Peek & Cloppenburg Kg Business Information, Profile, and History

Company Perspectives:

Social Awareness: It is of utmost importance to P&C to offer our customers goods produced under human conditions with concern for environmental protection while respecting the industrial safety regulations of the respective country. We therefore only work with companies who practice fair remuneration, social security, and protective health measures, prohibit child labor and take measures to protect the environment. These companies in turn are obligated to only accept materials from suppliers who are obligated by contract to fulfill these same requirements. Product Safety: P&C requires each supplier to adhere to German law by obtaining chemical analyses before each delivery especially regarding the "Food and Items of Usage Law." In addition P&C randomly tests goods received at different European laboratories for forbidden Azo dyes and other substances (e.g. pesticides, heavy metals, PCP, formaldehyde, nickel and now also TBT, etc.).

History of Peek & Cloppenburg Kg

Based in Düsseldorf, Peek & Cloppenburg KG is among Germany's leading apparel retailers. The company owns 65 large fashion stores in big cities, offering clothing for the whole family in the middle and upper price range. Peek & Cloppenburg is also present with two stores in Vienna and with one in Warsaw. The company's subsidiary Anson's Herrenhaus KG sells menswear in 16 sales outlets, including stores in Belgium and the Netherlands. Peek & Cloppenburg and Anson's stores carry upscale designer labels such as Armani, Bugatti, Cerruti, Joop, Ralph Lauren, Hugo Boss, S. Oliver, Bugatti, Esprit, and Strenesse in a shop-in-shop system. The company also sells clothing under its own labels such as McNeal and Savannah. Peek & Cloppenburg is majority-owned and run in the fourth generation by members of the Cloppenburg family.

Beginnings in the 19th Century

The roots of Peek & Cloppenburg go back to the 19th century. In 1869, Johann Theodor Peek and Heinrich Cloppenburg established their first fashion store in the Dutch city of Rotterdam. The two German apparel merchants had moved from Westphalia to the Netherlands, as many others had done, including the Brennikmeyer family, which later founded Germany's leading textile retail group and Peek & Cloppenburg's foremost competitor. However, Heinrich Cloppenburg's son James moved back to Germany, and in March 1901 founded Peek & Cloppenburg in Germany. In the same year the first Peek & Cloppenburg stores opened in Düsseldorf's Schadowstrasse and in Berlin's Gertraudenstrasse.

From the Turn of the Century to World War II

In the beginning, Peek & Cloppenburg stores carried only men's apparel. At the turn of the century, it was still most common for clothes to be tailored to the customer's specifications, which made industrial manufacturing of clothes impossible. However, with the appearance of industrial sewing machines apparel makers thought about ways to overcome this obstacle. Peek & Cloppenburg came up with a uniform size system for men's clothes which enabled them to order and stockpile larger batches of a certain style. In 1907, the company started printing and mailing catalogues to potential customers to promote its self-produced high-quality menswear. In the early days the catalogues included drawings--not photographs--of the available models and their price. After 1910, Peek & Cloppenburg started offering a line of clothes suitable for the tropics, catering to the needs of Germans who lived in the country's African colonies. In 1911, James Cloppenburg's brother-in-law Paul Schröder founded his own company in Hamburg and opened a first store there in the same year. In order to distinguish the two independent firms, they were later referred to as "P&C North" for the company in Hamburg and "P&C West" for the Düsseldorf-based firm, the history of which is the main focus of the following sections.

In 1926 James Cloppenburg, Jr., the son of James Cloppenburg, entered the business. After the economic downturn following World War I had been overcome, Germany enjoyed a short period of economic growth in the second half of the 1920s. During that time, Peek & Cloppenburg provided Düsseldorf's and Berlin's upper-class families with elegant clothes. Over time Peek & Cloppenburg expanded its product range, starting with clothing for boys. In the mid-1930s the company also started carrying women's apparel. In 1936, another Peek & Cloppenburg store opened in Frankfurt's Zeil boulevard, followed by another one in Essen one year later.

Recovery after World War II

World War II once again interrupted the development of the business--and it could have been the end for Peek & Cloppenburg. All of its stores, centrally located in inner cities, were destroyed during the war. But the company owners decided to live up to the challenge and started making plans for new stores in Düsseldorf, Frankfurt, Essen, and Berlin. Reconstruction went slowly since raw materials and equipment were scarce. However, that didn't stop the company from selling clothes again right after the war. A provisional store was opened near Frankfurt's Kaiserstrasse, and in October 1945 on the Zeil boulevard. Finally, in 1950, the old location in the city of Frankfurt was opened again, starting out with a limited store size. Two new Peek & Cloppenburg stores opened in the 1950s: one in Recklinghausen, a city in the Ruhr, in 1955, and one in Berlin in 1956.

