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Business development strategy - Beate Uhse AG
- 1. Beate Uhse AG - A Future Strategy for a Pioneer Wanda Rossi Business Strategy DMM Crew 6 Hyper Island Manchester
- 2. Beate Uhse - The Mother of Sex In 1962 âBeate Uhseâ was the first âsex shopâ in the world. The company is market leader in the distribution of sex toys, lingerie, and wellness products in Germany. Beate Uhse AG owns 96 brick and mortar stores in Germany, Italy, Beneluz, Norway, and France. The brand âBeate Uhseâ is synonymously linked to the erotic industry in Germany. Beate Uhse AG also provides erotic entertainment via the Internet, mobile and fixed telephony, video- on-demand (VoD) and the MovieOn streaming platform. The company operates 15 online shops that generate % of the total revenue.
- 3. From once 150 brick and mortar stores in Germany only 35 remain. Beate Uhse - The Downfall Despite of corporate restructuring efforts, revenues have declined each year. Innovative competitors like Amorelie target the same customers and have gained sizable market shares. Between 1999 and 2014 the Beate Uhse share has declined about 97%.
- 4. Beate Uhse has lost its brand DNA By copying the business strategy of young competitors Beate Uhse has not created female brand ambassadors. Beate Uhse has become the Swiss Army knife of the erotic industry. Beate Uhse does not exploit the potential of its brick and mortar stores.
- 5. Encouraging female exploration Opportunity Sex talk has become mainstream talk. However, the new openness needs guidance. This is an opportunity for Beate Uhse to build a female brand community. Call to Action Like Beate Uhse-Rotermund explored the sky and reached out fearlessly into unknown territory when she opened the first sex shop in the world, the group should take on supporting women to grow their sexual confidence.
- 7. Potential of the brick and mortar stores 35% prefer to order online. The same number of customers like to shop in-store. Only 3% enjoy the experience that a physical sex shop offers "very much". 64% would change the atmosphere in brick and mortar sex shop. 29% wish a better service in physical sex shops. 64% visit a physical sex shop for fun. 58% visit a physical sex shop out of curiosity. Consumers want to buy in brick and mortar sex shops for fun, to get inspired, and out of curiosity. However, the majority of shoppers buy online as the offline experience puts them off.
- 8. Space for sensual exploration Opportunity Beate Uhse AG has what competitors like Amorelie donât have: 96 well-located physical stores in five European countries. Call to Action With the help of Augmented Reality Beate Uhse can make its brick and mortar stores spaces of uninhibited learning and sensual exploration.
- 10. New Brand Portfolio to gain credibility Opportunity Brands with a cohesive portfolio gain brand equity. Beate Uhseâs online shop sells 30.000 products - too many! Today every product and brand in a corporate portfolio matters. This creates the opportunity for Beate Uhse to focus on its core business: love toys and lingerie. Call to Action The group needs to organize, prioritize, and distinguish its brand portfolio to re-gain brand equity.
- 11. More cash, less costs, fewer risks Gain in brand equity by building an engaged brand community New brand portfolio: let go of unprofitable entertainment sector and product ranges that donât belong to the core business Continue backward integration of supply chain and focus on private labels
- 12. Improved operational efficiency Promote in-store or mobile online orders to ship only once and reduce in-store stock. Focus on high-speed delivery right from the mail- order centres within 24 hours.
- 13. Encourage Self-Exploration! Beate Uhse can go beyond marketing speech and half-hearted empowerment campaigns. Instead of jumping on the train of false female media depiction the brand has the chance to change womenâs life. Yes, women have become more empowered and do talk more openly about sex topics. However, there are still a lot of insecurities surrounding female sexuality and relationships that glossy magazine covers do not address. Beate Uhse can lead the change! For curious women of all ages who want to grow their sexual confidence, the Beate Uhse mobile and in-store experience encourages women to go on a sensual self-exploration. Unlike Amorelie or other competitors, Beate Uhse adds long-lasting value to every woman's life and links a unique customer experience to the heritage of a brand that is synonymous with the erotic industry and female empowerment.
