because this step entails both major efforts and – above all – risks. Which is why this step was avoided or only taken in a rudimentary manner in the past. Maybe we could learn from the current crisis and transfer crisis management to our industry: in crisis management we often hear about “operate in parallel” and “ramp up slowly”. The change of business models could work the same way. This means: first develop a new model and then ramp it up in parallel with the existing one so as to be able to “de-commission” the “old” model at the right point in time. Sounds simple at first, but is quite complex and cumbersome due to dual structures and processes. The alternative, however, would also be elaborate and very risky; it would require the establishment of a completely new brand and/or retail model.

Although the current crisis leaves companies little breathing space in commercial terms, both sides show a greater preparedness to change conditions fundamentally just now. Our sector should capitalise on this momentum to tackle the corresponding measure sustainably. We at hachmeister + partner will be pleased to support you with all imminent changes.

Best regards, 

Ole Schartl
Partner
Tel: +49 173 2128860

Mail: oschartl@hachmeister-partner.de

hachmeister+partner

Order Optimizer – the Digital Order Center for Retailers

Order Optimizer – the Digital Order Center for Retailers

Cases-2

Dear Business Assoiates and Friends of h+p,

The current Corona crisis faces us with new challenges, in health, economic and political terms. However, it also promotes faster re-thinking and acting when it comes to the possibilities that digitalisation brings our industry and can therefore also be seen as a catalyst for a change long overdue. Understanding the crisis as an opportunity.  

A quick poll conducted by h+p among fashion companies in Germany on the impact of Corona on digitalisation processes in industry and retail gives rise to the following conclusions:

  • The Corona crisis will noticeably accelerate the digitalisation in the fashion industry and in fashion retail.
  • According to 86% of all people polled especially areas like Distribution/Sales will experience sustainable changes induced by the launch and/or expansion of digital order portals or digital showrooms, for example. The sector will also take a closer look at web shops and omni-channel distribution according to 62% of all interviewees.
  • Almost every company sees the Corona crisis as a factor influencing these processes.

This is why we are delighted to give you an update from h+p’s digital workshop today.      

Order Optimizer - The Digital Order Center for Retailers

The h+p fashion platform is extended to include another module – the Order Optimizer. The Order Optimizer is digital order center for fast and easy capturing of orders with the help of h+p benchmarks. For order and re-order lines, fully digital and intuitive to use. Retailers can use it to place orders for goods based on manufacturers’ digital product catalogues by placing individual products, complete looks or specific flash lines into the shopping cart at the click of a mouse using a drag & drop function.

 

Illustration: Order Optimizer - Transfer articles from the catalogue to the trade order

Alternatively, orders can also be generated manually by entering basic data (image, article number or designation) as a fast entry to be completed at a later point in time. 

 

 

Illustration: Manual system of an article for the retailer order

The h+p benchmarks will ensure orders are optimised while they are being generated – by recommendations and/or proposals for sizes, proportions of colours, ratios between tops and bottoms, quantities, order limits, to name but a few parameters.  

Once approved by the buyer, the orders placed are transferred to manufacturers/suppliers in an automated way and reported to the retailers’ merchandise management system.

Captured and placed orders can be viewed in the Order Center any time. Filters ease searching, finding and viewing all orders.

Against this backdrop we are delighted to present a first release of the Order Optimizer developed by MobiMedia and hachmeister + partner. The Order Optimizer is fully integrated into the MobiMedia Quintet 24 Order Portal and a smart, digital retail-order tool that connects buyers and suppliers with each other.

Commenting on this Hannes Rambold, member of the MobiMedia board, says: “Thanks to the Order Portal Q24 and the Order Optimizer online order trade shows are possible today/will be possible in future.”

Smarter ordering, selecting individual products or complete looks from a digital showroom or a digital product catalogue or entering items manually by text or image capture fast and intuitively and optimising them by means of hachmeister + partner benchmarks.

Increased efficiency by substantially reduced manual workload associated with capturing orders, matching orders between retail and industry and, hence, faster communication on order and re-order demands. 

Interested in leveraging the benefits of the Order Optimizer? Then register for a demo appointment at www.hachmeister-partner.de/orderoptimizer.html

Yours,

Christoph Schwarzl
Managing Partner
h+p solutions GmbH 

Tel.:     +49 211 544781-552
E-Mail: cschwarzl@hachmeister-partner.de

 

hachmeister+partner

CRM in times of Corona: indispensable!

CRM in times of Corona: indispensable!

Cases-3

In view of ever keener predatory competition Customer Relationship Management plays a key role. Especially now it is paramount to understand which articles are sought and bought by which shopper. Tailor-made offers increase the chances of success and make shoppers happier.

Over the last few weeks we have organised Skype and telephone conferences to exchange ideas on CRM themes with several companies. In the first roundtable discussions participants all agreed that staying in touch with shoppers was the most important thing right now. Here many companies bet on a very personal way of reaching out to shoppers: their employees are often the face to the customer. Since these enterprises also maintained a personal contact before the crisis, feedback was positive across the board. Some companies even make personal advice available over the phone. This is essentially seen as a service provided rather than a way of generating significant turnover.

In a second phase companies addressed the issues associated with re-opening. Here the question of price marketing is of crucial significance but there was no uniform response.  

