No divine right

The German Praktiker Group is insolvent. It is not the first DIY retailer to go to the wall. But this insolvency is fairly spectacular because of its magnitude – after all, this group with its Praktiker, Max Bahr and Extra sales channels was number three in the German market and the fourth-biggest German DIY retailer, once its international business was included. The repercussions in the seven countries where Praktiker has operations may well be spectacular as well. But this case is spectacular above all because it is the bankruptcy of an entire business model. With its notorious 20 per cent campaigns run since 2003 (‘20 per cent off everything – except pet food’) the company had first set the entire industry against it, before then demonstrating ever more clearly that the ‘cheap’ business model doesn’t seem to function, at least not in this way. And that really means something in a sector which, in the minds of many consumers, is felt to be synonymous with ‘cheap’. After all, keep­ing the prices for whole product groups low (or at least giving the impression of doing so) seems virtually to make up the essence of the DIY retail business as such. Praktiker, you may well judge, overdid things. But there is no reason for malice or a holier-than-thou attitude in this industry. Cheap is everyone’s aim. So this bankruptcy throws up questions for all market participants. After all, none of them has the divine right to survive, as Neil Munz-Jones, one of our interviewees in this issue, said in connection with the industry’s e-commerce endeavours. Now, Praktiker most certainly wasn’t ruined by the e-commerce competition. This is still relatively harmless in Germany, DIY companies are having a hard time with it. Overall the internet doesn’t yet have any great relevance for the DIY retail scene in Germany, but market penetrat­ion like in Britain will not be all that long in coming to the biggest individual market in Europe. Talking about Great Britain, and talking about the internet: Praktiker is not making way for Kingfisher, but it is certainly interesting that the British group is just now, of all times, antagonis­ing its German partner Hornbach by arriving on the crowded German market with its Screwfix line. True, this is strongly geared to the trade, but also strong in online sales. And there the Brits are certainly further advanced than the Germans. Rainer Strnad Managing editor Download: