Deutsche EuroShop Annual report 2008


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Deutsche EuroShop Annual report 2008

  1. 1. 08 ANNUAL REPORT THE THIRD PLACE 9 783000 245381 Where people feel comfortable p. 32 More topics: When shops tell stories p. 10 | The modern shoppers from tomorrow p. 18 | Shopping centers between form and function p. 44
  2. 2. OUR VALUES – OUR GOALS VALUES We are the only public company in Germany that invests solely in shopping centers in prime locations. We invest only in carefully chosen properties. High quality standards and a high degree of flexibility are just as important to us as sustained earnings growth from index- and turnover-linked rental contracts. In addition, we boast a higher than average occupancy rate of around 99% and professional center management - these are the pillars of our success. GOALS Deutsche EuroShop does not seek short-term success, but rather long-term growth and the resulting stable increase in the value of our portfolio. Our objective is to distribute an attractive dividend to our shareholders every year from secure long-term income. In order to achieve this, we shall acquire further prime properties and hence establish ourselves as one of the largest companies in Europe focusing on retail properties.
  3. 3. 3 CONTENTS INTRODUCTION Mission / Vision Key data 04 Foreword by the Executive Board 06 Report of the Supervisory Board SHOPPING 08 p GROUP MANAGEMENT 08 Survey amongst visitors in the Altmarkt-Galerie Dresden REPORT 80 p 10 When shops tell stories – designers create worlds 81 Business and economic conditions of brands 85 Income, financial and net assets situation 14 Shop design – interview with Viola Raeder, Architect 91 Environment 16 Center TV – innovative infotainment 91 Events since the end of the interim reporting period with an advertising effect 91 Risk report 18 Healthy shopping – the modern shoppers of tomorrow 94 Outlook 21 “What I bought for myself in 2008” 22 Movie tip – “Shopaholic“ 23 Book tips CONSOLIDATED THE SHOPPING CENTERS 24 p FINANCIAL STATEMENTS 96 p 24 Our shopping centers 98 Balance sheet 30 Shopping as an experience – a selection of the diverse 100 Income statement activities in our centers 101 Cash flow statement 32 The third place – where people feel comfortable 102 Statement of changes in equity 38 The 200 colour shades of Stadt-Galerie Passau 104 Notes 42 Passau – the Venice of Bavaria 139 Auditor‘s report 44 Between form and function: integrating shopping centers into a city 48 Sustainability beyond symbolism SERVICE 140 p 52 The shopping centers in detail 140 Reader‘s letters 141 Index INVESTOR RELATIONS 64 p 142 Glossary 64 The Shopping Center Share 144 Legal 69 Events Multi-year-overview 70 Stock market in 2008 Financial calendar 2009 72 Roadshows and conferences Reader‘s service 74 Marketing 76 Corporate Governance
  4. 4. DEUTSCHE EARNINGS PER SHARE EUROSHOP OVERVIEW 2.00 3 TARGET-PERFORMANCE COMPARISON REVENUE EBIT EBT* * excluding measurement gains and losses RESULT 49.9 RESULT 98.1 RESULT 115.3 TARGET TARGET TARGET TARGET TARGET TARGET TARGET TARGET TARGET 113 –115 125 –128 128 –131 93 – 95 105 –108 109 –112 45 – 47 50 – 52 53–55 2008 2009 2010 2008 2009 2010 2008 2009 2010 KEY DATA 1 million 2008 2007 Change Revenue 115.3 95.8 20% EBIT 98.1 78.5 25% Net finance costs -48.2 -39.6 -22% EBT 87.0 77.8 12% Consolidated profit 68.9 94.2 -27% Earnings per share (1) 2.00 2.74 -27% FFO per share (1) 1.45 1.12 29% Equity* 977.8 974.0 0% Liabilities 1,029.1 1,002.3 3% Total assets 2,006.8 1,976.3 2% Equity ratio (%)* 48.7 49.3 LTV-ratio (%) 46.0 47.0 Gearing (%)* 105 103 Cash and cash equivalents 41.7 109.0 -62% Net asset value 942.8 925.1 2% Net asset value per share (1) 27.43 26.91 2% Dividend per share (1) 1.05** 1.05 0% * incl. minority interest ****Durchschnittszinssatz *Duration (Jahre) / proposal
  5. 5. 5 2008 JANUARY Deutsche EuroShop once more over- • Expansion of Altmarkt-Galerie in Dres- HIGHLIGHTS all winner of BIRD survey ( Best Inves- den decided − 150 million investment. tor Relations Germany) by the investor magazine Börse-Online. • Deutsche EuroShop wins the Capital Investor Relations Prize 2008 in MARCH the MDAX category. Grand opening of Stadt-Galerie Hameln JUNE SEPTEMBER • Annual General Meeting on 19 June 2008 Grand opening of Stadt-Galerie Passau. and distribution of a dividend of 11.05 per share. COVER PICTURE: The cover picture shows the Stadt-Galerie Passau, which opened on 10 September 2008. Further information, e.g. on the unique facade of this center, can be found starting on page 38. In addition, we have compiled some interesting tips for you on pages 42 – 43 which provide some suggestions should you wish to visit Passau. OUR CENTERS AS OF 2008 1. Sulzbach 2. Viernheim 3. Dresden 13 4. Hamburg 4 5. Hamm 8 6. Wetzlar 12 POLAND 5 7. Dessau GERMANY 7 10 9 8. Wolfsburg 3 16 6 9. Kassel 1 10. Wuppertal 2 11. Passau 11 12. Hameln AUSTRIA 13. Gdansk 14 HUNGARY 14. Klagenfurt 15 15. Pécs 16. Wroclaw
  6. 6. FOREWORD BY THE EXECUTIVE BOARD CLAUS-MATTHIAS BÖGE Dear Shareholder s and Friends, d by one word in particular: capital markets remain dominate The headlines of the international situation. The transaction ent of any sustained relief of the crisis. There is still no sign at pres continent declined in 2008 and ping centers on the European volume for investments in shop the market came to a virtual standstill. achieve all its business tar- e EuroShop managed not only to Despite this environment, Deutsch this is made up of our outs tand- solid foundation enabling gets but even to exceed them. The pean ted in prime locations in four Euro ing shopping center port folio. The 16 centers are situa . rating long-term secured earnings countries, are fully let and are gene on in 2008 and ultimately nue of 1110 million to 1113 milli We conservatively predicted reve before esented a year-on- year increase of 20% . Earnings achieved 1115.3 million, which repr 195 milli on but instead cast to lie between 193 million and interest and taxes (EBIT) were fore ) without measurement expe cted earnings before taxes (EBT rose by 25% to 198.1 million. We the day these increased to on and 147 million. At the end of gains/los ses of between 145 milli to grow th of 29% . 