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Deichmann kicks off major UK expansion

German footwear retailer Deichmann will take advantage of the weak property market and open up to 10 stores in the UK this year as part of wider plans to open up to 400 stores in the country over the next 10 years.

The chain, which has previously hired pop bands the Sugababes and the Pussycat Dolls to promote its stores, is planning to invest about £4.5 million in UK stores this year and is looking for sites of between 3,500sq ft and 5,000sq ft.

Deichmann, which already has 31 stores in the UK, opened a 7,300sq ft flagship store at shopping mall Westfield London this week, the chain’s first store in the south east.

It said it was also looking at sites vacated by the likes of Woolworths and Zavvi, which both fell into administration in recent months.

Deichmann group chief executive Heinrich Deichmann said: “The UK is a key market for us. We see a great deal of opportunity for expansion here across the next 10 years. Even with the difficult economic environment we see a positive pattern of opportunity.”

Deichmann is a self-service value footwear concept in the mould of Shoe Zone, Brantano and Priceless. Prices start at £9.99. It has more than 2,500 stores across Europe and the US and is a debt-free, privately owned company.

Global sales at Deichmann Group increased by 6.2% to €3.12 billion (£2.9bn) in 2007. In 2008, the business sold more than 127 million pairs of shoes worldwide.

Figures for year to Dec 31 2007

Deichmann UK (25 stores at the time of figures)
Sales +20.3% to £14 million
Pre-tax loss £1.5m
Managing director
Bjorn Gulden
Operations director Andrew Underwood
Deichmann Group
Sales +6.3% to ¤3.12 billion (£2.9bn)
Chief executive
Heinrich Deichmann

Footwear specialist faces tough competition in UK market

Ravel, Dolcis, Faith, Stead & Simpson, Barratts, Priceless and Shoe Studio Group have all collapsed or closed under the pressure of decreasing spend coupled with increased competition in the UK footwear sector.

That a footwear retailer from Europe would choose now to enter the UK market would seem to be odd timing.

Fashion retailers including New Look are stealing more and more share from footwear specialists and while the value sector, where Deichmann operates, is said to be holding up in clothing, for footwear the picture is less clear.

Priceless went into administration earlier this year before being bought back by footwear group Stylo’s majority shareholders the Ziff family.

Meanwhile, Shoe Zone has been leading consolidation in the sector, snapping up as many of its rivals as possible, including Shoefayre and Stead & Simpson.
Deichmann’s footwear starts at £9.99 and its spring 09 collection is fairly trend-led, with studded gladiator sandals, fringed sandals and patent peep toes.
Tie-ups with pop groups the Pussycat Dolls and the Sugababes in Europe would appear to give the chain more credibility in the fashion stakes, but how the business executes its marketing will be crucial. Imagery in its home market is quite Euro in style.

The Westfield London flagship store is a bold move and should help to raise Deichmann’s profile among UK shoppers, but rents at the centre are among the highest in the country, and the footwear chain will need to shift a lot of shoes to make it viable. On the plus side, there are good deals to be done with landlords elsewhere.

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