- 14. Table 1 - Declining revenue of the Beate Uhse brick and mortar stores Annual report - year Revenue retail - Previous year Revenue retail - Reference period Difference compared with the previous year in % 2005 89,5 89,1 -0,3% 2006 89,1 86,5 -2,9% 2007 86,5 82,7 -4,4% 2008 82,7 73,8 -10,7% 2009 73,8 62,8 -14,9% 2010 62,8 57,2 -9,0% 2011 57,2 47,5 -17,0% 2012 47,5 46,5 -2,1% 2013 46,5 45,9 -1,0% 2014 45,9 44,3 -3,6%
- 15. Bibliography Attwood, F. (2005): âFashion and Passion: Marketing Sex to Womenâ. In: Sexualities. 8 (4), S. 392-406. Beate Uhse Aktiengesellschaft (1999): Geschäftsbericht 1999. Flensburg: Beate Uhse Aktiengesellschaft Beate Uhse Aktiengesellschaft (2000): Geschäftsbericht 2000. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2005): Geschäftsbericht 2005. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2006): Geschäftsbericht 2006. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2007): Geschäftsbericht 2007. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2008): Geschäftsbericht 2008. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2009): Geschäftsbericht 2009. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2010): Geschäftsbericht 2010. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2011): Geschäftsbericht 2011. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2012): Geschäftsbericht 2012. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2013): Geschäftsbericht 2013. Flensburg: Beate Uhse Aktiengesellschaft. Beate Uhse Aktiengesellschaft (2014): Geschäftsbericht 2014. Flensburg: Beate Uhse Aktiengesellschaft. Beate-uhse.ag (2015): âInvestment Highlights - Beate Uhse AGâ. Last seen July 24, 2015 http://www.beate-uhse.ag/index.php/investment-highlights.html. Beate-uhse.ag, (2015): âThe story - Beate Uhse AGâ. Last seen July 24, 2015 http://www.beate-uhse.ag/index.php/the-story.html. Cendrowski, S. (2012): âNikeâs new marketing mojoâ. Fortune. Last seen July 24, 2015 http://fortune.com/2012/02/13/nikes-new-marketing-mojo/. Dummer, N. (2015): âBeate Uhse, Eis.de, Amorelie: Die Zukunft des Erotikhandels - Handel - Unternehmen - Wirtschaftswocheâ. Wiwo.de. Last seen July 24, 2015 http://www.wiwo.de/unternehmen/handel/beate-uhse-eis-de-amorelie-die-zukunft-des-erotikhandels/11838356-4.html.
- 16. Bibliography - Continued Euler Hermes Rating GmbH (2014): âZusammenfassung des Ratingberichtes BEATE UHSE AG.â Hamburg: Euler Hermes Rating Deutschland GmbH. Fell, J. (2011): âHow Steve Jobs Saved Apple.â The Entrepreneur. Last seen July 24, 2015 http://www.entrepreneur.com/article/220604 finanzen.net, (2015): âBEATE UHSE Chart | Chartanalyse | Indikatoren.â Last seen July 24, 2015 http://www.finanzen.net/chart/Beate_Uhse. Herbig, P. & Milewicz, J. (1995): âThe relationship of reputation and credibility to brand successâ. Journal of Consumer Marketing, vol. 12, no. 4, pp. 5-10. Hume, M. & Mills, M. (2013): âUncovering Victoria's Secretâ. Journal of Fashion Marketing and Management: An International Journal, vol. 17, no. 4, pp. 460-485. Pachoulakis, I. & Kapetanakis, K. 2012, âAugmented Reality Platforms for Virtual Fitting Roomsâ. International Journal of Multimedia & Its Applications, vol. 4, no. 4, pp. 35-46. Payne, A.; Storbacka, K.; Frow, P. u. a. (2009): âCo-creating brands: Diagnosing and designing the relationship experienceâ. In: Journal of Business Research. 62 (3), S. 379-389. Perrey, J.; Coe, M. E.; Carlotti Jr., S. J. (2004): âMaking brand portfolios workâ. Mckinsey.com. Last seen July 24, 2015 http://www.mckinsey.com/insights/marketing_sales/making_brand_portfolios_work. Petromilli, M.; Morrison, D.; Million, M. (2002): "Brand architecture: building brand portfolio value". Strategy & Leadership. Vol. 30 Iss 5 pp. 22 - 28. Ries, E. (2011): The lean startup. New York: Crown Business. Spence, S. H. (1991): Psychosexual Therapy: A Cognitive-Behavioural Approach. Springer. Steller, P. (2013): âAmorelie: Online-Sexshop zum Anfassenâ. YouTube. Last seen July 24, 2015 https://youtu.be/h969cL-9LDA. Willmott, B. (2014): âRetail showrooms, mobile salesâ, Journal of Direct, Data and Digital Marketing Practice, vol. 15, no. 3, pp. 229. Wohlert, N.-V. (2015): âDie Frauenversteherin: Warum Frauen jetzt wissen, was sie wollen - Wirtschaftswocheâ. Wiwo.de. Last seen July 24, 2015 http://www.wiwo.de/die-frauenversteherin-warum-frauen-jetzt-wissen-was-sie-wollen/11438026.html.
