Brand Rebrand

S. Oliver's New CEO Seeks To Upgrade Fashion and Profits

KSP Engel & Zimmermann, soliver
S. Oliver headquarters in Rottendorf, Germany.

Everything is in place for a big party. About 1,000 employees and retailers from around the world have come to an exhibition hall in Düsseldorf, where they are sitting around a runway, waiting anxiously.

But Reiner Pichler darkens the festive mood.

“We cannot continue with the status quo,” the head of the fashion group S. Oliver tells his audience. He paints a grim picture, in which discounters are rapidly capturing market share in the fashion world, while the mid-range price segment continues to lose ground. That is precisely the segment, where S. Oliver, a clothing manufacturer based in Rottendorf near the Bavarian city of Würzburg, is located.

And that is why Mr. Pichler is announcing a new strategy on this evening.

“We cannot continue with the status quo.”

Reiner Pichler

“We want to clearly position S. Oliver as a premium brand, but with democratic prices,” Mr. Pichler said. Under the new strategy, many sub-brands will be eliminated and the company will return its focus entirely to the main brand, S. Oliver, enabling it to achieve Mr. Pichler’s ambitious goals.

“We want double-digit growth every year, primarily abroad,” the CEO said in a conversation with Handelsblatt. This is exceedingly ambitious, given that in 2013, the best year in company history, sales for the entire group grew by only 5.3 percent to about €1.6 billion ($2.1 billion).

Mr. Pichler only left the Swiss Holy Fashion Group, with brands that include Strellson, Windsor and Joop!, to join the S. Oliver Group in January. But he wants to lead the family-owned business into a higher category.

His arrival also marks an organizational change, as Mr. Pichler is the first outside chief executive. Bernd Freier managed the company since it was founded 45 years ago. He transformed a small jeans retailer into one of Europe’s biggest fashion companies, with 7,500 employees in more than 30 countries.

 

sOliver Sales-01

Annual sales at retailer s.Oliver. Source: s.Oliver

 

Unlike many competitors in the fashion industry, the company is in good shape economically. It doesn’t borrow money from banks and is funded entirely with equity capital. According to Mr. Pichler, S. Oliver will earn a ”healthy” profit this year, as it did last year. Mr. Freier, who has avoided public appearances in the past, now heads the newly formed advisory board.

Mr. Freier has also brought outside experts to the board. In addition to his children, Christian and Kathrin, members include the former Linde chief executive, Wolfgang Reitzle, Willy Oergel, the head of the Stuttgart-based Breuninger department store chain and Marco Götz, chief executive of fashion label Drykorn.

The advisory board has agreed to let Mr. Pichler strongly support his new strategy with advertising to head off competitors such as Mango, Vero Moda and Esprit.

“We will invest an additional €100 million in advertising and marketing in the next three years,” Mr. Pichler said. “It’ll be enough for everything from TV to print campaigns.”

He is also investing a lot of money to renovate the company’s retail stores. “We want to make the stores clearer and more modern,” Mr. Pichler said, noting that he plans to open the first of the redesigned stores this fall. “The entire renovation of all retail stores will take at least a year.”

The company operates 278 of its own stores and another 402 with business partners, as well as shop-in-shop concepts and space within other retail stores.

 

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The S. Oliver chief executive Reiner Pichler. Source: S. Oliver.

 

Mr. Pichler does not intend to open more new stores in Germany, choosing instead to optimize the existing ones. In other countries, however, the retailer will continue to open company-owned stores and those with franchise partners.

Mr. Pichler said he aims to increase the foreign share of sales from 30 percent to at least 40 percent in the next three years, and to 50 percent in the long term.

“Many brands in the middle price segment have weakened their brand image by constantly adding new secondary lines,” said Andreas Bauer, a consumer products and fashion expert with Roland Berger Strategy Consultants in Munich.

According to Mr. Bauer, it is better to bring independent brands into the market for new target segments.

S. Oliver isn’t just relying on its main brand, either. The group also includes two premium brands, Liebeskind and Comma. They are managed independently, as is the new brand, Triangle. Only central functions like information technology, purchasing and administration are handled by the parent company.

S. Oliver acquired Berlin-based Liebeskind in late 2013. Liebeskind is the German leader for luxury hand bags. Mr. Pichler wants to continue expanding the brand. “We have issued the first licenses for women’s outerwear.”

Translated from the German by Christopher Sultan

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