The competition has been firmly under control for fashion retail ingesison for years. Whether attractive store locations or pleasant online shopping, the industry has to come up with a lot for the customers. With the ‘Value/Discount’ concept, the NKD Group has positioned itself as one of the leading local suppliers in the textile trade in Central Europe.
The group, founded in 1962, relies on “Value for Money”. Today’s customers are extremely price-conscious, but at the same time expect high quality. NKD serves exactly this segment. In around 1,850 stores in Germany, Austria, Italy, Slovenia and Croatia, NKD offers a wide range of seasonal fashion, home textiles and home accessories.
The textile discounter employs more than 8,200 people (including 6,400 in Germany) and generated sales of almost 700 million euros in 2018 with an EBITDA of 45.1 million euros. The company, based in Bindlach near Bayreuth, is managed by Dr. Ulrich Hanfeld (CEO), Rüdiger Hartmann (CFO), Alexander Schmökel (CPO, Purchasing) and Christian Welles (CSO, Sales).) Since May 2019, the NKD Group is 100 owned by TDR Capital.
NKD holds its ground in a difficult market environment
2018 was one of the most difficult years for textile companies. Overall, the market in Germany has slumped by an average of around two percent. Very extreme it caught the midfield. Luxury and discount/value-for-money, on the other hand, were able to hold their own. NKD grew slightly in 2018 – and thus for the fifth year in a row – against the trend. EBITDA even increased by almost 20 percent year-on-year. The foundations for the robust business model have been laid with the successful turnaround that the company has completed since 2013.
NKD has established itself as a local supplier, especially in small and medium-sized cities, benefiting from lower rental costs and fewer competitors, which are more likely to operate branches in larger cities. The product mix of fashion, sportswear, home accessories, toys and household goods as well as weekly new products ensures a recurring and loyal clientele. The so-called “conversion rate”, i.e. the proportion of shoppers who visit a shop and make a purchase, is above-average in the industry.
The branch portfolio is continuously optimised and enlarged. Non-profitable stores will be closed and new, profitable stores will be opened in new locations. In this way, the NKD Group also achieves uniquely high retail values in terms of area profitability. More than 95 percent of all shops are now
EBITDA-positive, with an average EBITDA margin of 15 percent of the stores. Overall, NKD has increased area productivity by 18 percent since 2014.
In order to make cheap purchases, NKD has entered into long-term strategic partnerships with major suppliers. This has significantly reduced the costs in sourcing and has had a corresponding impact on profitability. When pricing over 7,000 items per season, NKD uses Artificial Intelligence to find the right price for all products at any time and automatically. Among other things, weather data are used here in order to plan special promotions in a timely and on-demand manner.
In addition to organic growth in the area, the continuous expansion of the omni-channel business is an important basis for the sustainable success of NKD. The comprehensive branch network allows NKD so-called Click&Collect. Customers order online and can pick up the ordered goods in the shop. Customers save the now usual shipping costs of around 5 euros. Meanwhile, 75 percent of online customers use Click&Collect and buy additionally when they visit the store.
NKD — an active and attractive employer
In order to be able to cope with the planned growth in terms of personnel, NKD plans to fill several hundred new positions in all areas of the company in 2019. As an attractive employer and training company, NKD has once again doubled the training places for trainees as well as for commercial economists. These are also taken over after training has been completed.