149.9 million, which is equivalent that we do not normally fore - ment gains and losses and taxes Taking into account the measure on to 168.9 million. d by 27% from 194.2 milli cast, consolidated prof it decrease ed itself in the real estate key statistic that has now establish You will find in our reporting a new ned as the cash flows from or FFO for shor t. The FFO is defi business : funds from operations nts in exis ting properties, sche - to finance ongoing investme operating activities and is used distribution of dividends. In 2008 , an duled payments on our long-term bank loans and the 5 million or 11.12 per share share was posted, up from 138. FFO of 149.8 million or 11.45 per in the previous year. OLAF G. BORKERS e from operations as against from several sources: 11.13 cam Earnings per share were derived from the valuation of the . A further 10.87 per share resulted 10.94 in the previous financial year 12.74 to 12.0 0 albeit that in Total earnings per share fell from shopping centers (2007: 10.94). 6 per share from the reversal of d additional earnings of 10.8 the previous year they containe e tax reform. deferred tax provision s in connection with the corporat as at 31 December 2007 to pany rose from 1925.1 million The net asset value of our Com increase of 117.7 million and a net . This is equivalent to an 1942.8 million at the end of 2008 asset value per shar e of 127.43. now productive. In March s in 2008, our entire port folio is After celebrating two new opening followed by Stadt-Galerie Pas- and in September this was we opened Stadt-Galerie Hameln our new outset as was the case with all sau. Both were fully let on a long-term basis at the openings in the past.
  7. 7. 5 On the investment side we rem ained restrained and only carried out selected activity: – Dresden’s Altmarkt- Galerie, in resden which we have a 50% share, is to or 18 000 m2 of retail space by early 18,0 00 be expanded by almost 70% f 2011 for a total sum of 1 150 milli 90 new shops will be located here on. Altogether around . – At the start of 2009, we incre ased our stake in City-Point Kass ding the liabilities acquired, the el from 40% to 90% . Inclu- investment volume came to som the year around 7,00 0 m2 of reta e 153 million. By the end of il space is to be revamped for eigh City-Point Kassel will then have t new speciality shops. around 70 speciality shops, cafe space will remain unchanged at s and restaurants. The retail roughly 20,0 00 m2 and the area has already been fully let out. undergoing reconstruction Our share coped comparatively well with the extremely difficult started the year at 123.50 and clos year on the stock markets. It ed slightly up at 124.30. Taking distribution of 11.05 per share, into account the dividend the performance of the Deutsch annualised 7.9% . Compared with e EuroShop share came to an our European competitors we were performers and achieved the four therefore one of the top th best result worldwide. More and more companies are takin g a very cautious stance in their pred our business is predictable, stab ictions. However, since le and laid out on a long-term basi a glimpse into the future and cite s, we are prepared to venture some key figures that we intend to take as a benchmark: – For the 2009 financial year, we are anticipating revenue of betw million. In the 2010 financial year een 125 million and 128 revenue should increase to betw million. een 128 million and 131 – We forecast earnings before inter est and taxes (EBIT) in the curr million and 108 million and risin ent year of between 105 g to between 109 million and 112 million in 2010. – We expect earnings before taxe s (EBT Michael ) excluding measurement gains/los 50 million and 52 million Dr.2009 Gellen, Manfred Zaß, Alexander Otto, ses to be between fr. left: Thomas Armbrust, in and between 53 million and 55 Claus-Matthias Böge, Dr. Bernd Thiemann, Olaf G. Borkers, Dr. Jörn Kreke million in 2010. – We expect funds from operatio ns of between 1.45 and 1.50 and of between 1.55 and 1.60. in the 2010 financial year 0 r We intend to maintain our long -term dividend polic y geared towa basis of the forecast outlined abov rds continuit y and on the e expect to distribute a dividend shareholders again in 2009 and of 11.05 per share to our 2010. We would like to thank you for your conf idence in Deutsche EuroShop if you remain loyal to us in the futu and would be pleased re. Hamburg, April 2009 Claus-Matthias Böge Olaf G. Borkers
  8. 8. On the investment side we rem ained restrained and only carried out selected activity: – Dresden’s Altmarkt- Galerie, in which we have a 50% share, is to or 18,0 00 m2 of retail space by early be expanded by almost 70% 2011 for a total sum of 1 150 milli 90 new shops will be located here on. Altogether around . – At the start of 2009, we incre ased our stake in City-Point Kass ding the liabilities acquired, the el from 40% to 90% . Inclu- investment volume came to som the year around 7,00 0 m2 of reta e 153 million. By the end of il space is to be revamped for eigh City-Point Kassel will then have t new speciality shops. around 70 speciality shops, cafe space will remain unchanged at s and restaurants. The retail roughly 20,0 00 m2 and the area has already been fully let out. undergoing reconstruction Our share coped comparatively well with the extremely difficult started the year at 123.50 and clos year on the stock markets. It ed slightly up at 124.30. Taking distribution of 11.05 per share, into account the dividendd the performance of the Deutsch annualised 7.9% . Compared with e EuroShop share came to an n our European competitors we were performers and achieved the four therefore one of the top p th best result worldwide. More and more companies are takin g a very cautious stance in their pred our business is predictable, stab ictions. However, since e le and laid out on a long-term basi a glimpse into the future and cite s, we are prepared to venture e some key figures that we intend to take as a benchmark: – For the 2009 financial year, we are anticipating revenue of betw million. In the 2010 financial year een 125 million and 128 8 revenue should increase to betw million. een 128 million and 131 – We forecast earnings before inter est and taxes (EBIT) in the curr million and 108 million and risin ent year of between 105 g to between 109 million and 112 million in 2010. – We expect earnings before taxe s (EBT ) excluding measurement 50 million and 52 million in 2009 gains/los ses to be between and between 53 million and 55 million in 2010. – We expect funds from operatio ns of between 1.45 and 1.50 and of between 1.55 and 1.60. in the 2010 financial year We intend to maintain our long -term dividend polic y geared towa basis of the forecast outlined abov rds continuit y and on the e expect to distribute a dividend shareholders again in 2009 and of 11.05 per share to our 2010. We would like to thank you for your conf idence in Deutsche EuroShop if you remain loyal to us in the futu and would be pleased re. Hamburg, April 2009 Claus-Matthias Böge Olaf G. Borkers
