Online retail remains a reliable growth driver for the international retail and services group. According to initial forecasts the Otto Group will close its 2021/22 financial year ending 28 February 2022 with online sales revenues of almost 11 billion euros, compared with 9.9 billion euros in the previous financial year. Germany is expected to account for almost 7.6 billion euros of this, compared to 7 billion euros in the same period of the previous year.
Globally, the e-commerce revenues of the Otto Group with its approximately thirty major Group companies in the current financial year have thus grown almost 10 percent compared to the same period of the previous year*, and in Germany by almost 9 percent. These very satisfying figures demonstrate once again that the Otto Group has charted the right course with the consistent digitisation of its own business models, processes and sales channels to react to the increasing change in consumers‘ purchasing behaviour.
Sebastian Klauke, Member of the Executive Board, E-Commerce, Technology, Business Intelligence and Corporate Ventures Otto Group: "We are growing sustainably and successfully in e-commerce. We are pleased about this and it proves that we have already come a long way on our journey towards the comprehensive digital transformation of our Group companies and our business models. However, as a Group of large corporate groups active in multichannel retail, we are also seeing the normalization we expected compared to the first year under pandemic conditions."
As forecast, following extremely high growth in the first year of the pandemic, growth rates weakened somewhat in 2021. Otto Group companies developed in line with the global online retail markets. Taking Germany as an example, as this market’s largest online retailer, the Otto Group was also able to benefit from the revival in online fashion business activity. On the other hand, the Furniture and Home Furnishings market, which is particularly important for the Otto Group, still delivered double-digit growth but this was not as breathtaking as in the first year of the pandemic. The Otto Group can also confirm the trend that online marketplaces such as OTTO are growing disproportionately.
At the same time, while the Otto Group's multichannel retailers with a significant over-the-counter (OTC) business, such as Crate and Barrel in the USA or Manufactum in Europe, continue to report very stable e-commerce growth they can also point to a pleasing recovery in OTC retail. In some cases, sales in this sector are already back to pre-crisis levels.
Nevertheless, a two-year comparison clearly highlights the increasing importance of online retail: in the current 2021/22 financial year, the Otto Group's e-commerce revenues increased by around one third worldwide compared to the same period of 2019/20.
At the focus company OTTO alone, the number of active customers rose by around 30 percent in calendar year 2020 and again by some 20 percent in 2021 to reach the current figure of well over 11 million. Orders and order frequency at OTTO also increased significantly, especially in the past Christmas business season. The textile sector, especially shoes and jackets, as well as the DIY segment recorded very significant revenue increases.
Alongside the very good performance of the digital business models, the Group’s excellent logistics infrastructure is also securing the basis for this. For example, Hermes Germany processed a total of around 136.4 million shipments in its logistics network during the Christmas business from October to the end of December 2021 alone – an all-time high. 99.8 percent of all packages and parcels were delivered in time for the Christmas festivities.
Sebastian Klauke: "E-commerce continues to gain relevance – and across all age groups. We expect this trend to continue, but at the same time we foresee more moderate growth and stabilization at a high level."
In view of the persistently high inflation rate, primarily due to the current inexorable rise in energy prices, as well as continued uncertainty regarding the further development of the corona pandemic and the critical geopolitical situation, it is reasonable to assume a subdued economic situation combined with a noticeable decline in consumer sentiment. For the coming financial year the Otto Group therefore anticipates declining momentum in e-commerce, and high single-digit growth.
In the 2022/23 financial year, the Group will once again focus on making considerable investment in its technology. For example, a three-digit million-euro sum is planned to further advance digitisation and continuously optimise the customer purchasing experience across all digital sales channels.
Artificial Intelligence (AI) remains highly relevant and is already applied in various business areas throughout the Group. For example, Bonprix recently presented a new, self-developed forecasting model based on AI; this now forms the basis for the daily updates to product rankings in all assortment categories of its own webshop. The model allows Bonprix to offer its customers an even better service, as it can display at the top of the webshop page those products that are currently the most popular and that at the same time offer sufficient availability in all article sizes.
In the coming financial year the Otto Group will also continue to concentrate on innovation. Examples include further developments in the area of social commerce and establishing new sales channels such as live shopping formats. Corresponding pilot events were recently launched successfully at OTTO, Bonprix, Mytoys, Sheego, and Mirapodo.
In future the Otto Group will also focus even more intensively on the topic of Corporate Digital Responsibility. For instance, to provide Group company employees with greater transparency about their own CO2 footprint, Otto Group IT is set to roll out a self-developed CO2 footprint app in the first quarter of the year. This way, the Otto Group is seeking to raise its employees' awareness of climate protection and enable them to take informed decisions about emissions reduction – a small but important step towards the Group's goal of climate-neutral business by 2030.
The Otto Group will announce its overall results for the Group financial year 2021/22 at its Annual Financial Statements Press Conference in May.
*On a comparable basis (mainly adjusted for Otto Japan (sold in financial year 2020/21) and excluding About You; this company was deconsolidated in recent years’ financial statements but will be fully consolidated once again in the Otto Group's upcoming consolidated financial statements with effect from June 2021).
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Founded in Germany in 1949, today the Otto Group is a globally active retail and services group with around 50,000 employees in 30 major company groups and does business in over 30 countries in Europe, North and South America, and Asia. Its business activities are grouped into three segments: Multichannel Retail, Financial Services, and Service. In the 2020/21 financial year (to 28 February), the Otto Group generated revenues of 15.6 billion euros. With online revenues of approximately 9.9 billion euros, the Otto Group is one of the world’s largest online retailers. The Group’s particular strength is its broad market presence and differentiated product and service offers to diverse customer target groups in almost all of the world’s relevant economic regions. Numerous strategic partnerships and joint ventures provide the Otto Group with excellent opportunities to transfer know-how and leverage areas of synergy potential. Group companies demonstrate a high degree of corporate responsibility and willingness to collaborate with one another; at the same time this guarantees flexibility, customer proximity and optimum target-group appeal in their respective national markets.