Germany: "People who have to save don't buy online"
Patrick Zahn, CEO of the textile discounter KiK, on the consequences of the lockdown for his company and its customers.
Patrick Zahn sits in casual clothes in front of his computer at home in Cologne and conducts the interview via the Internet. The boss of KiK drives two to three days a week to the Westphalian town of Bönen, where the headquarters of the textile discounter is located. Because of the difficult situation, he works significantly more than before, he says from 6 a.m. to midnight, so to speak.
Mr. Zahn, you are angry. Why?
Because I feel that I and our business have been treated unfairly and disadvantaged. Our branches have been closed for ten weeks due to Corona. This places an excessive burden on stationary retailers, which like KiK do not sell any food. Food stores and drugstores, on the other hand, are allowed to remain open - including supermarket discounters, some of which offer textiles. All of this is massive market intervention at our expense. In addition, until recently there was no support for companies with an annual turnover of more than 750 million euros.
Shops may open again soon. The pressure on the government is increasing.
Rightly. Because we too are now reaching our limits. In principle, infection with the virus cannot be ruled out, but it can be greatly reduced with sensible hygiene concepts. This means that our employees wear masks and that only a few customers enter the shops at the same time. Incidentally, the food trade registers 40 million visits a day, whereas the non-food industry only receives ten million. That alone shows that we are not a hotspot.
Do you think the closure of the store is completely wrong - or just badly implemented?
I understood the first lockdown last spring. At that time, almost nothing was known about the virus, and there was great uncertainty. Since then, however, we have learned a lot, including with the hygiene concepts. That is why I now consider it questionable to choose the apparently simplest solution for a second lockdown, which will significantly affect retailers - without even considering other options, such as more consistent protection of the elderly.
If everyone goes out shopping again, there will be more contacts and then more deaths. Do you accept that?
I'm not doing that right now. For example, we try to understand every case of infection among employees in our company. And we know that the number of illnesses among our employees is below the national average. However, what it can cost us as a society to lead our normal lives again, and which values have to be weighed, we have to clarify in a public debate.
The government has launched numerous corona subsidy programs for companies, such as offsetting current losses against previous profits. Can KiK hold out for a few more months?
Politicians are window dressing. Up until the third week of February, our company received zero point zero euros from government aid, including no tax refunds. The short-time work allowance is an exception, but not a generous state aid. But these are the previously paid social security contributions of the company and employees. Now companies with a turnover of more than 750 million euros will soon receive public support. In our case, however, that would be a maximum of twelve million - a drop in the ocean. We have been covering our losses with our own funds for ten weeks. At some point our strength will also be exhausted.
Patrick Zahn, 44, has been CEO of the textile discounter KiK since 2016. He used to work at Plus, Aldi and Hugo Boss, among others. The business administration graduate lives with his family in Cologne.
Then your owner, the Tengelmann Group, has to step in?
Tengelmann believes in the future of KiK. But that's not an infinite promise.
So KiK will survive the corona crisis.
Yes hopefully. But it's getting harder. Because we don't earn anything, we have to postpone future investments in the remodeling of the branches and expansion. The modernization is urgently needed in order to remain competitive against online retailers. They now deserve a golden nose and there is nothing we can do.
How's your own internet sales going?
A significant increase has been recorded, with the online share of KiK sales in Germany only being 2.5%. This is mainly due to the fact that many people buy from us on a very tight budget. They have maybe ten euros in their pockets and are looking for products for 1.99 euros. Such cheap items of clothing are often not available online. Because their shipping causes too high costs compared to the minimal profit. People who have to save do not buy online but in stores. In addition, around six million people have Schufa entries or other problems that prevent them from having a credit card - as a prerequisite for participating in online trading.
That means you won't be closing branches in favor of online trading?
This is not an option for a manageable period of around five years.
The government has just presented the draft supply chain law. It is intended to oblige local companies to protect the human rights of workers in factories around the world. You previously supported this project, do you now think the result is okay?
Basically I can live with it. However, I find it worrying that small and medium-sized retailers with fewer than 1000 employees are left out. I also think the extension of the right of non-governmental organizations to bring legal action against companies is questionable, because this is more about instrumentalizing courts than actually finding the right law. And a European solution would be better than just a German law.
See here for more: https://www.fr.de/wirtschaft/menschen-die-sparen-muessen-kaufen-nicht-online-90211181.html