  9. 9. 9 ia s Bö ge, C EO C la us -M at th uary 1959 tion on born 13 Febr es s administra pleting a busin vat-- clerk and com Düs seldor f-based Privat ing as a bank in 1987 at the Af ter succes sfully qualify career which he was made profes sional His work, for ge began his Acquisitions. m-sized ze degree, Mr. Bö in Mergers & all and mediu Burkhardt advising sm bankha us Trinkaus & , focused on natory) in 1989 uity interest s. uthorised sig panies and eq a Prokurist (a d selling com buying an nik GmbH, a subsi- - companies on KST Stahltech anagement of where he was a was appointe d to the m nologie AG, oup VA Tech ts. t In 19 90, Mr. Böge ns truc tion gr inis trat ion departmen strial plant co l, ta x and adm diar y of the AuA strian indu rsonnel, lega & Co. KG in H am- m for the finan cial control, pe ent G.m.b.H. responsible si E Proj ek tmanagem ing and g-ter long-term moved to EC alisation, leas 93, Mr. Böge velopment, re with the world he In autumn 19 ader for the de me fascinated , the Europe an market le he first beca bsidiaries in th t e burg he centers. It w as here that sitions at su of shopping anagement po prof itabi lit y opti- ty o management e e to a series of m and ongoing s. In addition ning, financing pping center of shopping concept plan focused on o p, s work ECE group hi ts. op er ty investmen 01. misation of pr on in October 20 e EuroShop AG ar d of Deutsch e Executive Bo öge j ed th Mr. Böge join n. and ha s two childre He is married r Bo er s, C FO O la f G . B rk ber 1964 as born 10 Decem b rn rkers qualified l Nav y, Mr. Bo erman Federa inistration in on er with the G studied busin es s adm as a ships of fic 1990. He then eutsche Bank AG Af ter serving r e Bank AG in analys t for D with Deutsch d as a credit AG, Ham- a bank clerk c , Mr. Borkers worke sit z und Bete iligungs- n. From 1995 RSE Grundbe the Execu- Frankfur t/ Mai 98, he joined appointed to kfur t and Ham burg. In 19 r. Borkers was and Hamburg , in Fran utive Boar d. In 1999, M Tegernsee ta nt to the Exec und Bete iligungs-AG, r 20 05. In addi- I ddi burg, as as sis e Immobilien til Septembe TAG Tegernse or relations un in the TAG tive Board of le for finan ces and invest positions with was responsib anagement where he ry Board and m us Superviso ers held vario tion, Mr. Bork . Group. October 20 05 roShop AG in d of Deutsche Eu ecutive Boar s joined the Ex Olaf G. Borker child ren. and has two He is married
  10. 10. 6 DES AR 08 INTRODUCTION REPORT OF THE SUPERVISORY BOARD DEAR SHAREHOLDERS, During the 2008 financial year, the Supervisory Board performed MEETINGS the duties incumbent on it according to the law and the Articles of Association and closely followed the performance of Deutsche During the 2008 financial year, four regularly scheduled and one EuroShop AG. The strategic orientation of the Company was coor- extraordinary Supervisory Board meetings took place. No Super- dinated with the Supervisory Board and the progress of strategy visory Board member participated in less than half of the Super- implementation discussed at regular intervals. The Supervisory visory Board’s meetings. Board monitored and advised the Executive Board in its manage- ment of the business. The Executive Board informed us regularly, In the extraordinary meeting on 24 January 2008, the Executive promptly and in detail of business developments. Board presented two development projects to be implemented through joint ventures. The Supervisory Board granted its appro- FOCUS OF ADVISORY ACTIVITIES val of these transactions. The higher development risk and the importance of these projects for the strategy of the Company in We examined our Company’s net assets, financial position and particular were discussed in this context. results of operations, as well as its risk management, regularly and in detail. In this context, we checked that the formal conditions In the first planned meeting on 17 April 2008, the annual review for implementing an efficient system of monitoring our Company of efficiency of the Supervisory Board was completed and the were met and that the means of supervision at our disposal were agenda for the Annual General Meeting approved. In this con- effective. We were informed on an ongoing basis of all significant text, we selected the auditor who was proposed to the sharehol- factors affecting the business. ders for election. With regards to the audit of the annual finan- cial statements, we once again attached great importance to the Our discussions focused on the development of the portfolio explanations of the Executive Board and those of the auditor on properties, their sales trends, outstanding accounts, occupancy the real estate appraisals. The report of the Executive Board on rates, construction measures and liquidity as well as investment the spot checks by the German Financial Reporting Enforcement cost trends for our new development projects. Panel completed in March 2008 and the statements of the audi- tors and the Executive Board on the effects of the German busi- Particularly intensive and repeated discussions with the Executive ness tax reform were also addressed. Board focused on the Company’s strategy in light of the turmoil on the capital markets. In these discussions, the Executive Board also In the meeting on 19 June 2008, the first action was to elect the presented various investment options to the Supervisory Board. undersigned once again as Chairman of the Supervisory Board and Dr. Gellen as Deputy Chairman pursuant to Section 107 of Other current topics were discussed by the Chairman of the Super- the Aktiengesetz (AktG – German Public Companies Act). Regular visory Board and