Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
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F r a n c e , G e r m a n y , L u x e m b o u r g , Spain and the U.K. Meanwhile, deep discounters at home keep cutting into HEMA's traditional market, says Tom Muller, an analyst at Amsterdam-based in- vestment bank Theodoor Gilissen. As a custom, HEMA locates its stores on major shopping streets. A formi- dable Dutch upstart called Action now has about 400 stores, most of them in the Netherlands, and most of which opened within the past 15 years. Action's cost structure is a tough challenge to HEMA, because Action stores are smaller, employ fewer workers per square foot and are typically located on cheaper streets, according to Muller. Sure, HEMA is noted for service, but high-cost employees are not needed to sell low-cost items, and shoppers would probably forgo a sales clerk or two if that meant they could hold onto a bit more of their cash, Muller argues. "The name of HEMA stood for quality and a relatively cheap price," said Muller. "The name is still very good, but when your price is €2 and some other shop is selling for €1, then you have a problem." Now HEMA must find a new focus, he as- serts. "They are known for some of their quality items, like textiles and other household things, but they have to either broaden out to other items or take their prices to lower lev- els. I think they have to more or less change their company or their posi- tioning in the market," he said. There are signs that the company is taking measures to trim costs. In March HEMA told suppliers that it planned to begin paying them in 120 days rather than 90, as had been the practice. An even tougher pro- nouncement involved pressing those suppliers to give back 3 to 5 percent of the HEMA-related revenues they had earned the previous year. Then, too, at this point HEMA's owner, a $6 billion U.K. private equity firm called Lion Capital, may be start- ing to get impatient. Lion, which spe- cializes in consumer brands, bought HEMA in 2007 from Maxeda Group, a Dutch retail firm controlled by U.S. buyout firm Kohlberg Kravis Roberts for a reported €1.1 billion ($1.5 bil- lion). Lion then put HEMA on the block in 2010 but pulled back the fol- lowing year when no one was willing to proffer the €1.5 billion price. Lion usually sells its assets after one to six years. But having already kept HEMA on its books for about seven years and also having given the chain a €900 million capital infusion last year, Lion may now be eager to see a bit more for its trouble than just a stock of pink frying pans or rabbit- shaped teapots. S C T 40 S C T / O c t O b e r 2 0 1 4 VEGAS STRIP SUNSET STRIP or Bialow takes you where you need to be. Our experienced team is skilled at tailoring a regional or national expansion plan that meets each retailer's individual needs. 781.444.2316 | www.bialow.com