Its response to shifting consumer behaviors and the growth of the European outdoor market were described by Bergfreunde as two key factors behind a 33 percent sales increase to €66.65 million last year, spread between eleven European countries.
The German-based online retailer added three websites last year, as it launched its business in Italy and Spain and started another entry point for the European Union. However, all three moves contributed only a small part to the sales increase achieved in 2017, and Bergfreunde has no intention of opening further sites this year.
Apart from Germany, which makes up by far the largest share of sales, the retailer continues to focus most strongly on the U.K., where it operates as Alpinetrek, and on France under the name of Alpiniste. Its strategy is to convey the experience of a specialist store with the convenience of an online store, which requires some level of localization.
Part of the increase could be attributed to the dynamics of the online retail business, where smart operators manage to create a virtuous circle of increasing traffic generating more visible references, in turn drawing more new customers. The company declined to provide details on customer retention, but in view of its service levels that is unlikely to be lagging.
Among the latest trends, Bergfreunde has seen growing demand for urban outdoor and fashion products. It has added brands such as Helly Hansen and Hurley, which have helped to address a wider consumer demand. At the same time, consumers of urban outdoor products have pushed up demand for specialist outdoor brands such as Patagonia and Ortovox.
Bergfreunde points out in its financial report that online outdoor retailers in Germany have been growing faster than the overall European market, as estimated by the European Outdoor Group. The Handelsverband Deutschland puts the growth of this market at about 10 percent in 2017.
Despite early discounts and unabated price pressure across the European outdoor retail market, Bergfreunde's gross profit margin increased slightly, as it reported a 35 percent rise in gross profit to €27.5 million last year. Its Ebitda soared by 40 percent to more than €4.1 million.
Part of the Backcountry.com group, Bergfreunde has upgraded its infrastructure to deal with the expansion. A distribution center was opened about 18 months ago near its head office, with substantial investments in fulfillment automation. This caused a little disruption but less than anticipated, and it has enabled the retailer to continue providing outstanding service despite the rapid growth. Orders placed with Bergfreunde before 4 pm are nearly always delivered the next day in Germany.
The retailer predicts in its financial report that sales will jump by 28 percent to 33 percent this year and that the profit margin will rise further. It should end up in a range of 5.5 percent to 6 percent, compared with 5 percent in 2017. The increase should be driven by improvements in efficiency, due to more automation.