the Executive Committee of the Supervisory elections of members of the Supervisory Board took place in the Board together with the Executive Board as required. Transac- Annual General Meeting concluded prior to this. In addition to a tions requiring the approval of the Supervisory Board were dis- discussion of business development, we also passed a resolution to approve the expansion of Altmarkt-Galerie in Dresden. “PARTICULARLY INTENSIVE AND REPEATED In the third meeting on 18 September 2008, we discussed DISCUSSIONS WITH THE EXECUTIVE BOARD in depth the possible impact that dwindling economic pro- spects might have on our Company. The Executive Board FOCUSED ON THE COMPANY’S STRATEGY IN also presented a shopping center in Germany as an invest- LIGHT OF THE TURMOIL ON THE CAPITAL MAR- ment opportunity. The Executive Board also informed us KETS.” that one of the development project joint ventures appro- ved in January was not realised because the necessary land had been bought by a competitor. cussed and resolved in meetings held according to plan. In addi- tion, for transactions of the Executive Board requiring approval, In the last meeting on 25 November 2008, the Executive Board an extraordinary meeting of the Supervisory Board and two con- presented its ideas on increasing the investment in City-Point in ference calls of the Executive Committee were held and circular Kassel. The Supervisory Board discussed this investment and gave resolutions were passed in writing. All resolutions of the reporting its approval for pursuing this opportunity further. In view of the period passed unanimously. approaching end of the year, the Executive Board reported to us on its assessment of the real estate portfolio appraisal. In consi-
  11. 11. deration of the worsening outlook for the retail sector, we moni- The documents relating to the financial statements, the auditor’s tored the statements of the Executive Board on the revenues of reports and the Executive Board’s proposal for the appropria- our tenants and the outstanding rents in our shopping centers tion of the unappropriated surplus were presented to us in good more closely than ever. Because of the general scepticism about time. The auditor elected by the Annual General Meeting on 19 retail trends, we will continue to watch these figures in a timely June 2008 – Hamburg-based BDO Deutsche Warentreuhand AG fashion in order to assess their impact on our Company and initi- Wirtschaftsprüfungsgesellschaft – had audited the previous sets ate countermeasures at an early stage. of financial statements and issued an unqualified audit opinion in each case. The auditor also confirmed that the accounting poli- An extensive discussion also ensued on the projection and medium- cies, assessment and consolidation methods in the consolidated term performance planning of the Company presented by the Exe- financial statements complied with relevant accounting provisions. cutive Board. In addition, the auditor determined in the course of his assess- ment of the risk management system that the Executive Board has COMMITTEES undertaken all required measures pursuant to Article 91 (2) of the AktG in order to identify risks promptly which could jeopardise The Supervisory Board has formed two separate committees, an the continued existence of the Company. Executive Committee and an Audit Committee, each with three members. We consider this to be appropriate, given the size of the The auditor’s representatives took part in the discussion on the Company and the number of Supervisory Board members. During annual financial statements and the consolidated financial state- ments on the occasions of the Audit Committee meeting on 7 April 2009 and the Supervisory Board meeting on “IN THE LAST MEETING ON 25 NOVEMBER 23 April 2009 and explained their main findings. 2008, THE EXECUTIVE BOARD PRESENTED ITS IDEAS ON INCREASING THE INVESTMENT Following its own examination of the annual financial state- ments of Deutsche EuroShop AG, the consolidated finan- IN CITY-POINT IN KASSEL.” cial statements and the management reports appertaining thereto, the Supervisory Board did not raise any objec- the reporting period, both committees met on 9 April 2008, with tions, agreed with the findings of the auditor’s examination and the Executive Committee of the Supervisory Board also convening approved the annual financial statements of Deutsche EuroShop in conference calls on 15 April 2008 and 17 December 2008. AG and the consolidated financial statements. The annual finan- cial statements have thus been adopted. The Supervisory Board CORPORATE GOVERNANCE endorses the Executive Board’s proposal for the appropriation of the unappropriated surplus. In December 2008, together with the Executive Board, we issued an updated declaration of conformity with the recommendations The adverse environment for the real estate sector persisted of the government commission pursuant to Article 161 of the during financial year 2008 and was worse still than the previ- Aktiengesetz (AktG – German Public Companies Act) and made ous year. The Company’s conservative strategy has continued to this permanently available on the Deutsche EuroShop website prove successful. in December 2008. A separate report on implementation of the German Corporate Governance Code is included in this Annual The positive development of our Company in this environment Report. The members of the Supervisory Board and the Execu- is also a result of the dedication of the Executive Board and our tive Board declared in writing at the beginning of 2009 that no employees. The Supervisory Board would like to express its grati- conflicts of interest occurred. tude for this to the Executive Board and to the employees. FINANCIAL STATEMENTS OF DEUTSCHE Hamburg, 23 April 2009 EUROSHOP AG AND THE GROUP FOR THE PERIOD ENDED 31 DECEMBER 2008 At the Audit Committee meeting on 7 April 2009 and the Super- visory Board meeting on 23 April 2009, the Audit Committee and Manfred Zaß, Chairman the Supervisory Board examined in detail the annual financial statements of Deutsche EuroShop AG in accordance with Ger- man commercial law, and the consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs), each as at 31 December 2008, as well as the management report and group management report for financial year 2008.
