Karstadt boss Andrew Jennings’ parting gift to the retailer is a very British makeover.
With the store’s bright open-plan spaces, modern finishes and a decidedly global product mix, I feel as if I could be in any international department store as I walk through Karstadt’s Düsseldorf flagship in the hours before its grand unveiling after two years in development. Celebrities such as Dita Von Teese and model Poppy Delevingne are about to descend on the store for its British-themed launch event, Feel London.
This focus on British brands will be rolled out simultaneously across Karstadt’s 83 stores, plus its 28 sports stores (according to Karstadt, it is the largest sportswear retailer in Germany). The business is bringing brands such as Reiss, Radley, Whistles, French Connection, Ted Baker, All Saints, Phase Eight, Wallis, Dune, Kurt Geiger, Hunter, Jeff Banks, Ben Sherman, Burberry, New Look, Karen Millen and Lipsy to German consumers, as well as launching Topshop and Topman onto the country’s high streets via shop-in-shops.
And if the product mix aren’t clear enough, then the red telephone boxes and bowler hats suspended from the ceiling and hanging from coat racks dotted around the store confirm Karstadt is serving up a little slice of London in Düsseldorf.
“We feel it’s cool, it has inspiration today and there have been some great designers that have come from London fashion schools,” says Andrew Jennings, the German department store’s chief executive, who will leave the business when his contract expires in December. “It’s not just us, Bloomingdale’s [in New York] has just run a London promotion, and Printemps [in Paris] is in the middle of doing something similar.”
This attitude is indicative of Jennings’ undeniably impressive international track record over a career spanning 39 years, with stints at Harrods and House of Fraser in the UK, Brown Thomas in the Republic of Ireland, Holt Renfrew in Canada, Saks Fifth Avenue in the US, and more recently the turnaround of $2.8bn [£1.77bn] 400-store South African retailer Woolworths. “Six countries, two hemispheres, three continents. It’s been great fun,” he says, proudly chiming in before I can finish reeling off his CV.
British-born Jennings was appointed to turn around the ailing German business in 2010 and has since been implementing his ‘Karstadt 2015’ strategy to turn it into an international retail destination. As part of the plan, Karstadt has invested about €400m [£335.7m] in refurbishing its store portfolio since 2011, with six-figure sums invested in 42 locations this year and “many millions” spent on the Düsseldorf store alone.
Jennings says when he joined the business it was “totally broken”, adding: “It didn’t have a planning division, there was no focus on the customer, we didn’t understand who we were buying for and we just bought what we bought last year, and we also stocked what our competition were buying. So there was no differentiation.”
Differentiation forms a key part of his Karstadt 2015 strategy. Uncompetitive departments within its stores including multimedia and lighting have been closed to focus on fashion. Jennings hopes the new assortment will also help the retailer appeal to younger consumers.
“I’ve spent my life repositioning businesses and with many of these types of [retailers], historically their customer has become older. And the older you get the less you want to buy, that is a fact of life. We love all of our customers but we need to attract a more modern consumer who wants to shop with us on a regular basis.
So we have put in a customer segmentation programme, which is fantastic. This is the third business I have put it into,” he says.
Those customer groups include: the older ‘classic cross-shopper’, which currently represents about 30% of the business; ‘driven by kids’; the ‘premium cross-shopper’; ‘sport and tech’; ‘my man and me’; ‘gifts and treats’; ‘beauty deluxe’; and ‘fashion and trends’.
“We want to increase ‘my man and me’ and ‘driven by kids’, because it is a younger family shopper and we believe this is part of our recipe for success,” says Jennings.
He is hoping the new product assortment will do just that, and the early signs have been promising. “Ted Baker has been hugely successful in this market. And in fact, [founder] Ray Kelvin said to me ‘I cannot believe how successful it has been’. We just launched Topshop two days ago in the KaDeWe [Karstadt’s premium flagship], and Philip Green phoned me and said ‘What do you think about the results?’ I mean they were fantastic, absolutely fantastic.”
Asked if he will roll Topshop out across the portfolio, he says: “We haven’t discussed further but we’re going to be talking to them based on the success we’ve had in the first few days.”
He adds that Phase Eight has done “brilliantly”, going from just seven concessions in September 2012 to 30 stores for autumn 13. “The brand has come in and has become a number one brand in many of the stores for the ‘classic’ area.”
Phase Eight commercial director Ben Barnett says he has been consistently impressed with the strength of sales generated at Karstadt.
New Look also launched in September 2012 in Karstadt’s Berlin and Hamburg stores. New Look country manager for Western Europe Benjamin Tetard says that while the company wants to open its own stores in the longer term, having run stores on a trial basis in Germany about 15 years ago, it is currently focused on its re-entry there via Karstadt.
“It has a very good footprint in the German market, it’s present in all the major cities with very good prime locations on the high street, wide retail space and a strategy to go into a differentiated offer with international brands coming in, getting a younger customer base.
So we thought it might be worth investigating a collaboration.”
Of course, it’s not just Jennings overseeing this strategy, and behind the scenes he has appointed more than 15 senior managers over the past two years, both from Germany and overseas. They include former Marks & Spencer womenswear trading director Annette Brown, who has been made product development director at Karstadt; formerMothercare brand director Gillian Berkman as chief merchandise officer; Simon Ryder, whose CV includes stretches at H&M and Converse as head of sports; and Jane Munro-Hall as director of ladies’ fashion, who has worked for retailers Tom Tailor and Esprit.
Jennings believes global talent will help Karstadt achieve its aim of becoming an international department store. “We’ve got a mixture of people because we see ourselves as an internationally thinking organisation.”
Sarah Lim, partner and head of UK retail and consumer at executive search firm CTPartners, which has been working with Karstadt on many of these hires, agrees. “The calibre of that leadership team, the experience, the energy
and the drive to effect change and get everyone on board is really important. You meet someone like Gillian Berkman and she is super-charismatic, very driven, a real people person, and she’s very experienced. They are all heavy-hitting senior players who have done big roles before,” she says.
Jennings reveals that profit stood at €4bn (£3.35bn) in 2012, though he declines to give profit figures, and will not reveal turnover for 2011 due to the distorting effect of the business’s restructure.
And despite just months left in the role before he returns to the UK (he hasn’t revealed what his next professional move will be), Jennings is not resting on his laurels. He’s gearing up for the relaunch of Karstadt’s website next month,
as he aims to take it from single digits to 10% of total sales. Looking ahead he is confident about Karstadt’s future: “I came here to do a job, which I will complete by the end of the year. Whoever comes in after me will implement the same strategy that we started off on this journey.
This is a relay race, it really is.”