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Sales at Peek and Cloppenburg are stagnating – especially in the large stores. Smaller stores and experience shopping are expected to attract more customers again.
Fewer and fewer customers come to the city centres and prefer to buy their songs from Amazon and Zalando. Or they want to buy much cheaper and go to Primark and H&M. The big shopping chains like Peek & Cloppenburg are feeling the effects. In particular, the five largest stores, which P&C calls “Weltstadthäuser”, are doing badly. The turnover of the flagship stores with at least 10,000 square metres has been stagnating for two years at 1.5 billion euros.
Smaller shop areas
The new strategy of the company is therefore to increase the target turnover by smaller areas again. The 138 other stores in the chain in Germany, Austria and Eastern Europe are doing well. The first step will be in Vienna, where some floors of the stores will now be rented to restaurants, for example. Other branches will follow, and there will also be other changes at Peek & Cloppenburg. At the beginning of the year, the company brought in consultants from McKinsey. They are taking a closer look at the processes and costs at the head office.
Optimal shopping experience
But downsizing alone is not enough. Managing director John Cloppenburg tells Handelsblatt that the company management is currently working on further ideas for an optimal shopping experience. Peek & Cloppenburg has already tried a few things. From pop-up stores to exclusive customer events.
Online is becoming more and more important
There is also potential for improvement in Peek & Cloppenburg’s online business. For many years, the company had not taken the trend towards digital purchasing seriously. So the opportunity was missed to counter online fashion platforms like Zalando. Only recently has the company’s online sales increased, reaching 100 million euros in 2017.
Showpiece chains in the fashion industry
From the 1960s to the 1990s, Peek & Cloppenburg built massively and became a showpiece chain in the fashion industry. Their secret was the wide range of affordable private labels from Jakes to premium brands. The clothing market was covered here for the entire family. But that doesn’t work so well anymore. Only recently, the company decided not to sell any more children’s fashion.
Sticking to old core strategy
In the future, Peek & Cloppenburg wants to stick to this old core strategy and continue to be the centre of the fashion market, but the focus should also be on what has made P&C big: a product range with a good price-performance ratio and well-trained sales staff. Especially in the case of sales staff, the company can distinguish itself by competing in the online business.
Family business with tradition
Compared to competing companies, Peek & Cloppenburg also has the advantage that the company is firmly in family hands and has a financially sound basis. The equity ratio was more than 40 percent in 2017, and the return on sales of earnings before interest, taxes, depreciation and amortization (Ebitda) reached 5.8 percent. Many P&C properties in Germany also belong to the Cloppenburg family.
New concept on display in Vienna
What a new concept for Peek & Cloppenburg can look like at the moment can be seen in Vienna. The branch on Kärntner Straße has been completely rebuilt and refurbished. There are now more premium brands from Emporio Armani to Ralph Lauren to Hugo Boss.
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Image: Peek Cloppenburg