What: Peek & Cloppenburg (P&C), a Düsseldorf-based fashion retailer, plans to reduce the space at some of its 69 nationwide locations following renovations, aiming for a more efficient use of space and mixed-use concepts.

Why it is important: This strategic shift, including a move away from broad discounting practices, is part of P&C's efforts to increase sales, enhance profitability, and adapt to the challenges posed by the pandemic, the war in Ukraine, and the competitive online retail environment.

Peek & Cloppenburg, a prominent fashion retailer in Düsseldorf, is set to downsize its retail space at several of its 69 branches across the country. Despite the profitability of these branches, Thomas Freude, the company's CEO, highlighted the necessity for medium-term adjustments. The new strategy includes introducing mixed-use concepts, such as incorporating hotels or offices within the same premises, to boost foot traffic and enhance the shopping experience.

In an effort to improve sales and profitability, P&C will shift away from widespread discounting, a common practice in the retail industry that Freude believes undermines the sustainability of fashion retailers. Instead, the company will focus on offering discounts on specific items at the end of each season to clear inventory, avoiding discounts on new goods across the board.

This strategic overhaul follows P&C's restructuring during self-administration insolvency proceedings last year, prompted by challenges including the COVID-19 pandemic, the impact of the war in Ukraine, and the shift towards online shopping. Freude acknowledged the company's overreliance on the digital market, which, like many others, has yet to turn profitable. P&C aims to achieve a "black zero" and secure long-term profitability, with digital sales currently accounting for 10 percent of total revenue and a future target of 10 to 15 percent.

P&C's new approach reflects a broader trend in the retail industry towards optimising physical store operations and reevaluating discount strategies to ensure long-term success and adaptability in a rapidly changing market landscape.

Peek & Cloppenburg to optimize store space and revise discount strategy