Editor's Notes
- Beate Uhse-Rotermund (*1919) was not only the first female stunt pilot, she opened the first âsex shopâ worldwide and built it into an erotic empire that is listed at the Frankfurt stock exchange market. Beate Uhse was born in East Prussia. As a consequence of WWII she escaped to West Germany and settled down in Flensburg. A major issue in post-war Germany were unwanted pregnancies. Uhse took advantage of this market gap and started to sell the leaflet âSchrift Xâ that educated women about natural contraception methods. This led to a mail order business and finally, in 1962, Uhse opened the first sex shop, soberly called âThe Institute for Marital Hygieneâ. It sold among others books, magazines, lingerie, and contraceptives. When pornography regulation laws were relaxed in 1975 the company flourished. In 1999 Beate Uhse AG (from now on called âBeate Uhseâ, âBrandâ, or âGroupâ) went public.
- In 1999 the majority of Beate Uhseâs customers were men aged 30-40. In those days 70% of revenue for paid online services in Europe and the USA were made with online erotic. With 140 Domains and 140.000 webpages, Beate Uhse used to be a major erotic online content provider. (Beate Uhse Aktiengesellschaft, 1999) However, with the emergence of free internet pornography the company started to struggle. After a good start at the Frankfurt stock exchange in 1999, revenues decreased and eventually resulted in profit losses in 2005. Between 1999 and 2014 the share value has declined about 97%! (Beate Uhse Aktiengesellschaft, 1999 and 2014) In 2010 the company reacted with a corporate restructuring program. (Beate-uhse.ag, 2015) Despite of this, revenues declined each year until 2014 when the group made a slide profit (0.6%) in comparison to the preceding year. (Beate Uhse Aktiengesellschaft, 2014) From once 150 brick and mortar stores in Germany remain only 35. In 2007 Beate Uhse AG employed 1425 people. Due to the restructuring process only 620 were in their jobs in 2014. (Dummer, N., 2015) Like Beate Uhse, main competitor Amorelie focuses on the âcasual sexâ sector. Amorelie grows each month and makes profit in the high six-digit range. Steller, P., 2013) 60% of Amorelieâs customers are women from age 25 to 30 - Beate Uhse targets just the same customer segment. The competition within the erotic industry is even more intensified by fast fashion retailers like H&M or Zara that sell Lingerie as well. (Dummer, N., 2015)
- Today 75% of Beate Uhse customers are female. Yet, for too long the company had focused on male customers and only gained recognition in the erotic lifestyle market when innovators like Amorelie had already disrupted it. Amorelie is more experienced in selling erotic products online, their product range is of better quality, and as Amorelie only operates online, they save considerable costs while Beate Uhse has to pay for rental space and staff. When Sex and the City made female sexuality a mainstream topic, Beate Uhse missed its chance to engage female customers at the peak of the groupâs success - a major failure. Today, instead of leading innovation, the group has been copying the business strategy of young competitors. (Wohlert, N.-V., 2015) This âstrategyâ has not created female brand ambassadors. Beate Uhse AG has become the Swiss Army knife of the erotic industry. They operate in retail, wholesale, e-commerce, and entertainment. The revenue in the entertainment sector has been declining dramatically. though. Between 2000 and 2014 revenues decreased by 76%. (Beate Uhse Aktiengesellschaft, 2000-2014) Beate Uhse AG does not exploit the potential of its brick and mortar stores. While the internet of things is about to change our lives, they still adhere to traditional offline retailing and this despite of the fact that their brick and mortar stores have not been profitable since 2005. (See Table 1) Images: www.bild.de, www.outdoor365.co.uk, www.golocal.de
- âLove toysâ have become lifestyle products. One of three women spends more than 50 Euros/year on love toys and the trend is rising. (Euler Hermes Rating GmbH, 2014) The TV shows âSex and the Cityâ, âGirlsâ or the novels â50 Shades of Greyâ have made sex talk mainstream talk. In todayâs popular media womenâs sexual pleasure is shown as fashionable, safe, aesthetically pleasing, and feminine. (Attwood, F., 2005) However, although women have become more confident talking about sex, the many self-help books, articles in womenâs magazines, or blog posts circling around female sexual insecurity reveal that women are still not a 100% confident about their own sexuality. Successful brands are seen as partners that offer products and services that fits customers needs best and add value to their lives. (Petromilli, M.; Morrison, D.; Million, M., 2002) For Beate Uhse this is an opportunity to connect to female customers by offering a solution for sensual self-exploration. Like Beate Uhse-Rotermund explored the sky and reached out fearlessly into unknown territory when she opened the first sex shop in the world, the group today should support women to grow their sexual confidence. Image: imagepo.com
- VALUE PROPOSITION: Beate Uhse Explorer - Mobile solution for sensual self-exploration For curious women of all ages who want to grow their sexual confidence, Beate Uhse Explorer is a mobile solution that encourages women to go on a sensual self-exploration. Unlike Amorelie or other competitors, Beate Uhse Explorer adds value to every woman's life by linking a unique customer experience to the heritage of a brand that is synonymous with the erotic industry and female empowerment. Further user benefits (Spence, S. H., 1991): Enhanced desire Stronger orgasms More enjoyment during sex Sexual skill development Increased self-confidence Improved overall health, i.e. through kegel training Incentive to engage sexually with the partner Pointers of success Re-build your brand and relationships around customers, not around your companies requirements. If this means, you need to change Beate Uhseâs requirements, change it! (Payne, Adrian; Storbacka, Kaj; Frow, Pennie u. a., 2009) Value is created by experience. Co-create with your customers to add value to your solution! (Payne, Adrian; Storbacka, Kaj; Frow, Pennie u. a., 2009) Be lean, move fast, and iterate! (Ries, Eric, 2011) Popular media about âSexerciseâ: Kylie Minogue - Sexercise How to exercise on a fitness ball Sex-Enhancing Workouts
- In a non-representative survey a general audience was asked about their perception of sex shops. The survey shows that: 35% prefer to order erotic products online. The same number of customers prefer shopping in-store. Only 3% enjoy the experience that a physical sex shop offers "very much". 64% would change the atmosphere in brick and mortar sex shop. 29% wish a better service in physical sex shops. 64% visit a physical sex shop for fun. 58% visit a physical sex shop out of curiosity. 45% visit a physical sex shop to get inspired. Sample size: 31 In conclusion, consumers want to buy in brick and mortar sex shops for fun, to get inspired, and out of curiosity. However, the majority of shoppers buy online as the offline experience puts them off. Reference: Survey - The perception of sex shops
- Beate Uhse AG has what competitors like Amorelie donât have: 96 well-located physical stores in five European countries. (Beate-uhse.ag, 2015) A study on luxury lingerie suggest that brands which match the consumerâs desired self-image with the brandâs image create the strongest incentives for purchasing sexy lingerie. If consumers feel paired, they do not mind to pay more. Hence, a brand that boosts its customerâs self-esteem and gives her the feeling that she belongs to the brandâs community, can sell on a higher price level. The brand should deliver consistent product quality, but this does not suggest that it has to be luxury quality. It is all about the experience, â(...) the greater the emphasis or importance of the symbolic and hedonic aspects of the product/service the less relevant (is) the major functionality of the good or service to the customer (...).â (Hume, M. & Mills, M., 2013) With the help of the Beate Uhse Explorer app and the use of augmented reality in-store, Beate Uhse bolsters customersâ self-confidence and creates a sensual experience that will enchant female customers. Virtual fitting rooms or 3D âdream landscapesâ are only two examples for the many possibilities the technology provides to inspire women to reimagine themselves. Role models for successful experience design could be the highly successful experience brand Victoria Secret. Image: www.psu.com
- Beate Uhse should focus on the customer experience and in particular on the in-store experience by providing outstanding customer service that operates seamlessly across channels, using augmented reality to encourage uninhibited learning and enhance sensuality. Whether Beate Uhse customers order online at home or in-store, goods should be delivered within 24 hours, either to the customerâs home address or for pick-up to Beate Uhse stores. 45% of consumers use their smartphone in-store to look up product reviews and 42% look up product information. To own the experience Beate Uhse has to enchant customers. The group should encourage uninhibited learning in-store with the help of augmented reality devices. For instance, fun 3D visualisations of how toys are supposed to be used could be a reason to visit the store for entertainment. This experience would be linked to the Beate Uhse Explorer app. Virtual fitting rooms should become a standard that provides priceless insights into customerâs appearance. Image: www.mynewsdesk.com
