Basic: latest store a great success

As the press conference on current company development on Tuesday (26.5.09) revealed, the second biggest organic chain in Germany is again on the path to success. A significant contribution to this pattern of success was the take-off of the two latest openings in Munich. After a number of bad experiences and the closure of four stores last year, managing director Joachim Kreuzberg now swears by choosing better locations. One store among the chain of 26 organic supermarkets is currently being watched very closely. But in 2009 two new stores are due to open, one of which is in Regensburg. (Picture: It’s easy for store manager Christoph Tschernutter-Englisch and a colleague from the meat department to laugh: the store in Neuhausen is doing extremely well)
 They are very happy with the way the seventh Basic organic supermarket in the Neuhausen district of Munich has got underway: instead of the planned 800 – 1000 customers a day there are already 1,200 – 1,400 coming through the doors of this attractively designed store (700 m²). Manager Christoph Tschernutter-Englisch is thrilled: “The location has enormous potential on account of the affluent and interested people who live in this area.” Although customers tell him that that they used to do their shopping in the Basic store in Schleißheimer Straße (the first ever Basic store that opened in 1998), the turnover in that original store has not declined. The 38 year-old manager, who was a store manager for Aldi for eight years, has made a good job of familiarising himself with organics and he obviously cultivates good relations with the customers. “Being friendly is the most important thing when dealing with customers,” he explains. He came originally from Austria and did his apprenticeship as a cook. Customers are received with a friendly greeting not just from him but also from all the staff thay come into contact with (picture). Mr Tschernutter-Englisch now has a staff of 20 mainly full-time employees.

The surprisingly positive popularity of Basic 7 at Nymphenburgerstr. 82 is not just because the store is easily accessible on foot, by bike and on the underground – the exit to the underground, that is two stops from the main railway station in Munich, is right in front of the store. The other factor is the design of the store – it has been cleverly thought out and is much better than before. The first thing that strikes a new customer is the interesting colour theme and a large round window (picture) with a diameter of about three metres. As usual, the floor is yellow, the walls for the most part red. Blue light is beamed onto the ceiling by concealed lamps. In the middle of the store is a glazed chilled room containing fruit and vegetables. There is a seven metre long meat and sausage counter that stocks up to 100 different articles, followed by a 4 metre cheese counter selling 140 varieties of cheese. The store stocks a total of 8,000 articles, a full range that leaves nothing to be desired. Like several previous stores, this store was planned by the company der-petzinger in Zorneding near Munich. The store was created in a new building and from outside you don’t suspect there is such a big supermarket on the ground floor because the façade is rather small. Since the store is set back a few metres from the pavement, it was possible to lay out a lawn and leave enough space for bicycles (picture).

A new feature in the store in Nymphenburgerstraße is a inviting seated area opposite the bakery goods department (picture). Here customers can sit in comfort on leather couches, have breakfast from 7 am while the sore is still roped off before opening at 8 o’clock. About 60 people come here every morning. Lunch is from 11.30 to 14.00 but with 20-30 sitting down for a meal it is not full to capacity. Outside in front of the store there is room for eight people and inside about 20 can sit down for a meal. Although all Basic stores have a bistro, they usually don’t have seats.

The retail area of Basic’s stores is currently 500 m² to 1,100 m². The interim managing director Mr Kreuzberg, who will be replaced by Stephan Paulke by 1.10.2009 at the latest, considers that 600 m ² of retail space will be sufficient in future stores. If more space was on offer, it would be possible to bring in new features like bigger bistros, a shop-in-shop eco textile outlet or a natural drugstore. He pointed out that they took this step with a 95 m² bistro in their third store in Frankfurt. He thinks that comfortable sitting areas with sofas and Wi-Fi connection could be a good idea too. These new ventures would be run by partners. (pictures: about two-thirds of customers take the handier single-basket trolleys and a third the bigger metal trolleys)

An interesting detail to emerge from the press conference on 26.5.2009 was the remark about the structure of logistics in the future. They are obviously not assuming at Basic that Dennree will continue to be their main supplier. Joachim Kreuzberg indicated that a new solution might be found before the end of his period of office that is likely to be in September.
(All pictures were taken at Nymphenburgerstraße 82)

Mr Kreuzburg became temporary managing director in August 2008. He sees the aim of future expansion as being to “realign with more stores in the conurbations”. Thus on his wish list are Munich, Berlin, Frankfurt, Hamburg and the Ruhr region. More stores could be located in Austria too (Vienna and Salzburg). However, as experience has shown, careful choice of sites is of crucial importance.

He is anticipating an operational result (profit before tax) of nil in 2009 but for 2010 it is expected to be 1.85 million euros. An important precondition for the successful restructuring was raising capital: whilst 6.9 million euros came from current shareholders, the suppliers contributed 1.5 million and the banks provided loans of 1.75 million. So overall, the losses were balanced by a good 10 million of fresh capital. The new online shop, that will be launched with 1,900 product lines in the summer of 2009, will be a driver of growth. Only non-chilled products, mainly dry goods and drugstore articles, will be sold via the internet, with an anticipated annual turnover of up to 5 million euros.

During restructuring, operating costs were considerably reduced – for personnel by 15 %, for example. The share of personnel costs in total turnover was reduced from 22 % in 2007 to 19 % in 2008, and by 2010 it will drop even further to 17 %.

Basic AG, that finished the year 2007 with a turnover of 91 million euros and 2008 with 93 million euros, is expecting turnover to rise to 98 million euros this year.

(Picture on right: 25 kg blocks of Emmental are sold in a few days)


Tip:
www.basicbio.de
www.basicbio.at

(Picture on left: The scanner tills are well organised so no delay at the check-out)