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Discount battle on Black Friday and Cyber Monday - consequences of the price war for the retail trade

Black Friday
Discount battles in the retail trade

Whether online or in the stationary trade: the American trend of discount shopping for the traditional Thanksgiving celebration has long since conquered Europe and thus also Germany. We are talking about Black Friday and the following Cyber Monday, the shopping days with the highest turnover in German retail. The Handelsverband Deutschland (HDE) forecasts a new record turnover of € 3.1 billion.  This is equivalent to a sales growth of 22%.

Black Friday, Cyber Monday, Singles Day, Valentine's Day, Mother's Day, Father's Day, Easter, Christmas – the buyer quickly loses the overview in the discount rain. It's a psychological game with the customer. Discounts have a verifiable effect on the brain and thus on the customer's decision to buy. But discounts do not only have positive effects. The radical discounting of goods at certain predictable points in time has an effect on the customer's buying behaviour: the bargain hunter and the cheapskate wait exactly for this recurring discount, in order to access it quickly and withdraw again for the rest of the year.

The regular customer, on the other hand, doubts the credibility or the quality of the dealers due to the strongly fluctuating prices or even feels cheated.

Traders who encounter campaigns like Black Friday without a good pricing strategy can only lose.

On today's Black Friday, buyers will again be lured with great discounts: Buyers supposedly save up to 90% on Black Friday. Dealer giants such as Amazon or Zalando have been advertising with particularly low prices since the beginning of the week. The customer rubs his hands and is in the starting blocks – ready to make as many good deals as possible. But the decisive factor is not the high turnover, but the profit. Dealers face a problem: if they don't offer discounts or don't keep up with competitors' discounts, they lose their customers and the corresponding turnover to the competition. Those who do not calculate their discounts well in the fight for the best deals, however, lose not only in the Christmas business, but also their profit margin due to too low prices. The success of a discount campaign for the retailer therefore depends on a good pricing strategy. From an economic point of view, therefore, providing an entire assortment with a blanket discount is the most unwise strategic move – unless the strategy envisages raising prices beforehand and offering "sham discounts" that deceive the customers. Here the dealer must ask himself which philosophy he represents and what value the customer's trust has for him. The danger of lasting damage to the company is probably as great as the chance of success. The question arises as to the development of these discount days. Where is the discount battle to go? How will stationary retailers in particular deal with the cost pressure?

Singles Day in China sets the example: instead of advertising with ever larger discounts, THE Shopping Day of the Year is staged as an event that conveys a message: Dear Singles, give yourselves a present. Customers automatically associate a special experience with this day. Especially via television they are emotionally picked up and animated to buy, similar to teleshopping. Although promotional prices are also used here, they apparently play a secondary role.

The German retail trade should also explore similar strategies and create an emotional link to the experience that goes beyond discounts. These stimuli make the shopping experience individual and the visit to the store attractive, can significantly influence the customer experience and contribute to the positive shopping experience and thus to customer loyalty.

The increasing importance of strategic versus operational leadership

Organizations and individuals - we are all confronted with the effects of the digital revolution. We enjoy positive effects and opportunities, but how do we deal with the challenges and what are the drivers for successful change in companies?

A look at nature shows that a successful strategy in dealing with radical change involves a healthy mixture of resistance and adaptation. Adapting the corporate strategy both internally and externally thus becomes an elementary task for managers. They become pioneers and designers for leadership, process and relationship quality. Resilience plays an important role here. But how do you adapt a corporate strategy that includes structures which promote resilience?

Talcott Parsons' AGIL scheme can support you in this:

A - "Adaptation": reacting quickly and efficiently to changes

G - "GoalAttainment": in spite of flexible ways not losing sight of the goals and measuring their achievement

I - "Integration": integrating new developments into business models and processes

L - "Latent Pattern Maintenance": Living Trial & Error

Our author, Dr. Bernhard Becker, together with Silvia Braumandl, Christian Jacobs and Verena Riedinger, has published an article on this subject in the Zeitschrift für Corporate Governance (04.19). It can be downloaded here.

