Love goes through the wallet. At least that's what a look at the German retail figures suggests: Christmas brings the most money into the shops' coffers throughout the year, and the months of November and December alone bring in up to 20 percent of total annual sales. This is why there is tension in the executive suites - after all, the Advent season at the latest decides whether the financial year will be crowned with a profit or will have to be written off with a loss.
The toy retailer ROFU Kinderland from Hoppstädten-Weiersbach in Rhineland-Palatinate found out that the fate of companies can depend on this. The company has been selling toys for more than 40 years. With branches in six federal states, ROFU claims to have worked its way up to one of the leading toy retailers in southwest Germany.
Restart after bankruptcy
ROFU then filed for bankruptcy in January. According to the company, this was due to increased costs and customer reluctance to buy, as well as weak Christmas business. An investor was found; Nevertheless, 27 branches closed and more than 600 employees lost their jobs.
After the company completed its restructuring under self-administration in July and all creditors approved the insolvency plan, ROFU has recently reopened its previous branches - with a revised concept and offering. Sales, renovations and new openings in time for the Christmas shopping season in Heilbronn, Neunkirchen or Heppenheim.
How much money is left for gifts?
This restart has to work. The fact that this is successful is demonstrated by the new management: Achim Weniger, an industry expert, is on board. He was in the toy retail organization VEDES for 40 years, most recently on its board, managing purchasing, logistics, marketing and sales for the purchasing cooperative of around 800 toy retailers.
“Our focus is on the future and the restart. We are changing internal processes and repositioning the company in order to be successful in the long term,” says Weniger. “Of course we hope that a little more money will be spent on Christmas presents again this year.”
Retail with mixed feelings
Even if Less couldn't know the toy industry better, he is not immune to external circumstances. “Many retail companies are confronted with rising costs for energy, personnel and excessive bureaucracy before the start of the Christmas business. This does not contribute to an optimistic assessment of the business situation,” says Alexander von Preen, President of the umbrella association of German retailers HDE.
Nevertheless, he sees signs that Christmas can defy the crisis, and refers to surveys commissioned by his association. According to this, on average each respondent plans to spend 262 euros this year, which is almost the same as last year. This means that retail companies are preparing to turn over a total of around 130 billion euros in the last two months of the year.
Quite a few of the 300 retail companies surveyed were confident: almost a third assume that customers will not let the joy of Christmas shopping be taken away from them even in difficult times. And almost a quarter are certain that buying gifts will not suffer from the poor economic mood. But especially in the non-food retail sector, which also includes ROFU, according to the survey, 56 percent of retailers see a worse or significantly worse Christmas business than last year.
Growth comes from online business
The world of the toy industry currently does not appear to be as rosy as its Barbie dolls: cheaper toys from the Far East, the used market on the Internet, price pressure from price comparison portals, the price dictates of market leaders, but also digital entertainment such as smartphones, tablets, game consoles and streaming platforms are causing many traditional companies to stumble. Schleich, Playmobil, Haba and Rolly Toys are traditional brands that have recently had bad news. At the same time, the birth rate has fallen again: fewer children, fewer customers.
According to the HDE forecast, online retail will be the growth driver at the end of the year: it will increase its Christmas sales by four percent compared to the previous year, with sales then amounting to 23 billion euros. But this is a market in which many classic, owner-managed toy stores can rarely keep up. More than 150 of them closed their doors last year.
Despite everything - a celebration for the industry?
ROFU also wants to secure its branches with an online shop. A revised version is due to go online these days - reducing costs through cooperation, especially in logistics, to prevent storage costs.
“We are optimistic about the coming weeks. Our entire team is highly motivated and looking forward to the Christmas business,” says ROFU boss Weniger. And HDE President von Preen is similarly confident: "The Christmas business remains stable despite a difficult environment and many uncertainties. Christmas is crisis-proof."
