If You Don’t Buy, You Can’t Sell

It’s on! During the last order round, retailers yet again reduced their respective pre-order volumes quite drastically. Among other effects, this move puts long-term partnerships to the test. Where were the dwindling limits most noticeable and what have retailers focused on instead? Text: Nicoletta Schaper. Illustration: Claudia Meitert@Caroline Seidler. Photos: Interviewees

Andreas Weitkamp has made a clear cut. “For spring/ summer 2017, we have only ordered products that we were 100 percent convinced of”, the managing director of Modehaus Schnitzler explains. “In turn, this means that we have cut back radically on what we didn’t like and spent more on what we liked. That’s what our customer have taught us. They only buy the most beautiful items.” The spring/summer order is a prime example of what has been lurking on the horizon for quite some time. “We are currently at a crossroad”, says Peter Haertel, whose agency Vestitus specialises in luxury brands such as Jacob Cohën, Herno, Santoni, and Antonelli. “The retailers are even turning their backs on products that they remained loyal to for a long time despite the sales figures not really adding up.” The pressure has increased while the volumes have decreased. The order volumes have dropped between ten and 15 percent - in some cases even 30 percent. This has thrown some suppliers into turmoil. Will this trigger a market shakeout? The shakeout is already in full swing. There is simply too much of everything and there are definitely too many interchangeable products. As a result, Einwaller has aligned its buying strategy accordingly, thus turning their back on many large collections. “We found it very difficult to end long-term partnerships, but recent developments have shown that both the industry and retailers are sometimes too far removed from the consumers”, says Theresa Minatti-Einwaller, the head of buying at the family-owned business. “Customers of today only buy products that are right for them. Luckily, there are still brands that generate excellent sales. We ordered more from those brands. It also doesn’t make sense for us to look at many small labels. If we order for 5,000 Euros one time and for a different sum another time, it doesn’t result in a clear statement in our store and doesn’t save our sales figures either. In our capacity as a specialised retailer, we would rather forego a huge selection in favour of offering our customers the orientation they often lack.”

Focus Time is putting long-term sales partnerships to the test. Large orders can guarantee excellent collaboration and responsiveness, thus securing that business runs smoothly. Nevertheless,

Andreas Weitkamp, managing director at Modehaus Schnitzler: “Everything that’s interchangeable loses - without mercy.” Theresa Minatti-Einwaller, head of buying at Einwaller: “You need to consider the numbers, but you need a lot more emotion and willingness to take risks to ensure you don’t look like all the others.”

Oliver Feske, managing director at Agentur P4: “Brands that are over-distributed or whose collections are not contemporary are destined to lose out.”

Andreas Weitkamp was willing to - in some cases - waive beneficial terms. That doesn’t mean that he is not seeking partnerships. “When I look at our last order round, we ordered healthy volumes from those who showed personal commitment”, he notes. “Too many sales representatives focus on Excel sheets, while too few are willing to visit a store on a Saturday to see how the business is going. The latter is a good source for highly relevant information.” Peter Haertel is among those who wasn’t particularly affected by the pre-order reductions. “There is no brand loyalty, only service loyalty”, he argues. His stated principle is to be approachable at all times and to exchange goods that don’t perform as swiftly as possible. “However, one also need to be able to re-deliver goods that perform well just as swiftly. That’s why we see speed as our competitive advantage”, Haertel explains. “That’s why we, as an agency, lay aside the bestsellers from individual collections in order to ensure that retailers can re-order from us quickly. We take a risk with a high budget in this respect, but it has always been worth it so far.” Peter-Boy Weber requires absolute reliability for Modehaus Ehlers in Wyk on Föhr. “I need the winter sweater early, mainly because it’s too late on our island once the customers have already seen a particular item in Hamburg or Munich”, he provides an example. “For me, it is a clear image enhancement when I receive the latest goods early. If the goods for winter arrive as late as mid-September, it could be too late. In such cases, we require a special deal with the suppliers.” Last season, his store decided to focus on the premium segment once again. This approach does not protect him from price sensitivity, which has - according to all market players - increased enormously. “More than ever, there is a psychological price threshold that should never be exceeded”, Peter Haertel explains. “I need to offer quality, but at the right price. Our customers are prepared to spend a lot of money as long as they know what they’re spending it on.” The heyday of the outerwear market, during which consumers were willing to fork out a lot of money for brand jackets without hesitation, is long gone. However, the crisis is an opportunity for collections such as Save the Duck of Italy. Such brands boast a fresh name, awareness for sustainability, and - last but not least - an excellent price-performance ratio with a high calculation factor. “The orders placed by our existing customers have increased by 20 percent year-on-year. Our last season closed with an export ratio of 40 percent”, says Daniela Holnsteiner, the international distribution manager at Save the Duck. “There is no European market in which our product doesn’t work. We are developing on a global level. It is also positive that we are not being plugged into a certain category.” To ensure that the label continues to grow healthily, it is necessary to expand the distribution network in a selective and sensitive manner. “Especially in a saturated market, it is important not to abandon your own positioning”, Daniela Holnsteiner explains. “Such an approach improves the credibility of the brand.” Peter-Boy Weber is also convinced that a lot depends on the distribution strategy. “Within our product range, we strengthened brands that don’t try to push into the market with force, but maintain their individuality in order to remain interesting for premium retailers. This ensures that there are no problems in terms of sales figures.”