Leadership

Staff excursion 2019

Jour fixe
Drivers' safety training
A visit to the Meyer Werft

A review of our employee trip to Papenburg on the last weekend of October: It got really hot at comes. And that doesn't refer to the weather, but our tyre temperatures. Because on the test tracks of Automotive Testing Papenburg (ATP) we really put the pedal to the metal. On Saturday, Meyer Werft left a lasting impression.

This year's trip started with a Jour fixe. In addition to new tools, the focus was on current legal issues relating to restructuring. We ended the JF with a case study. Afterwards we started off our actual excursion in a cosy bar in Papenburg.

Friday was really exciting. All day long we were able to put our vehicles, but above all ourselves, to the test on ATP's tracks. How long is the braking distance during an emergency stop with aquaplaning or even on ice? What is it like to drift around bends on wet roads? How does my vehicle behave when the wheels drive on different road conditions? How does my reaction time and motor function change when I am distracted? And how do I get out of my car when it has overturned? We were able to find out the answers to all these questions ourselves, and in the process we produced a lot of adrenaline.

After "fast" on Friday it became big and impressive on Saturday: our destination was the Meyer shipyard in Papenburg. During the factory tour we could first dive into the history of the shipyard and then marvel at the cruise giants under construction. It was impressive to see how the huge cruise ships are built, which have as many leisure possibilities and space to offer as a small town.

This trip will remain in our memory. But we are already looking forward to what awaits us next year!

Financial partners must rethink in times of climate change

The topic determines the width of the current media landscape. Many economic participants are concerned with the consequences for their companies. Investment decisions are not always made solely with a view to increasing profits or optimising returns.

First enterprises are ready to do without a part of profits in order to make production procedures or products greener.

In Germany, where for decades the implementation of investment measures has been characterised by a high level of involvement of external funds, not only the companies but also the currently crisis-ridden banks and savings banks play a decisive role in the implementation of investments.  

The relevant systems of credit institutions, however, essentially focus on the return and equity ratios of past years when assessing a company.

The conscious decision to forego returns in order to produce in an environmentally conscious and resource-conserving manner can lead to discussions with lenders in individual cases, as long as return ratios and thus ultimately equity development are affected.

Well off are the companies that, following these trends, can also afford to limit their returns. Broadly speaking, however, it will also depend on the understanding of financial partners and the responsible use of rating systems to achieve sustainable improvements in the emission of climate-damaging emissions by companies.

Umdenken in Zeiten des Klimawandels

As in many cases in the past, the state supports the various possible investment measures with loans and security through deficiency guarantees. Before applying for a loan, it is all the more important for the individual companies to reach an agreement with their banks on the results of their rating procedures.

If the investment decision is driven by the fact that official conditions must be fulfilled, it is usually too late for parts of the market participants to obtain money from the credit institutions.

In all cases, comes uses the extensive knowledge from around 1,000 mandates to create understanding and transparency between companies and banks for the respective objectives.

comes keeps growing

Pia Frohberg

Pia Frohberg

Since September, Ms. Frohberg has been working in the marketing, university marketing and events department at the Oldenburg location. This includes in particular the online presence of comes in the social media as well as the cross-location coordination and organisation of events organised by comes. She is also involved in our joint venture partner Hase & Igel.

Previously, Ms. Frohberg worked as a Junior Marketing and Sales Manager in the sports industry.

Sebastian Geppert

Sebastian Geppert

In October this year, Mr. Geppert joined our Hamburg location as a consultant for the areas of restructuring and insolvency management.

During his previous activities as treasury manager at various medium-sized companies, his areas of responsibility included liquidity planning, risk management and reporting.

 

Rasmus Kriest

Rasmus Kriest

Since October 2019, Mr. Kriest has been supporting the Berlin office in digitization issues in the area of "Shaping Success".

Prior to this, he worked parallel to an interdisciplinary course of studies, primarily in the practical implementation of solutions in the areas of digital collaboration and new work.

 

Why you should take advantage of a Financial Performance Management Software for your company

As an entrepreneur, you need reliable figures on which to base your business planning and strategic decisions. The complex Excel spreadsheets you keep for this are often error-prone and confusing. In addition, it takes a lot of time and money to keep all tables up to date.

