The problem children
At the moment we are experiencing a dangerous mixture of political unrest, first signs of a potentially upcoming financial crisis, coupled with rapid technological disruptions. There are some industries that are already affected today. While a few years ago it was the ship and wind energy players (although for other reasons), today it affects automotive suppliers and above all stationary retailers.
Retail comes from the Old French word tailler, which means "to cut off, clip, pare, divide" in terms of tailoring. The crux of the matter, however, is that it refers to business in which the typical customer is the average citizen as the end consumer.
The drivers behind the change
Explaining why the industry is having difficulties is quite easy. The proportion of the population buying retail goods online is growing and growing.
In fact, we Germans like to spend our time online with nothing - or at least nothing more often - than looking for information about goods and services.
The end consumer benefits immensely: no annoying opening hours, fast, simple and, thanks to the almost unfathomable transparency and the resulting cost leadership strategies of the providers, increasingly cheaper.
The Retail Vicious Circle
Even goods that should be tested physically before purchase can be purchased online without any problems thanks to the exchange guarantee.
Fashion is perhaps the best example. Even companies like H&M are increasingly suffering. Although the fashion giant already has a good online business, reconciling the two fundamentally different business models - online vs. stationary - is anything but easy.
We're all feeling the effects. Empty shops are not an isolated case. In fact, the problem has already progressed so far that even Fifth Avenue, once lined by one flagship store after the next, is suffering from vacancies.
And here we have the vicious circle. One of the most common reasons for buying retail goods online is the lack of local availability.
Experts demand a change in the law
The customer is king. Unfortunately, there is no way around this in the retail sector either. Although the first counter-movements are taking place and customers are occasionally resisting the trend by making targeted purchases from stationary providers, the online trend does not seem to be stopping.
So it is not surprising that companies such as AlixPartners can show in studies that experts demand above all thorough restructuring. However, they also anticipate that structural change will not be possible without a wave of insolvencies.
The experts interviewed in the study by AlixPartners even go so far that the majority demand a framework for extra-insolvency restructuring proceedings so that restructuring can take place outside the framework of insolvency law.
If you ask us, this is one of the strongest indicators of acute need for action that we have seen for a long time.
Falcon can help!
There is not much left for the industry to do but change fundamentally. And it is precisely this transformation process that we accompany with Falcon. If you are affected and interested, feel free to contact us!