Innovation Necessary Innovation is also essential to be perceived as “special” - this applies to both the industry and retailers. Does this mean that stores still need to stock new goods as often as the vertically integrated rivals? Does this mean that the budgets of retailers will shift to shortterm trends or towards NoS? Oliver Feske’s agency P4 has the Danish label Minimum in its portfolio. “The collection boasts an excellent stock programme of which retailers can benefit greatly. Many retailers say it is important to have an option to re-order bestsellers during the season.” To this end, Minimum offers four order dates per year. Oliver Feske is not the only one who perceives this as a good rhythm. Save the Duck has also decided to increase its order rhythm. The declared aim is to have six to eight order dates consisting of four pre-main collections and two to four flash collections. The collections will also be made available via a virtual showroom. “The important thing, however, is that every collection needs to specialise in a theme that the retail industry is craving for at that time, such as a fake leather programme in October”, Holnsteiner says. “Seeing that the collections dif

Peter-Boy Weber, managing director at Modenhaus Ehlers: “I need to be able to rely on agreements and I need the willingness to consider special terms.” Daniela Holnsteiner, export manager at Save the Duck: “As a label, we need a certain pre-order volume. Then I can, accordingly, offer more service.”

Peter Haertel, managing director at Agentur Vestitus: “Today, brands that aren’t maintained properly have no chance.”

fer from each other greatly, there is no product pressure.” Andreas Weitkamp has put aside 15 percent of the current season’s budget to spend on items that inspire him spontaneously. “However, I don’t believe that I will receive any more strong flash goods from the stronger brands this season. I also don’t believe that we need to move towards more ready-to-wear items. If I receive my winter goods as late as November, what am I, for example, supposed to sell in the last three weeks of August? The temperature reached 16 degrees on a certain Monday, which was a great day for selling outerwear. On the next Friday, the temperature soared to 32 degrees. Was I supposed to hide all the winter jackets and bring out the swimwear again?” At Modehaus Schnitzler, collections such as Dorothee Schumacher, Armani, and Stone Island are among the strongest complete look brands. “However, we have noticed a shift from global brands to niche labels”, Weitkamp reveals. Is the product itself becoming more important? Does this mean that product specialists are becoming more important? “Absolutely”, Weitkamp answers the question. “I believe that this development has been, in part, caused by sociological factors. Today, people expect so much more quality for their money, which is also strongly reflected in the gastronomy industry. They are no longer willing to spend cash on second and third rate products.” Peter-Boy Weber is also convinced that quality is more important than quantity. Late September, he ordered some more cruise collections in Milan. This is currently the main part of his order volume, especially as he is very happy with the delivery punctuality of the Italians. Instead of focusing on larger collections, he prefers to order lesser-known names and niche labels. “As a multi-brand retailer, we need such products to strengthen our own brand and to sharpen our profile.” At Einwaller, on the other hand, large names such as Chloé, Dolce & Gabbana, and - most of all - Gucci have lost none of their pulling power. The large design houses not only stand for innovation, but are also Einwaller’s figureheads. The latter is not only owed to the location of the Einwaller stores, which are grouped on the way to “Goldenes Dachl”, the main tourist attraction of Innsbruck. “For example, this ensures that many Asian customers visit our stores and adds to our local regular customers”, Theresa Minatti-Einwaller explains. “Today - more than ever - you need to know who your customers are and what exactly they want.” Like many other successful retailers, Theresa Minatti-Einwaller not merely reduced her order volume, but decided to focus it. “In my opinion, it makes no sense to simply shave off your respective order volumes as if you’re hacking away at them with a lawnmower. Within our business, we prefer to follow the guiding principle of my father, Josef Einwaller. He once said that those who don’t buy goods can’t sell anything.” What does she think is more important? Should buying decisions be dictated by the gut or the brain? “One does need to look at the numbers, but one needs to forget them again as quickly as possible”, Theresa Minatti-Einwaller argues. “You need a lot more emotion to ensure that your product range doesn’t look like all the others. We stand for colour, but that can cause issues in terms of distribution. Subsequently, it comes as no surprise when the customers refuse to buy the umpteenth jacket in beige or dark blue! As stationary retailers, we have a myriad of opportunities ahead of us and they all begin with the buying process.”

Who Surprises, Wins But this is not the only area that offers untapped potential. “The customers want to consume, but stores often lack a certain level of excitement”, Oliver Feske says. “We started perceiving ourselves as a lifestyle agency some time ago. To this end, we decided to equip our new showroom with a 100 square metre concept store area that showcases books, electronics, liquor, scented candles, soaps, and furniture. We have received excellent feedback for that.” It’s all about special items and unexpected thrills. Andreas Weitkamp believes that this is an opportunity for multi-brand retailers. “You have to take risks to ensure that your business remains exciting - even more so in uncertain times”, he stresses. “Customers need to be surprised. If they aren’t, they might as well stay on the couch and click their way through all the online shops. The element of surprise is paramount. The biggest mistake one can make is to always play it safe.”