  12. 12. 8 DES AR 08 SHOPPING Customer Survey at Altmarkt-Galerie in Dresden in Q3/2008 Gender How often to you visit Altmarkt-Galerie? x Female 58% Daily 6% 42% x Male x x Several times a week: 20% Once a week 17% Age Every fortnight 14% Up to 19 years 13% Once a month 13% x 20 – 29 years 29% Four times a year 9% 10% x 30 – 39 years 15% Twice a year 5% 40 – 49 years Less frequently 9% 50 – 59 years 13% First visit 7% Over 60 years 20% I always find everything I need Where do you live? at Altmarkt-Galerie: 5% Fully agree 26% 5 minutes’ drive away x 15 minutes’ drive away 28% x Generally agree 61% x Tend to disagree 12% x 30 minutes’ drive away 21% Fully disagree 1% 45 minutes’ drive away 5% Day trippers from Saxony (> 45 minutes‘ drive away) 5% The fashion range at Altmarkt- Galerie is always extremely varied Tourists from Germany 18% Fully agree 35% International tourists 18% x Generally agree 45% Home country x Tend to disagree 20% of international tourists Fully disagree 3% Japan 22% Czech Republic 14% What school grade would you give Altmark-Galerie? Russia 10% Excellent 21% Poland 6% France 4% x Very good 67% United Kingdom 3% x Good 11% Satisfactory 1% Italy 3% x Other 38% Poor 0% Insufficient 0% x
  13. 13. 9 Statistics At 14%, the Czechs were the second larg- main roads approaching Dresden on both est group of tourists who visited Altmarkt- sides of the border and the distribution of Galerie last year after the Japanese. This pocket guides at the main railway station. is not only due to the proximity of the In addition, targeted PR activities are car- Czech border (which is less than 50 km from ried out to ensure that Altmarkt-Galerie is Dresden) but also the result of special mar- frequently mentioned in the Czech regional keting measures. These include a Czech press. version of the website, billboards on the
  15. 15. 11 They can look fancy or playful, futuristic or cosy, avant-garde or vin- Claus Schmidt from store construction com- pany Assmann sees another reason for the tage. Those who go shopping today step into a new world each time lack of real trends in shop design. “Trends they enter a store. One shop’s merchandise rests on rough wooden dissolve themselves into concepts”. Each store design concept today needs a new palettes. Another hangs its wares in overseas travel trunk. There are approach that promises uniqueness to a store. Successful store design is marked also the stacks of shoeboxes in the open trailer of a small lorry while by individuality, authenticity and person- the next shop uses a tower built of champagne glasses as shelving. ality. As products are increasingly interchangea- ome stores vie for atten- more expressive again. For example, trends ble, marketing strategies have to give them S tion with their wild-pat- terned wallpapers while others rely on a distanced, slick and simple look. While in one shop marble, fire- from fashion and interior design like the Asia look animal prints colourful wallpapers and ornamentation are spilling over into store construction. Yet, no one is saying things like “right now only glass and bare a larger emotional context. Marketing can infuse a product with an unmistakable “aura”, what is referred to as the market- ing message. This is primarily communi- cated through advertising. Nevertheless, place and leather armchairs invite visitors steel work” or “in spring everyone is doing shop design is an important means that on a time journey into the 19th century, a safari look”. Any aesthetic laws or real the next one is flying into the future with trends are really nowhere to be found. a metallic and glass space-age design. The “NEVERTHELESS, more noticeable the design, the more it Actually though, stores cannot be com- SHOP DESIGN IS AN attracts customers, or so goes the store pletely refurbished each season. More owner’s calculation. And those who suc- often, they follow renovation cycles IMPORTANT MEANS THAT ceed in making the customer extend his between 7 and 10 years, depending on their PRACTICALLY STAGES or her time in the shop as long as possible product. For this reason store designers try MARKETING IDENTITY AS will have the highest sales figures. Cus- to walk that fine line between expressive tomers nowadays are especially looking and yet timeless design. “After all, stores A THREE-DIMENSIONAL for entertainment, surprises and inspira- should last long enough before custom- ROOM EXPERIENCE” tion while shopping, which casts interior ers start saying things like “been there, architecture in an increasingly important done that”, explains Jeffrey Hutchison, role. As today almost everyone can shop which he says is a store owner’s biggest practically stages marketing identity as a online, real shopping must offer something fear. Hutchison designs flagship stores three-dimensional room experience. superior to its virtual cousin. It has to speak from Donna Karan to Polo Ralph Lauren. to all of the shopper’s senses and create For this reason, it is important to design The customer should be able to experi- a positive feeling. For this reason, interior the store set up as a modular system that ence and feel a brand’s spirit and unique- design experts try to create a leisure-time can be quickly changed and thus more eas- ness with all their senses. For example, this and well-being ambiance that puts poten- ily adapted to new products and new col- can be accomplished with the selection of tial customers in the mood to shop. lections. specific materials. In this way, unfinished wood lends a rustic touch. Silk or linen Admittedly, there is no patent solution provide a raw elegance. The more believ- for this. Indeed, there are many ways to able a brand’s presentation at the point win the customer’s favour. Experts now 1 of sale, the more durable an impression i.e. tiger prints, cow hide agree that in general, after years of pur- 2 i.e. Asian drawings, black, white and red colour it makes on the customer, explains inte- istic shop design, stores may dare to look schemes and materials such as bamboo rior architect Karl Schhwitzke whose p
  16. 16. 12 DES AR 08 SHOPPING The atrium of the Stadt-Galerie Passau created an almost personal relationship to Technical innovations such as new mate- the customers. rials support designers in their work. For store designs include Escada and Esprit. example, polymers and actually all types of His motto: “a good store is like an exciting Here especially it is increasingly important plastics are making a comeback, either as story”. Shop designers act like film direc- for internationally known brands to mon- a material for interior store elements or as tors, creating rooms that are designed to itor their various regional markets care- protective surfaces for metals and woods. move the customer through an invisible fully. If all stores of a specific label look Their advantages are obvious, explains storyboard. These rooms are never static the same worldwide, cosmopolitan cus- New York materials expert Andrew Dent. because the customer is always changing tomers become easily bored. Following “Plastic is always one of the least expen- their perspective – following a path and the motto “think global, work local”, local sive, most