Towards a tighter assortment
Gebr Heinemann took the time to reassess its product ranges in light of the pandemic, identifying a strong core offer that will be the focus in the short term. Chief Commercial Officer Dirk Schneider said: “We reduced the permanent assortment by around -30% and we reduced our inventory level, while introducing better inventory management. “This was decided based on relevance. Even if you looked pre-Covid, demand could have been 90% covered by the new stronger assortments. We cut back on the weakest, so the percentage we dropped is in SKUs, not in contribution to the business. The consumer also went for global brands, amid the pandemic and in the ramp-up. “Everyone is more focused, so the complexity you might have in the last percentage of your product range is something you don’t need in the crisis or ramp-up phase. You want to be fast, you want to be flexible in your supply chain. And this is needed to master the recovery of the business.” Looking ahead, said Schneider, “we will see more variety again, but with a more interesting and more attractive assortment. That is about sustainability, being trendy, being regional, being healthy and being special on a few products.” Elaborating, he highlighted two key aspects for the future assortment. “What will be important will be the ‘extraordinary’ and regionality, both of which will help us to create ‘wow’ effects and achieve the best possible Sense of Place. In the future, Gebr Heinemann will stand out even more as the curator that always arranges and presents new, exciting ranges to inspire travellers.”
“How can we make our ranges even more exciting? What does the traveller expect from us? We see two key points here: regionality and the extraordinary.”
– Dirk Schneider
Dirk Schneider: “How do we bring the great stories from all of these great products or brands to the consumer? That’s the real question.”
To curate an assortment for travellers with a clear distinction versus the online and domestic markets, Gebr Heinemann said that its category strategies must embrace changing consumer demand. In beauty, this is reflected in an extended ‘clean beauty’ offer, with a range of products that benefit both the body and the environment. “We have already launched this in Berlin, Hamburg, Frankfurt and Copenhagen and we are working on further rollouts,” said Schneider. In beauty, another lever is to “enlarge our range of indie brands and niche brands, because we see very strong demand from travellers,” said Schneider. “For example, we tested Penhaligon’s in Istanbul in a pop-up concept and it provided outstanding results.
Clean Beauty and the introduction of more indie and niche brands are strands of the strategy for P&C
“We also have a high-end brands such as Ajmal or the popular brand Pixie, which we launched in Frankfurt. There are quite a few things on the way. For P&C, there is also the task to elevate the customer experience. This is also about local sense and local brands, but also about implementing digital services as a value-add to excite and inspire the consumer. Here we have the latest innovation in place, which is the digital lipstick bar, launched in Berlin and also just landed in Frankfurt.” In liquor, tobacco and confectionery, part of the approach is about focusing on the premium, the extraordinary and the exclusive. Two highlights recently were a 72 year old edition of The Macallan, available at Amsterdam Schiphol, and an ultra-limited-edition Islay single malt, Black Bowmore DB5 1964. Launched by Heinemann at Frankfurt Airport, this is a collaboration between Bowmore and Aston Martin, with each bottle in the release priced at £50,000 (US$65,600). Schneider said: “We aim to pick up new category trends, like non or low alcohol, healthy food and snacking or less sugar confectionery, plus tobacco alternative products. It will include regional offers like Tony’s Chocolonely or local spirits or wine.”
Fashion capsules, limited editions and more customisation: Seeking newness in luxury
Travel retail exclusives will remain “extremely important”, he added, as will maintaining price advantages to the domestic market. In fashion, accessories watches and jewellery, “we are strengthening the global positioning of that category and the rollout of our multi-brand concept and also our mono-brand boutiques,” said Schneider. The company has struck an agreement to open a Cartier flagship store at Istanbul Airport next year. And it plans a new luxury multi-brand watches & jewellery store on the Odyssey Of The Seas cruise ship with Royal Caribbean. “This category is also about exciting the traveller. Here we are looking for unique products, for fashion capsules, for limited editions, combined with emerging categories and products that we see with regard to sustainability and customisation.” Schneider concluded: “It is our strategic intention to differentiate through our assortment. How do we bring the great stories from all of these great products or brands to the consumer? That’s the real question. Sometimes they are on the shelf, known by the expert, not by the normal consumer, so how can we do a better job there?” Finally, on brand partnerships, Gebr Heinemann said it was committed to attending TFWA World Exhibition in October. COO Raoul Spanger said: “Heinemann has a clear position on Cannes. We will be there with a senior team, a smaller team adapted to the event. The event will be smaller and that is OK. Some companies will invest, some will not come. But it is high time that we restart the personal dialogue, and Cannes will be a starting point for this and for 2022.”
Farewell to a legend
Gebr Heinemann Chief Commercial Officer and Executive Board member Dirk Schneider stepped into big shoes last year as he replaced Kay Spanger (below), who retired in late 2020 after 41 years with the family-held company. In the latest Annual Report, Spanger addressed how purchasing had changed in his time with the company. “More clarity, ever-increasing professionalism, a growing number of facts and figures to aid decision-making, more benchmarking with other players in the market have emerged. When I started in purchasing, the best price was the most important criterion. But at some stage that has its limits. The all-over margin, in other words what suppliers invest, for example for promotions or displays, at Heinemann has become more significant.
“It has become more important to develop something that can be applied to the retail space with suppliers saying: that’s exactly what we need for our mutual benefit. In recent years, we have expanded Fashion & Accessories/Watches & Jewellery, because we believe that it makes airport retail even more exciting. It should also be emphasised that tobacco products have always been a consistently high-margin product, in part because they sell off the shelf almost by default, without any need for advice and using easily planned merchandising.” On his activities since leaving, he added: “I’ve remained loyal to the perfume industry as advisory board member for the distributor Saether in Copenhagen and Nobilis in Wiesbaden. At the beginning of 2021, I travelled to a husky farm in Norway to help friends to train and tend to their dogs for four weeks. It was something I had always wanted to do. But above all, I am happy to have more time for my wife, my daughters and my three dogs.” Closing, Spanger said: “To persevere – or the aptitude to never give up – is the value I cherish most and it has always influenced my work. The crisis has illustrated yet again just how important this is. Let’s not take anything for granted, no matter how much success we have had and will have. Persevere and never think something is perfect, but be constantly on the lookout for ways to improve and occasionally take a risk as well.” *Click here for our December 2020 feature on Spanger’s departure, with fulsome tributes from the industry.
The Moodie Davitt eZine Issue 297 | 21 June 2021
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