The majority of approaches, however, use a differentiated way of reaching out to shoppers from the outset. Such as special bonuses for top shoppers or a stronger focus on prices in the design segment. Scarce few focus only on prices when addressing shoppers. The “spread” of approaches depends on the situation of the company and anticipated behaviour of competitors. Most look to a combination of themed (current fashion themes) and personal approaches (“we look forward to seeing you”). One thing is for sure though: the longer the shutdown lasts and the longer it takes to re-open, the more prices will move centre stage again. An extension of the season would be desirable in this connection. It would release some of the pressure and be generally preferable for all parties involved – especially also shoppers.

However, companies have also firmly set their sights on autumn; and the vast majority of them are re-writing their marketing plans for it. Everything revolves around flexibility and speed. Processes and workflows are questioned and re-organised in order to be able to respond to developments faster. In this context budgets are shrinking by between 25% and 50%. The interplay of all departments – marketing, purchasing and sales – plays a prominent role here.

To become more efficient and understand one’s shoppers even better, CRM is as relevant as ever. An essential prerequisite for this are targeted analyses performed in short cycles. Companies focus on shopper segmentation in order to classify them. It is important to know, for example, what the most important shoppers buy. Enriching one’s own data with other third-party data as well as benchmarks provides additional orientation.

In this connection we offer support for analytics and share our insights gained in the various discussion groups with you for planning your marketing operations. In addition to this, we provide our CAP (Customer Analysis Portal) users with further and short-term analyses and benchmarks.

Over the next few months it will be key to understand one’s shoppers as best as possible and to gear one’s ranges and communication to them. We help you to optimise your value added per shopper in 5 guided steps:

1 Understand shoppers better                                                      

  • Segment shoppers by behaviour 
  • Determine value added based on cash register slip and shopping frequency                                           
  • Analyse shopping basket                                        
  • Enrich knowledge of the shopper with additional & third-party data                                 

2 Define shopper potential and targets     

  • Benchmark value added                  
  • Focus on the shopper segment with highest potential                
  • Define targets per shopper segment

3 Introduce shopper insights into the Organisation                       

  • Develop reporting for each corporate level (MD, sales, purchasing, Marketing)
  • Define a consistent meeting structure  
  • Define most important KPIs                                      

4 Develop Action Plan for shoppers        

  • Develop Action Plan for pre-defined types of shoppers       
  • Lay down communication channels 
  • Develop package offers (products & services) for each type of shopper
  • Decide upon a budget

5 Monitor shopper behaviour and learn from it        

  • Analyse shopper behaviour non-stop for general KPIs  
  • Analyse marketing action and optimise next campaigns  
  • Provide all corporate levels with feedback on the result                                                                                             

Make sure to use our support to identify and tap into your potential fast and efficiently! Feel free to ask for more in-depth information.

Sincerely yours,

Uwe Seibicke
Partner
Tel:  +49 172 5217350
Mail: useibicke@hachmeister-partner.de 

hachmeister+partner

Professional Portfolio Management one component for crisis management

Professional Portfolio Management – one component for crisis management

Cases-4

The Corona crisis has accelerated the changes already being felt in physical retail even further. Currently, red lights are flashing across all areas like profitability, merchandise management, mark-downs, footfall and turnover: the struggle for liquidity and the sheer survival of companies is impacting nearly all areas of retail. Over the past few years portfolio management has already enormously increased in importance in the wake of the optimisation and re-negotiation of existing tenancy agreements for retail multiples and system catering. This applies even more so today where tenant and landlord interests are to be reconciled with each other.

In the current crisis the discrepancies between landlord and tenant interests are becoming particularly evident. In many cases, lawyers are being consulted and there is reason to fear that a large proportion will end up in court later down the line. In the interest of the companies affected, immediate and professional action is called for to soften hardened attitudes and restore the basis for partnership-based, sustainable and successful cooperation between the contractual parties. Agreements must be reached both on current rental costs and solutions for all parties to overcome the current crisis. Checking existing real-estate portfolios and adapting them to the multiple consequences of the Corona crisis for the various segments of physical retail is of prime and existential importance. With immediate effect common ground must be found to meet tenant and landlord interests if a disastrous scenario is to be averted which would not only hit retailers and property owners but also shoppers at the end of the day.

After all, our ailing city centres risk further change and deterioration if vacancy levels continue to rise as a result of terminated tenancy agreements or “Corona-accelerated”, unavoidable insolvencies. It does not take a prophet to imagine the resulting effects on the quality of our cityscapes, let alone the issues associated with finding new tenants.

What counts here and now is to enter into a dialogue with expertise, experience and an intuitive approach to negotiations in order to achieve a future-proof result. It is therefore indispensable to come up with a matching package for each location – considering both current and potential turnover generated over time!

Here experts can help. Frank Reinhold, Managing Director of consultancy Reinhold & Partner GmbH headquartered in Bonn (www.reinhold-partner.com), and his team of experts in cooperation with other real-estate professionals and lawyers has specialised in the optimisation and negotiation of existing tenancy agreements for retail outlets and system caterers. With over 30 years of experience in the retail arena under his belt, he boasts an excellent knowledge of the market and maintains very good relations with a comprehensive network of retailers and decision-makers among real estate owners and landlords. The cooperation partner of h+p always has an eye on market changes and adapts the contracts of property portfolios to the given market situation by means of strategically managed negotiations.

With our diversified know-how and network we are at your beck and call to develop and implement professional solutions and strategies for our clients.

Let’s tackle it!

Yours sincerely, 

Frank Reinhold
General Manager

Tel: +49 151 29107124
E-Mail: fr@reinhold-partner.com

 

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