flexible and durable materials. performing different activities like select- colour can in fact be that little added extra It can be formed into any shape, colourful ing, comparing, trying on and paying. Real which makes all the difference. Successful or transparent and can even mimic other stories can be woven into a designer’s cre- design concepts integrate local references materials such as wood, metal or glass”. ated story, rendering it even more emo- into the architectural givens of a project. Such developments are always opening up tional. Lacoste serves as a good exam- For this reason, the Armani store in the new possibilities in store design. ple. Designers used the stories of René elegant Neuer Wall in Hamburg has to look Lacoste’s tennis career and that of the croc- different than the one on Rodeo Drive in Also, experts estimate that aluminium, odile for the French sports label’s flagship Los Angeles. steel and brass will remain the most used store. The design conveyed a message of metals in store systems, although the way competence in sports and at the same time they are used and the effects they can pro-
  17. 17. 13 important role. These are themes which and toward sunset. For this reason, intel- good shop design can communicate. ligent lighting systems change the mood of the lighting depending on the time of For economic reasons, sustainability also day or can be flexibly set with the push of “A STORE IS A plays an important role in shop design. a button to adapt to the shoppers’ needs. CONSTANTLY CHANGING For example, the use of a modern lighting This enables store owners to adjust condi- STAGE AND THE system can significantly decrease a store’s tions to the customers’ mood and always energy consumption. Efficient lamps like be able to create the right atmosphere and MERCHANDISE IS THE LED and halogen use less electricity and favourable atmosphere to facilitate their STAR” release less heat, which in turn considerably decision-making process in shopping. Even reduces air-conditioning costs for a store. modern lighting systems have put an end “In view of notice- to the bad lighting often found in chang- ably higher energy ing rooms. Sometimes the customers can cos t s, energ y even control the lighting themselves and optimisation has look at their new outfit in various lights, say become one of a tennis skirt in artificial sunlight or a for- the highest priori- mal dress in softer evening light. Modern ties for projects”, light diodes can even be built into the fur- observes the EHI niture, floors, walls and any type of mate- Retail Institute in rial. Hence light has become an integral Cologne. part of architecture. Generally, intelli- Modern lighting systems, new materials gent lighting plan- and individual approaches, forward-look- ning is one of the ing yet timeless, sensual, surprising and duce are changing. Copper and bronze are most important design elements in mod- sustainable: modern shop design is today not able to compete with these metals. ern shop design. In fact, light can com- more than just putting up shelves. Interior “They are too expensive and can quickly pletely change a room. Light can empha- architecture can even decisively influence a get a patina”, explains Dent. sise a room’s limits, open it upward, or store’s success. The focus is to create con- make it seem narrow or wide. Besides cepts that are unmistakable and custom- Natural materials are in fashion, such as being light or dark, light can also be dif- tailored for the customer. Store designers simple leather, woods, fabrics, bark and fuse or bright, direct or indirect, static or create walkable worlds of brands, which cork. Bamboo is also currently very pop- dynamic, warm or cold, elegant or atmos- aim to allure potential customers and ular as it currently epitomises the omni- pheric, clinical or dramatic. To achieve this, seduce them to buy. present in-concept of sustainability. Trend targeted lighting effects must supplement researchers like Marc Völler from the Ham- the basic lighting system. The “right” light- Contemporary materials, intelligent tech- burg Agency Neogard claim that sustain- ing can pull customers into a store, lead nology and lighting systems are all means ability is a megatrend and that in the future them to a specific place, emphasise dis- to an end. They create a sensual shopping no company will be able to get around it. plays and put them in “the right light”, sur- experience that surrounds the shopper yet After all, today not only does the safety of prise the potential shopper and manipulate is rendered invisible by technology. a product’s ingredients classify it as envi- their mood - and all this varied through- ronmental, the source of the product and out the day and season. After all, a per- Ultimately, says Brand Designer Alfred its ingredients, fair trade with the produc- son’s inner biological clock makes them Leitl, “a store is a constantly changing ers, reduction of waste in production and expect sunlight or a cool lighting during stage and the merchandise is the star”. energy-saving transportation all play an the day but warmer lights in the evening f Nicolette Maurer
  18. 18. 14 DES AR 08 SHOPPING INTERVIEW WITH VIOLA RAEDER, ARCHITECT Ms. Raeder, what is your approach on a this, areas nesting in one another are cre- their quality. A room first becomes three- new project? ated, and appropriate lighting and the nat- dimensional through lighting. Moreover, First, together with the developer, we take ural materials are used to give customers lighting can actively control a customer’s a close look at the project’s store’s target a feeling of protection. point of focus. There is also a trend to link customers and the product they sell. This lighting and ventilation into one system. If a gives us a sense of the atmosphere we need What are the most important design store experiences a lighting outage, even a to create to make the shop inviting to cus- elements for you in shop design? partial one, the customers literally run from tomers. From this, we develop our initial Within the parameters of a given floor plan, the store, which by the way also happens ideas on basic design, materials and colour an architectural plan is developed which with too high or too low temperatures. schemes as well as a schedule and budget leads customers through a room. This does for the project’s realisation. not only contain colours and materials, but Are there certain materials that you pre- rather much more a solution to an individ- fer to use? Are there certain tricks that you use? ual room situation. An emphasis is placed I often use natural materials such as wood, There should always be an idea or a sto- on enabling the customer to experience stone and cloth. These materials corre- ryline as the basis of a project. I do not something, to allow them to enter another spond well to people’s current wish for sus- try to design a room by piling up popu- world. To do this one needs to play with tainability as they create an atmosphere of lar design trends but rather develop the materials and lighting. well-being. In the meantime, many custom- overall concept from a central theme, as ers value an environmental lifestyle, which if it were a leitmotif guiding the project’s How important is lighting in your aims to strike a balance between satisfy- entire development. For example, in a concept? ing consumption and responsibility for the home store, the feeling of “cocooning” or Lighting plays an essential role. Light is used environment. retreating into the privacy of the home is to create important accents. Some prod- emphasised in the store’s design. To do ucts are staged so that the light emphasises
