Focused growth

In the rapidly changing digitalised retail market of the future, strengthening profitable business models will be vital to business success. As a major global online retailer and service provider, the Otto Group intends to set clear benchmarks and generate significant growth with this strategy.

 

17 billion euros is the annual revenue target the Otto Group has set itself by the 2022/23 financial year. To achieve its ambitious growth and profitability targets, the Group is pursuing a focused growth strategy in its three business segments of Multichannel Retail, Financial Services, and Service. Targeted investments in those market-relevant business models and Group companies will be made where firm prospects for particularly good performance and high growth potential have been identified.

 

Multichannel Retail

The Otto Group is active in the Multichannel Retail segment with its three business models ‘Platform & Retailers’, ‘Brand Concepts’ and ‘Corporate Ventures’. The investment focus is on selected companies and brands, in line with the Group’s growth strategy.

Within the PLATFORM & RETAILERS business model, major investment is being made into the single company OTTO to transform it into an e-commerce platform where customers receive a diverse product and brand offer. This comprises millions of articles, with highly intelligent, personalised customer advice both online and offline, first-rate services and a trusting relationship with business partners. A further example is Collins, whose ecosystem with its flagship ‘About you’ brand is a platform designed to satisfy extremely high customer demands and is enjoying tremendous growth. For these reasons Collins is to be expanded to become a billion-euro revenue company.

Furthermore the Otto Group is investing more intensively in its successful BRAND CONCEPTS, above all Bonprix, Witt, and Crate and Barrel. Bonprix has achieved great success with its fashionable and indisputably good-value product offer. The company is active in almost 30 countries, which makes it the Group’s most international retailer. The Witt Group is also an Otto Group focus company. This brand for 50+ female customers serves them so perfectly that it has been growing for years and achieving well above-average revenues. Expansion into the USA is this company’s next major step. A further investment focus is on the North American Furniture and Living specialist Crate and Barrel following its successful turnaround, whose products enjoy cult status with many, particularly better-off and more European-orientated North American customers.

 
Alexander Birken, Chairman of the Executive Board and CEO Otto Group
We have set ourselves the ambitious goal of getting the Otto Group back on track for strong, sustainable growth.
– Alexander Birken, Chairman of the Executive Board and CEO Otto Group

Start-ups are vitally important in remaining competitive. This is why the Otto Group has been investing since as early as 2008 in the CORPORATE VENTURES business area, holding a very significant, triple-digit million-euro stake in Project A and e.Ventures. This provides the Group with early know-how as well as access to working business models and the best business teams. Besides this, the Group’s financial engagement naturally also makes money, which means that the venture business remains a high priority for the Group.

Financial Services

Financial Services are a key source of earnings for the Otto Group. The attention that fintechs are receiving shows that the digital transformation has also reached the financial sector. To ensure the EOS Group maintains its strong market position, a triple-digit million-euro investment will be made in IT over the coming years. By acquiring bundles of receivables, EOS is well placed not only to generate high profits but also potentially to grow strongly on the revenue side over the next few years.

Services

Continued growth in e-commerce is making so-called ‘last mile’ services such as next-day and same-day delivery, customer-defined delivery times, and home installation enormously important. Service standards are constantly rising, which makes online shopping even more enjoyable for the customer but at the same time represents a major challenge for logistics companies. The Hermes Group will in future focus squarely on distribution and the associated, increasingly demanding end-customer services.

New logistics hubs are currently being constructed for Hermes Germany in a multi-year, 300 million-euro investment programme. In addition Hermes is continually expanding its European service network further, and with the takeover of the operative management of Mondial Relay and Girard Agediss is also strongly represented in France.

Moreover, the Otto Group with its Liefery concept aims to set benchmarks in the same-day delivery segment as well as with its well-established two-man handling system.