Bright signs with the words “SALE”, “Everything has to go!” And discounts of up to 90 percent – when the Gordon Brothers arrive in stores, the big discount guns are raised. The US consulting firm is hired by retailers to “quickly turn the remaining inventory into as much money as possible”, says Olaf Galler, the responsible Managing Director for Europe. This is usually the case when dealers close branches or sell. This was also the case with the break-up of Real: Gordon Brothers has been entrusted with the clearance sale of the non-food segment of the hypermarket chain. In other words: The company should ensure that the old Real goods are sold before the locations are transferred to the new owners such as Kaufland, Edeka or Globus. However, the company is not allowed to talk about the exact details of the deal.
It is no surprise that Real has commissioned the US company of all places. Gordon Brothers was already involved in the sell-out of the drugstore chain Ihr Platz, the DIY store Praktiker, or the department store chain Karstadt in Germany before it was transferred to Galeria Karstadt Kaufhof (GKK). Last year, the company sold off inventories worth almost 300 million euros for GKK when a total of 40 department stores were closed.
For the sale, the company goes to the customers’ shops and uses their sales area and advises and instructs the branch employees. “The customer does not notice that Gordon Brothers is behind the discount campaigns,” says Galler. To the outside world, it looks as if the dealers are carrying out the sale. Employees of the US company also supervise the sale on site: “We provide support with our own staff and our own advertising to ensure that we get the greatest possible profit for our customers,” says Galler.
In a large department store like GKK, the company sends around two to three employees. A small fashion retailer with a retail space of 100 to 150 square meters, on the other hand, only needs one, who is then responsible for several branches of the retailer, “like a kind of special district branch manager,” says Galler.
The longer a discount campaign runs, the more it is reduced
Galler and his team always follow the same principle. “Our system consists of half mathematics and the other half commercial implementation,” he says. First of all, the sales specialists carry out a precise analysis of which stock levels of the retailer are the better, medium-sized and “loyal”, as Galler calls the slow-moving goods. The products are evaluated in great detail and divided into up to 300 categories. Depending on which category a product belongs to, it is reduced accordingly high or low. The discounts at Gordon Brothers range from 5 percent to 95 percent and are constantly monitored, revised, and increase over time.
The exact differentiation in discounting distinguishes the Gordon Brothers’ approach from that of a dealer – the latter often reduce their entire goods by 50 or 70 percent when they sell out. In this way, however, they may lose money that could have been made with better goods.
The Gordon Brothers’ biggest competitor is always the retailer himself, says Galler, because he knows his goods best. So why would a store owner hire another company to do the sale? “We do not think that we would be the better dealers – but perhaps thanks to years of experience we are a tad better at complete sales,” says Galler, explaining the success.
Gordon Brothers guarantees its customers to sell every part
The main argument for hiring the clearance consultants: Gordon Brothers guarantees its clients that the entire inventory will be sold out. According to its own statement, the company has a sales rate of 100 percent. In the case of complete sales of branches in the event of mergers or takeovers, the company can, according to Galler, even guarantee its customers a fixed sum that the client will get in the end. Based on this, this guarantee should also be the case when the Real branches, which are taken over by the competition, are sold out.
If the sale does not go as planned, Gordon Brothers adds the difference to the specified amount itself. This guarantee is one of the main arguments in favor of commissioning the Gordon Brothers, especially for the chief financial officer of companies who have to plan their budgets firmly. In addition, the specialist frees up management capacities at dealerships for future-oriented projects, says Galler. In other words: while Gordon Brothers disposes of the old, the customer can take care of the new.
The consulting company is not always welcomed with open arms: “We are often seen as something negative, but from our point of view, the image of the remainder is unjustified,” says Galler. The manager sees himself more as a partner and helper for corporate customers.
The company sells goods worth 6 billion euros
Gordon Brothers closes thousands of branches worldwide every year, in Germany it is over 100 every year. According to its own statement, the company sells goods worth six billion US dollars worldwide, in Germany it is more than 150 million euros per year. From this and from other business areas, the company draws worldwide sales of around 50 million US dollars. Under Galler’s leadership, the company is relatively narrow in Germany: Gordon Brothers only has five employees out of a total of 250 worldwide. The US company sends 60 independent commercial advisors to support the branch staff on site.
Meanwhile, the pandemic is only giving the advisors an even bigger influx. Due to the corona crisis, the Gordon Brothers are hired by many German fashion retailers in particular to get rid of the autumn / winter collections that have been in lockdown in the warehouses and closed stores for months. At the end of December, the company had just sold out 30 branches of the Bonita fashion brand. “We were very busy even before the pandemic, but since the outbreak of the pandemic, demand has taken on another dimension,” says Galler.
There will probably be more to do for the sellers this year. Trade experts and the trade association HDE forecast between 50,000 and 200,000 business tasks in 2021.
However, since the clearance sales always take place on the customer’s premises, Gordon Brothers currently has to wait until the lockdown is over before it can sell out its customers’ goods. In the meantime, the goods continue to accumulate. For consumers, this means one thing above all else: huge discounts for reopening stationary retail.