  19. 19. 15 sectors require a perfectly planned ordered Also, the merchandising or staging of prod- system, which helps with orienting the cus- ucts through events or special interactive tomer, and this in fact, places certain bor- multi-media devices for trying on or trying ders on creativity. out merchandise, this will also play a larger role. Moreover, conversion or recycling of The greatest creative freedom in design is ‘used’ store display systems has become where the concept can already find its form increasingly important. in the façade’s development, and where a store design is required to be custom-made Are there national differences in shop for the product and the store location. This design? is usually the case for the luxury sector. One finds noteworthy designs worldwide. Particularly, the most exciting shop con- Where do you find inspiration for your What are the most important new devel- cepts originate in those large cities with a concepts? opments in recent years? What are the diverse design scene like New York, Tokyo, Architecture has the greatest influence on new trends? London and Amsterdam where one imme- me. Shop design is architecture on a small To counter balance the increasingly strong diately feels their progressive character. scale and likewise, it can have a positive trend of online shopping, those factors only However, I highly regard German shop influence on people’s mood. Unlike “reg- available in ‘real’ shopping situations must design in an international context, as the ular” architecture, location or the ‘genius especially be emphasised. These include desire for energy efficiency, sustainability loci’ usually plays a subordinate role in shop individual consulting, new services and and value is a common priority here. design. The character of the product itself communicative zones on the sales floor. serves instead as inspiration and under- The customer can now shop at home. Cre- Ms. Raeder, thank you for speaking with scores the design. ating social situations will become an espe- us. cially fundamental element to strengthen However, art, graphic design and fashion, retail shops in the future. such as say the current trend of vintage, are often the basis for a shop concept. What role does the store’s business sec- Viola Raeder tor play in its design? The 33-year old architect is specialised in Where does one have the greatest free- store design and has worked on projects dom in design? throughout Europe since 2002. In recent Some sectors require special staging and years she has planned and created stores lighting for the merchandise, for example on behalf of Gruschwitz GmbH for a jewellers or grocers. Some merchandise world-famous fashion company.
  20. 20. 16 DES AR 08 SHOPPING CENTERT V INNOVATIVE INFOTAINMENT WITH AN ADVERTISING EFFECT ince the end of 2008, almost to avoid any negative effect on the pre- companies wishing to advertise. In addi- S all Deutsche EuroShop centers in Germany have had an addi- tional, innovative highlight: flat info screens have been installed at loca- tions within the centers with a steady flow mium shopping atmosphere in the cent- ers. The screens are all situated at locations where they will attract a lot of attention and their pleasing aesthetic and technical quality makes them a positive addition to tion, advertising reservations can be tai- lored to individual requirements based on the fact that the screens are available nationally, whether it be a regional book- ing, a national booking or a booking relat- of traffic, providing visitors with attractive the centers. ing only to certain centers. Particularly in adverts and entertainment. We make a conjunction with attractive promotions tak- continuous effort to offer our visitors an For the centers’ tenants in particular, the ing place in the centers, the advertisements extraordinary shopping experience. For digital screens offer an excellent oppor- are an ideal addition, e.g. in order to pro- a long time, therefore, we have been ana- tunity to attract visitors’ attention directly vide information about a market launch in lysing the market to find a digital signage at the point of sale and to trigger impulse advance and/or round out the launch with solution that both meets our high aes- purchases. However, the national brand- emotive images while visitors are in the thetic requirements and offers visitors, retailers and the branding industry true ing industry is also already showing a great deal of interest in this unique network of center. f Lothar Franke added value. We received decidedly pos- advertising space. Processing of booking itive feedback from visitors who partici- enquiries is performed by one central office pated in our extensive testing in the Alster- for all of the centers, making the process tal-Einkaufszentrum in Hamburg and the extremely simple, quick and convenient for Hessen-Center in Frankfurt. “THE NATIONAL BRAND- ING INDUSTRY IS ALSO ALREADY SHOWING A GREAT DEAL OF INTEREST” With the subsequent installation of the flat screens in Deutsche EuroShop’s centers, we have now succeeded in emphasising the high-end nature of our centers, while at the same time providing visitors with an extra service. An average of 20 screens per center display attractive programming con- sisting of news, up-to-the-minute center information, varied entertainment content and interesting advertisements. There is, of course, no sound broadcast, in order
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  22. 22. 18 DES AR 08 SHOPPING Healthy shopping! The subject of demographic change is a hot topic
  23. 23. 19 ccording to a study by the Wenzel, Anja Kirig and Christian Rauch continual eye on their own life-work bal- A Berlin Chamber of Indus- try and Commerce, demo- graphic change is primarily influenced by the follow- ing characteristics: for one, from the Zukunftsinstitut (German Insti- tute of the Future) – have observed an additional phenomenon which will domi- nate society, markets and all industries by degrees: the “lifestyle of health and sus- ance. Alongside a higher quality of life, the key LOHAS aspiration is the reversal of living practices to self awareness, free- dom from stress and deceleration. The new healthcare markets can be based on these people’s life expectancy is getting longer – tainability” (LOHAS). Diverse age groups, theses. by 2050, the statistical life expectancy for differing income groups and no affiliation a woman is 85 as opposed to 79 today and to a distinct social class all mean that clas- There are additional LOHAS character- for men this will be 80 as opposed to 74 sification within a concrete target group istics that are indicative of a new future today, and for another, the population