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Otto UK mulls German relocation to cut costs

Otto UK, the company behind the Freemans and Grattan catalogues, stands to make massive cost savings if it goes ahead with plans to relocate its UK operations to Germany.
The home shopping company confirmed it plans to “streamline and restructure” its buying and creative departments, which could result in moving all purchasing to Germany, where its parent company, Otto Group, is based.

Sources told Drapers that up to 300 buying and merchandising jobs were under threat at Otto’s offices in Bradford in West Yorkshire and Euston, north London.
The proposed relocation follows a major strategic review by new chief executive Koert Tulleners.

One industry source said: “By moving to Germany, the catalogue print cost savings of not producing a separate UK catalogue would be radical. And feeding from one common stock pool would also have major cost savings.”

However, mail order experts questioned what impact a move to Germany could have on the relevance of Otto’s UK product offer. One industry source said: “There would be a very different look and feel to the catalogues if they are coming out of Germany, which might not sit well with the UK market. German fashions are more conservative and the UK is ahead of Germany in fashion terms.”

Another source said: “German fashion is so far removed from the UK market. If you look at the Otto catalogue there is no pan-European style – it just wouldn’t work. There is also the question of customer recruitment, and how that would be done from Germany.”

However, mail order experts agreed that Otto Group would not withdraw from the UK market altogether. Otto Group is one of the largest home shopping companies in the world with annual sales of about £10 billion.

One mail order expert suggested: “Otto Group has the financial muscle to start again in the UK if it wanted to. It could ditch its UK operations and build up the UK market again from scratch through acquisitions.”

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