Schlecker pulls its horns in
Schlecker's great blue hope: The new larger German Schlecker XL format opens its first store in Spain today
The European discount drugstore empire of owner-manager Anton Schlecker continues to retreat on a number of fronts.
Among other things, the group has confirmed to Lebensmittel Zeitung that it plans to end its 20-year presence in the Netherlands by the end of this year.
Can it be, we ask as mere breathless reporters, that the flaming Schlecker bull is finally running out of steam?
Currently, Schlecker‘s c. 100 Dutch stores achieve estimated annual revenues of around €35m to €40m ($48-$54m; £32-£36m). Also, local trade union Setca claims that 32 of Schlecker’s 36 Belgian stores are due for closure.
Following the withdrawal from Denmark last year, Europe’s largest drugstore multiple has reduced its activities to ten national markets.
Schlecker has also put an end to its foreign online businesses and now only operates internet shops in Germany and Austria.
LZ’s Jan Mende believes that Ehingen-based Schlecker could exit a number of further markets where the tough-nosed company does not believe that it can make a profit medium-term. Over the last two years, 152 stores have been closed in Austria and 40 in France.
Currently, Schlecker is only opening expanding in the Czech Republic, Poland, Hungary and Spain. The Swabians seem to enjoy Spanish blue skies. Today, the first “Schlecker XL” outlet (cf. below) has been added to the company’s 1,250-store network.
Schlecker is obviously intent on making hay while the sun shines as it is the only drugstore multiple in the country to date.
Up till now, Anton Schlecker’s pruning activities have mainly been concentrated on its home market. Between 2006 and the end of 2009, the German store network was trimmed from 11,000 to around 8,800 sites.
This is surely the inevitable consequence of Schlecker’s past expansion strategy which raced to open new stores in almost any site available, however small the expected economies of scale.
Towards the end of Schecker’s former growth frenzy one almost began to feel that no German barnyard was safe from one of Schlecker’s blue signs.
Around two years ago, Schlecker did a volte-face and has tried to confront the successful expansion of dm and Rossmann with the larger “Schlecker XL” fascia. But, the c. 250 “Schlecker XL” stores have not been able to compensate overall declines in sales.
Last year, LZ estimates that Schlecker revenues fell 5 per cent while both competitors grew by around 10 per cent. Schlecker sales during the first months of 2010 are also estimated to have declined more strongly than the generally weak market.
Although smaller suppliers will presumably continue to utter “mouth honour which the poor heart would feign deny, but dare not”, the major brands refuse to be strong-armed anymore when negotiating terms. After all, Schlecker is now only no. 3 in the drugstore product segment.