is is impossible. market: declining – in Germany, the population is expected to fall to 60 million inhabitants Current surveys corroborate these fore- • Consumers are proactively looking after by 2050 as a result of the decreasing birth casts. The German Wellness Association their health rate. According to estimates, it is antici- recently reported that the German health- • Higher costs are acceptable care market made up a volume of EUR 239 • Orientated towards substantial and billion. This is 10.7% of the gross domes- “HEALTH IS NOT SIMPLY subject-specific communication tic product. By the year 2020, the health- care market will be recording growth up • A desire for transparency and clarity THE ABSENCE OF ILLNESS to around EUR 453 billion. The key topics when being addressed BUT RATHER A LIFE GOAL” of nutrition, body, sport and quality of life are expected to lead to extended demand- Complex and promising business models pated that half of the population will be driven markets. Thus health will become a for the future can be derived based on the over 50 years old by 2040 – the so-called key resource – a prime consumer goods assessments listed above. “best agers” group. As opposed to the and lifestyle product. majority of 50 year olds today, they want In light of this, the demands on shop- action or at least to be part of the action. The authors of “Greenomics” identified ping centers will also change. We have The condition of their minds and bodies the following LOHAS principles: health is attempted to present this graphically in will also be better. They are expected to possess purchasing power, be consumption not simply the absence of illness but rather a life goal. People can avoid pains, symp- the following future scenario: p oriented and quality conscious as well as to toms and chronic illnesses if they keep a carry important sales potential. In the future, moving from the countryside to the city will become ever more attractive for older people as they expect to find a Demographic change numerical better quality of living here, such as prox- imity to doctors, shopping possibilities or cultural offerings. 2040 According to Berlin Chamber of Indus- try and Commerce, the growing demand for senior-friendly products will dramati- cally change the market. Redefining target groups with adapted and freshly-devel- oped marketing measures is unavoidable. At the same time, authors of the recently published “Greenomics” book – Dr Eike 2050 Life expectancy Population Ø +5 years – 25%
  24. 24. 20 DES AR 08 SHOPPING The modern ointment in the Instant Pharmacy – a machine where the user is required to register, again by means of the individual fingerprint. He spends shoppers of tomorrow his remaining time unwinding in the “ReMass Lounge” relaxation area, waiting for his partner to return. In a relaxed atmosphere, he settles him- self into the ReMass Massage Chair and enjoys a soothing shiatsu mas- It is a Sunday evening in November 2020, around 9 pm and we find sage. Four of the massage rollers, emulating human hands, loosen ourselves in a futuristic looking domed building made of glass, up the back muscles on both sides of his spinal column. Within a completely and self-sufficiently powered by a sophisticated solar few minutes of the treatment, he is already feeling a sense of well energy system. The glass building is a shopping health center – being and relaxation. SHOHEC for short – a place to satisfy all your needs: a shopping experience coupled with rest, relaxation and healthcare offer- Finally, they treat themselves to a healthy meal in the stylishly ings. Hand in hand, a couple meander through a shopping center furnished organic food area – they will be visiting this area again flooded with light. Right now, the light elements green and yellow when they next visit the center. To round off their day, they indulge are the dominating colours. The projected meadows and flowers in a jasmine tea. suggest a stroll through a summer landscape. Unobtrusive scents, discernable solely in the subconscious, convey a pleasant atmos- For our couple, visiting the SHOHEC has become a ritual, mix- phere that simultaneously stimulate the desire to shop. Our two ing business with pleasure. Because of their careers they spend a shopping strollers are “best agers”. Mid-fifties, in casual wear, both lot of time travelling Germany, which in turn affects their leisure employed with well-thought-out time management and a conscious time and they appreciate the fact that they can visit a SHOHEC in separation between career and their scarce leisure time. almost every German city. Beforehand, they both entered their shopping needs into the cent- Social change and the extremely popular trend of focussing more er’s internet service module – a special service for regular custom- on health represent enormous opportunities for the German econ- ers and the interested public. Once they arrive at the SHOHEC, omy in general and particularly for the property and retail indus- they register themselves by giving a fingerprint at the entrance and tries. Availing of these opportunities correctly is both a challenge are immediately provided with a virtual sales assistant. The assist- and an entitlement. ance they receive will be provided by means of an out-of-sight ear- phone with miniature buttons. Pursuant to the requirements that f Claudia Müller, Head of Marketing, ReMass had previously been entered online, the center’s service staff have prepared the corresponding products and both customers are now being guided via their earphones to the relevant shops in line with their requests. The staff in each branch are impeccably prepared for the customer visit, are aware of sizes and taste thanks to the ABOUT ReMASS customer-data system and can therefore efficiently offer advice Established in 2005, the service provider ReMass specialises in instal- tailored to the customer. The pre-selection was perfect: they have ling massage chairs in the quiet areas in shopping centers and airports. quickly found a conventional suit for HIM and a rainproof walking In addition to sounding out potential rental floor space, the full-service suit for HER. This process saves the couple time that they can then provider is responsible for the installation as well as the management put to better use spoiling themselves in the healthcare depart- and maintenance of its locations in both Germany and Austria. ment. The SHOHEC offers a wide range of healthcare services. In addition to various cosmetic offerings, there are other healthcare areas that concentrate on prevention, physical therapy and relaxa- tion treatment. SHE opts for an offering available on the discreetly insulated sports area: Knowledge Movement – 30 minutes move- ment on a multi-functional unit consisting of a stepper and an exer- cise bike whilst a digital presentation is given on the subject “New walking trails in the Harz”. In the meantime, he visits the “Minute Clinic”. As he already knows the easily understood treatment cat- alogue, he is aware that the trained staff here can diagnose and treat his skin irritation in just 15 minutes. He did not have the time during the week to visit the doctor. He buys the recommended