The big German shoe retailing group has reported a global 12.2 percent sales increase to €2.5 billion in 2005. The number of shoes sold in its stores around the world grew by 12.3 percent, breaking for the first time the threshold of 100 million pairs. Out of the nearly 101 million pairs, over 60 million were sold in its German stores, where the turnover went up by 9.7 percent to €1.27 billion including Roland, a higher-end chain of 66 shoe shops that belongs to Deichmann.
Excluding Roland, domestic sales rose by 9.3 percent to €1,173 million. They increased by 6.82 percent on a same-store basis, performing much better than the overall national market, which instead fell by an estimated 0.3 percent. German consumers, who have become very price-conscious lately, bought larger quantities of Deichmann offerings in the lower price bracket. Deichmann reckons that two out of three Germans shop at its stores and that its banner has become the main destination for one-third of the population.
Deichmann ended the year with a total of 2,066 stores in 12 countries, including 991 doors in Germany. The group’s sales rose faster outside Germany than domestically last year. They went up by more than 20 percent in Switzerland, for example, where the group trades under the Ochsner and Dosenbach banners. Foreign revenues reached a total of €1,188 million – nearly half of the total turnover – and they will continue to grow as the family-owned shoe retailer continues to enter new markets.
Deichmann will open a store in Ankara this coming spring, the first one in Turkey. It will also enter the Swedish and Slovenian markets this year, following up with Croatia in 2007. The group is also looking at other foreign markets such as Romania, Bulgaria, the Ukraine and Russia. The latest wave of foreign expansion began in 2001 when Deichmann made an acquisition in the United Kingdom, where it now has 14 stores, but it is now reportedly looking for smaller high-traffic locations in that country, where it is much less known than in Germany. On the other hand, Deichmann’s introduction in the Danish market, which took place in 2003, is described as a success.
Deichmann will continue to open new stores in Germany, where it sees a long-term potential for an additional 200 units. Last year the company opened or modernized 93 stores in Germany alone. About 50 new stores will be opened in 2006, and 70 others will be modernized, for a total investment budget of about €44 million.
Roland will add 5-6 new units this year. As part of an apparent trading-up strategy, Roland will also go forward with a new concept for branded footwear called Myshoes. After tests on three locations in Ingolstadt, Fürstenfeldbruck and Cham, 15 more units under this banner will open this year in Germany, mostly in industrial areas and shopping centers. Deichmann’s acquisition last year of two well-known German brands – Elefanten for children and Gallus for men – would seem to fall within the same overall trading-up strategy, as it will help to improve the chain’s image on the quality side.
Elefanten shoes have already appeared in at least some of Deichmann’s stores in Germany, carrying much lower prices than those to which customers were accustomed. The company has designated March 6 as “E-Day.” By then all its stores in Germany and in some other countries (Holland, Switzerland, Austria and Poland) will officially present Deichmann’s new exclusive Elefanten line of children’s shoes, carrying between 50 and 80 styles.
Deichmann is using a different breathable membrane than Gore-Tex in the new Elefanten collection, but it’s using more leather than before. It’s going to introduce the WMS measuring system for children’s shoes in its stores. The collection will be bigger than before and the prices will be much lower. Made in the Far East, like most of the other models sold in Deichmann’s stores, the new Elefanten models will be priced from €24.90 to €39.90 a pair, in contrast with a previous range of €37.90-69.90. The same applies to Deichmann’s new exclusive line of Gallus brand of men’s shoes, where a model that was previously priced at €94.90 will be offered for only €49.90.
Deichmann bought both brands last year, and it’s going to offer both of them to other German retailers for the next Fall/Winter season, using the internet for registration of their expressions of interest. The company has not yet decided on its international wholesale distribution strategy.
The Elefanten brand has a rich history that will inevitably enhance Deichmann’s international standing. It reached a peak in the early 1970s when its annual sales hovered above 9 million pairs Founded back in 1896, Elefanten was acquired by Freudenberg in 1935 and then sold to Clarks in 2001. Deichmann didn’t buy its production facilities but it bought last year the tooling and the lasts and rehired some of its technical and design staff.
Deichmann employed a total of 23,900 persons worldwide at the end of last year, or 900 more than the year before. The group is budgeting a sales increase of between 6 and 8 percent for 2006. Led since 1999 by Heinrich O. Deichmann, who is 43 years old, the company wants to remain an independent family-owned enterprise.