- The times of opportunism are over. Today every product and brand in a corporate portfolio matters. Customers are better informed, are less willing to spend, and evaluate not only the product, but also the image of the brand when making purchase decisions. (Petromilli, M.; Morrison, D.; Million, M., 2002) Brands with a cohesive portfolio gain brand equity. Beate Uhseâs online shop sells 30.000 products - too many! (Beate Uhse Aktiengesellschaft, 2014) The group needs to organize, prioritize, and distinguish its brand portfolio to re-gain brand equity. To do so the brand awareness of consumers should be exploited. While competitors have to create brand awareness, the brand âBeate Uhseâ is synonymously linked to the erotic industry. The problem is, it has lost its luster. However, for a company to survive in todayâs world, it needs to have a positive reputation. (Herbig and Milewicz, 1995) To re-gain brand equity Beate Uhse should: Analyse âneed statesâ: what do customers want and how do they want it? (Perrey, J.; Coe, M. E.; Carlotti Jr., S. J., 2004) Focus on the core business: love toys and lingerie. Drop the unprofitable entertainment sector. Evaluate the necessity of the wellness and fashion product range. Deliver high quality consistently, even if this means that the price of a certain product range has to be raised. Beate Uhse will gain reputation by selling products that fall into the luxury category. (Herbig, P. & Milewicz, J., 1995)
- What will increase revenue? Brand equity and ROI are interlinked. Brands that increase their brand equity, record ROI average of plus 30%. (Petromilli, M.; Morrison, D.; Million, M., 2002) Case of success: Nike+ was launched in 2006 and became the most popular running destination with the largest database for running routes worldwide by 2007. In 2011 membership grew by 55% and global sales for Nikeâs running division increased by 30%. (Cendrowski, S., 2012) What will decrease costs? When Steve Jobs re-entered Apple in 1997 he realized that the brand had become diluted due to an unmanageable amount of products. He reduced the amount of Apple products by 70% and started focusing on quality and innovation. The success of this strategy has become history: one year after the restructuring actions the as god as bankrupt company made $309 Mio. in profit. (Fell, J., 2011) By shaping its product Portfolio Beate Uhse will decrease costs and add value to its brand. Furthermore, the group should reduce in-store stock and focus on high-speed delivery. What will reduce risks? The group should continue its backward vertical integration to gain control of the entire supply chain. Beate Uhse has to make optimal use of its production network to manufacture in-house and thus be in full control. By increasing brand equity the group will be able to increase sales of its private labels in online and offline retail.
- Beate Uhse runs several mail-order centres in- and outside of Germany with excellent capabilities. For instance, the mail-order centre in Walsoorden/Netherlands can send 24.000 parcels per day. By increasing online orders and promoting its private labels, the group ships only once, right to the customerâs doorstep or the local Beate Uhse store.
- Timeline of execution Mobile application: Create instructive videos of psychosexual skill exercises Create instructive videos of fun âsexercisesâ performed by leading personal trainers. Develop exercise tracker that can be connected to smartwatches or smart bracelets. Feature expert tips on selected exercises. Upgrade: Provide high-quality audio erotica and audio serials. Transforming physical stores into sensual experiences: The brand should select stores to test the augmented reality experience concept. As a first step a seamless shopping experience across channels should be realized. Next, Beate Uhse should incorporate AR. Possible applications could be virtual fitting rooms, 3D visualisations of offerings that can be changed and manipulated, entertaining and educational 3D films to promote and explain the usage of products.