German retail group Metro has announced financial results for the first quarter of 2012 that stayed well below expectations. Their net loss of 81 million euro was attributed mostly to the under-performing electronics division Media Markt - Saturn.

India has finally loosened its law that forces foreign companies to work with a local partner. Good news for IKEA, Starbucks or Marks & Spencer, who only sell one brand. Multi brand retailers like Tesco, Walmart or Carrefour however are excluded from the new law, so they can still only hold a maximum of 51% of their Indian partner's shares.

Last year, 183 retailers went bankrupt in England and Wales, 11% more than the year before. Especially the last quarter was a reason for genuine concern: its 42 retailer bankruptcies represented a 27% rise compared to the third quarter of last year.

Will 2012 be a rich or a poor year for retailers? While the grim economical climate makes most people hesitant, as Gino Van Ossel (professor at Vlerick Management School) and Dominique Michel (Belgian trade federation Comeos) confirm in elaborate articles next week, retail watcher Herman Konings has another opinion: usually it is in the most difficult of circumstances that the best ideas and strongest innovations are born.

Dutch bank ING has released a fairly negative report on the future of European retailers. Its analysts see Tesco's weak business figures and Metro's profit warnings as the first signs of a weak fourth quarter.

“Consumer confidence is weakening in mature markets, as is the growth in emerging countries. In Europe, the euro and government debts remain problematic and new budget cuts are an additional reason to worry about most European retailers”, as the ING analysts say.

Thomas Cook, the second biggest travel company in Europe, has announced to close 200 of its 1300 British travel agencies, 125 more than announced earlier. The move, caused by disappointing financial results, lifts the job loss to 660. The group also aims to sell 6 of its 41 planes and about 500 hotels in an attempt to reduce the company's net debt of over 1.3 billion euro.

Exceptional charges sink yearly profits

In general, the financial year that ended on 30 September was not all bad, as revenue rose to from £8.9 billion to £9.8 billion (€10.6 to 11.7 billion) and underlying profit was still £303.6 million (over €360 million). Due to 'exceptional charges' however, results before tax went down from a £42 million (just short of €50 million) profit to a loss of £378 million (€475 million). The reported loss after tax was £518 million (€620 million), down from a £3 million profit last year.

The results did not come as a complete surprise, as the group had issued three profit warnings in 2011. The world's oldest travel agency (founded in 1841 and in Belgian hands until 1948 as part of the mythical Wagons-Lits company) was barely saved from bankruptcy by a £200 million (€240 million) emergency loan from banks last month. 

Walmart and Amazon, the biggest offline and the biggest online retailer in the world, have started a program to reduce excessive packaging. In two years time, Walmart hopes to reduce its packaging by 5% (compared to 2008), resulting in a staggering $3.4 billion (€2.5 billion) less spendings on packaging per year.

Garbage: 350 kilos per person per year

The American Environmental Protection Agency estimates that one third of all the garbage in the US is packaging, amounting to over 350 kilos per citizen per year. In December, the problem becomes even more acute, as household waste increases a further 25%. Apart from financial considerations, the giants' program is therefore also based on environmental issues.

Frustration free packaging

Personal experiences also sparked the decision: like many people, Amazon founder Jeff Bezos has experienced 'wrap rage' or “the stress that people feel when they can't open the packaging of a product”. His company now helps its suppliers in finding innovative methods of packaging that reduce the stress on man and nature, by using less packaging made from more recyclable products.

Amazon has been working on its “Frustration free packaging” since 2008, when the first 19 products met the program's standards. Now over 80,000 products (representing over 12 million items sold) meet the requirements, and Amazon hopes to triple that number in 2012.

97% garbage reduction

Walmart too is taking initiatives in this field: Hewlett Packard has won a design challenge of the world's biggest offline retailer by designing a protective bag for its notebooks that reduced packaging of 97% and, also important: reduced the required transport capacity by 25%. Another solution was developed by bluetooth headset maker Plantronics: by replacing AC chargers with (far smaller) USB cables, less material is needed – both for products and packaging...

Metro AG, Germany's largest retailer, has confirmed talks with Wolfgang Urban, ex-CEO of KarstadtQuelle, who wants to buy department store chain Kaufhof for a group of families from Düsseldorf. According to Bild am Sonntag, the group wants to buy a majority of 51%, but is prepared to buy 100% of the shares if necessary.

Three parties interested

Urban started his career at Kaufhof, but moved on to lead KarstadtQuelle – another interested party in the Kaufhof chain. Business newspaper Handelsblatt however reported that the bid by Karstadt's new owner Nicolas Berggruen has been rejected by Metro.

The status of the third proposal, that of Austrian Signa and the Greek billionaire George Economou, is unclear. Metro CEO Eckhard Cordes, who has been looking for years to sell Kaufhof, has recently stated he abandoned his hope to sell the chain before the year is over.

The Hungarian government has agreed to temporarily ban the construction of new shopping centres. In the next three years, building commercial buildings of more than 300 m² will be forbidden. With this measure, the government hopes to strengthen the position of Hungarian retailers.

Defending Hungarian retailers

“The goal is for the structure of retail to take a change for the better”, said government spokesman András Giró-Szász, who claimed that “69% of Hungarian retail is controlled by 1% of all retail enterprises, typically international corporations.” He said that exceptions could be granted by a special committee, but the conditions to be met are still unknown.

The Népszabadság newspaper claimed Aldi and Lidl would be the decision's main targets: both continue to grow in Hungary, despite (or owing to) the crisis. Other important foreign players on the Hungarian retail market are British Tesco and French Auchan, who would also be banned from building new hypermarkets.

... but endangering Hungarian builders

Representatives of real estate agents, shopping centres and employers are not too amused with the ban. “An average shopping centre creates 1000 jobs”, says Gergely Árendás of real estate agent Wing. His sector has been in a crisis since the Lehman Brothers bankruptcy of September 2008. Last year, the number of new contracts went down a staggering 37%.

Ferenc Dávid, spokesman of VOSZ (the Hungarian association of entrepreneurs and employers) warned that the ban will “deliver a blow to the domestic construction industry”. György Vámos, secretary general of OKSZ (the Hungarian trade association) also warned that the most important victim of the new ban will be the construction companies.

Saturated market

For the Hungarian shoppers, this ban is not necessarily a bad thing: the Hungarian shopping centre market is saturated. There are over twenty malls in Budapest alone, and given the average occupancy rate of 80, there is still a lot of room for expansion within the existing buildings.

The difficult relation between Hungarian chains and international corporations is not new: recently the CBA chain announced to be interested in buying the local stores of Cora, Match and Profi – all owned by Belgian group Louis Delhaize – to earn a stronger position against the foreign competition.