Through an integrated and independently applicable Financial Performance Management Software solution, which enables your company to recognize its own growth potential at a glance and to manage the financial controlling, the processes in your company are accelerated, while at the same time fewer errors can occur. Possible sources of error in the database are identified early on, so that only validated figures are reported. This creates the basis for holistic, future-oriented corporate management and growth.

In LucaNet's Financial Performance Management software, you collect all your data in one database. The software bundles the processes from consolidation, planning, reporting and analysis in a fully automated application and makes validated data available for your management consolidation, legal consolidation, budget planning with integrated financial planning or for management reporting and reporting. You do not need any IT knowledge to use LucaNet's Financial Performance Management software. The software is fast, easy to adapt and secure to use.

Financial Performance Management
LucaNet

Our certified consultants René Labahn and Dr. Jan Handzlik, with over 10 years of experience in the application, will accompany you during the implementation of the software in your company. In addition to comprehensive consulting, we support you in the preparation of resilient planning and consolidated financial statements, train your employees and support you with our know-how for optimizations.

We will also be happy to provide you with monthly controlling tasks or help you implement LucaNet's financial performance management software or optimize existing applications.

comes hosts 6th benefit soccer tournament in Oldenburg

Danke an alle Teilnehmer!
Scheckübergabe am 07.11.2019

On Saturday, August 31st, the sixth Charity Soccer Tournament, jointly organised by the Oldenburg Prevention Council and comes Unternehmensberatung, took place.

Following the invitation, six teams met on the open-air grounds of the Carl von Ossietzky University Oldenburg. At the end of the afternoon, the Bremen team prevailed in the 'everyone vs. everyone' mode.

This year's winner and the teams of Sparkasse Emsland, Raiffeisenbank Oldenburg, Springer from Stuhr and Heinrich VOSS Gebäudetechnik from Haselünne scored a total of 82 goals in 15 games on the soccer court, so that a total of 6,500 € could be collected for projects of the Oldenburg Prevention Council (PRO). The company DOMO Collection from Hude, which had to cancel due to operational reasons, also contributed to the good result with a donation. It was with great pleasure that we were able to hand over the donation cheque to PRO on September 11th, 2019.

We would like to thank all participants and spectators and look forward to next year!

Successful investor process for Ebeling GmbH in Langenhagen

Plastic and metal processor Ebeling is saved. The Hanover-Langenhagen-based company was taken over by the newly founded Ebeling & Ko. Zerspanungstechnik. The approximately 50 jobs and the company's location have thus been saved. The predecessor company Ebeling GmbH filed for insolvency in April.

The insolvency administrator Ralph Bünning of Schultze & Braun, appointed by the Local Court of Hanover, continued business operations without restriction even after the insolvency petition had been filed. "With the constructive support of the Ebeling family, we were able to stabilize the company quickly," reports Bünning. This enabled Ebeling to continue successfully even after the opening of insolvency proceedings on July 1st. "We were helped above all by the employees, who supported our rescue efforts outstandingly with their commitment, and also by the customers, who remained loyal to the company during the restructuring phase".

Parallel to the restructuring efforts, Bünning exclusively commissioned the Distressed M&A team of comes Unternehmensberatung under the direction of Michael Rabe to structure the search for investors. As a specialised management consultancy comes accompanied the entire sales process, in which numerous regional and supra-regional interested parties were addressed.

Erfolgreicher M&A-Prozess

At the end of the negotiations, Ebeling & Ko. Zerspanungstechnik GmbH succeeded with its offer. Behind the company is the sole shareholder Thorsten Koch from Wedemark, co-partner of several successful medium-sized companies. Koch will manage the company together with Torben Ebeling as managing director.

Ebeling GmbH had fallen into difficulties after suffering massive losses in turnover due to economic changes, e.g. in the oil industry. At that time, the industry was one of Ebeling's main customers. Although the company took restructuring measures and strategically positioned itself more broadly, these measures ultimately came too late to avoid insolvency. "I am pleased that the sale has enabled us to achieve our goal of creating the basis for Ebeling's long-term survival. The company now again has the opportunity to grow sustainably based on a healthy core," says Bünning. "I wish Ebeling all the best for this."