Who would have guessed that Fenix Outdoor would be ready to play the really big card in European outdoor specialty retailing? The Swedish group has notoriously had big ambitions as a retailer. However, it has been looking outside Sweden because it could not play a significant role against the big brands “without moving beyond the Swedish market”?
It made an experiment with an investment in Norway, but it didn't work out. After fine-tuning the retail concept of Naturkompaniet to a point where it started to generate good profits, it decided to invest more in retail and branched out into Finland. Other Nordic retailers such as Stadium and XXL have been expanding outside their national borders. Like Stadium's recent establishment of a store in Hamburg, Fenix is now making a big step across the pond through its merger with the much bigger Globetrotter chain.
Prior to these moves, Globetrotter had invested in Transa in Switzerland. Globetrotter has also continued to invest heavily in mega-stores to become a factor in all the major German cities, but still, its management has been complaining about its inability to negotiate better purchasing conditions with the major brands.
For Fenix, the dimensions of its investment in Globetrotter are changing the entire arithmetic of the group, shifting its focus from wholesale to retail and giving it a more pan-European scope. While it is sharing the risks with the former owners of Globetrotter, retail is no longer a side dish on the Swedish menu. And we are intrigued how it will taste.
The experiment that the Swedes have launched is ambitious because Globetrotter has seen a couple of challenging years. And there are more challenges ahead. The German chain wrote a small operating loss in its last financial year, which stemmed in part from rather heavy investments that were partly paid out of cash flow. They included the takeover of a local outdoor retail chain in the Stuttgart area, Woick, and the opening of a huge and costly store in the same city. Globetrotter has also launched a new experimental retail format on a smaller surface, away from any larger city in the northern part of the country.
The motivation behind these heavy investments in brick-and-mortar retailing has a lot to do with Globetrotter's increasingly difficult mail-order business, which is aching due to the growing competition in the online retail market. The competitors are not only Zalando, Amazon and other heavyweights, but also small specialized outdoor e-retailers that have proven to be very flexible and highly competitive, notably in pricing. As an online retailer, Globetrotter has tried to keep the entire price structure – more or less – at a healthy level, but has lost market share because customers have gone for some attractively priced offers that Globetrotter could not afford to match. The chain is trapped because it cannot have different pricing on the web and in its physical stores.
We are curious how the new sheriff in town will manage these challenges. Naturkompaniet and Patioaitta have onlines store that are working well, apparently but Fenix may want to use Globetrotter's online retailing platform and its know-how in the field to do a better job in the hybrid click-and-mortar format, learning from Globetrotter's problems.
There is more on the to-do list, particularly on the issue of exclusive private label brands and their future role in the whole scenario. Globetrotter has been used to carrying them, while Fenix has not offered any in its Nordic stores. The group's own brands are well-presented at its own stores, but they are also sold widely outside elsewhere, and Germany is one of the biggest foreign markets for them.
Two years ago, Globetrotter decided to quit the Euro Family, an informal alliance of European retailers that had joined forces to develop their own combined offer of private label items. That experiment had not worked out too well, partly because consumers have different tastes in Italy and Germany. Since then, the Hamburg-based retailer has not given any new indications on how it would handle this aspect of business going forward. Here, too, we are intrigued to find out how Fenix will act to make Globetrotter fit for the future.
We have asked top executives of Fenix and Globetrotter to comment on these points and others, but they have declined to say anything at this stage, noting that Fenix is a public company.