Because of the prevailing shortage of supplies of all kinds, including apparel, Peek & Cloppenburg decided to set up their own clothing production. By 1963 about 650 people worked at the company's menswear factory in Herne. At that time Peek & Cloppenburg was considered to be among Germany's leading manufacturers of men's clothes. However, at the end of the 1960s Peek & Cloppenburg decided to discontinue its production arm which was sold and later became known as the firm Dressmaker. While rebuilding and modernizing old stores, the company focused on expanding its distribution network. In the 1970s, Peek & Cloppenburg also invested in advertising, establishing the image of a modern, high-quality brand fashion retailer. The 1970s also marked the beginning of a period of business expansion which lasted for about two decades. Peek & Cloppenburg opened six new stores in the 1970s and eleven in the 1980s, many of them located in newly opened shopping malls. The company also started buying up its competitors. In 1969, Peek & Cloppenburg acquired the Mannheim-based firm Neugebauer and Wuppertal-based Klischan. In 1973, Peek & Cloppenburg bought the firms Vetter in Karlsruhe and Hettlage in Krefeld. In the late 1970s, the company acquired two more competitors: Lünen-based Kepa and Römer located in Offenbach. In the mid-1980s Peek & Cloppenburg took over three department stores from the German Hertie chain, located in Dortmund, Herne, and Castrop-Rauxel. By 1986, Peek & Cloppenburg had become one of Germany's leading textile retailers, generating total sales of DM 1 billion annually in 32 sales outlets.

Expansion Under New Leadership Begins in 1986

After steering Peek & Cloppenburg for 60 years, James Cloppenburg died in 1986 at age 84. His son Harro Uwe had worked in the family business since 1968 and became CEO at age 45. He kept expanding the business in the early 1990s. When the Peek & Cloppenburg store in Essen moved to a new location in 1989, the old store was re-opened as a special store for meanswear under the brand name "Anson's" which was managed by the newly-founded Anson's GmbH. The company decided that in every city where a Peek & Cloppenburg store already existed, the second store would be an Anson's. The concept was to offer a wide range of menswear, including special sizes, from classical to high fashion. With a focus on the middle price range, Anson's offered more expensive designer brands as well as less expensive clothes under the store's own labels. While there was a lot of redundancy with the menswear offered at Peek & Cloppenburg stores in the beginning, Anson's started developing its own profile.

In early 1993, Peek & Cloppenburg acquired 15 stores from Bernward Leineweber GmbH & Co. KG, adding 1,100 employees to its payroll. Many of the former Leineweber stores were located in northern Germany, especially in Hamburg. In order to avoid problems with the Hamburg-based Peek & Cloppenburg group, the company decided to push the Anson's concept and converted most Leineweber stores into Anson's stores. Anson's GmbH was transformed into Anson's Herrenhaus KG which operated independently from its parent company. Harro Uwe Cloppenburg's son Hendrik became Anson's purchasing director. Later his younger son John became part of Anson's management team.

Harro Uwe Cloppenburg was mainly responsible for everything connected with buying and selling clothes, including personnel. All other business functions such as accounting, controlling, IT, logistics, and public relations he handed over to Hartmut M. Krämer, a manager whom he had hired on recommendation of a common friend. In 1989, Krämer became a co-owner of the company--at that time the only one who was not a member of the Peek or Cloppenburg families. Harro Uwe Cloppenburg avoided public appearances. He rarely attended industry events and maintained relationships by entertaining a few selected business partners at his home. Krämer represented the company at the obligatory trade shows and other public events such as the opening of new Peek & Cloppenburg stores. At the same time the influence of the Peek family diminished. By the mid-1990s only one family member had remained in the Peek & Cloppenburg management: Walter Peek, who directed the company's women's apparel department.

In the mid-1990s Peek & Cloppenburg kept opening new fashion stores for the whole family. As early as 1987, the company was planning to tear down the old building in West-Berlin's Tauentzien that housed Peek & Cloppenburg's flagship store in Berlin. However, U.S. retail group W. Woolworth, which ran a store right next to Peek & Cloppenburg and who at first wanted to cooperate with the company, later changed their mind. The location was mainly frequented by upscale clientele while Woolworth targeted less moneyed consumers and didn't want to risk a huge investment in the wrong place. Finally, in the early 1990s Woolworth gave up its location, and Peek & Cloppenburg built a new store within 14 months. The new store with six levels and 450 employees opened in spring 1995. The second-largest Peek & Cloppenburg store--only the company's Frankfurt location was larger--was the biggest investment in the company's history to date. For the first time the store offered fashion for young people, including the Levi's, Diesel, and Chevignon labels as well as its own Review label. Another innovation was the "Fashion Sport" section. New Peek & Cloppenburg stores were also opened in big eastern German cities such as Potsdam, Leipzig, Dresden, and Stralsund. Between 1986 and 1995, the number of Peek & Cloppenburg stores grew from 32 to 47.

Activities in Western Europe in the 1990s

While the company had successfully expanded against the industry trend in Germany up until the mid-1990s, Peek & Cloppenburg was less fortunate with its ventures abroad. Through its subsidiary Gerhard Horn KG, Peek & Cloppenburg held a 42.3 percent share in the Dutch P&C Groep N.V. P&C Groep generated about DM 400 million in sales, employed 1,600 people and owned 42 stores in the Netherlands and 14 in Belgium, including Peek & Cloppenburg stores; the Somebody outlets that sold the company's own brand; and the Mac&Maggie stores. The group's second major shareholder was Amsterdam-based firm Vendex International N.V. which held almost 25 percent of the shares. The remaining P&C Groep stock was traded at the Amsterdam stock exchange.

Beginning in 1994, Peek & Cloppenburg continuously increased its interest in P&C Groep. By January 1995, Peek & Cloppenburg had acquired the share majority of more than 68 percent; in May 1998, the company took over the Vendex shares and bought the remaining 5 percent of the shares which were publicly traded. By December 1998, P&C Groep had become a wholly owned Peek & Cloppenburg subsidiary. However, while P&C Groep had turned up profits until 1993, the group started generating losses in the following years. To turn around the trend of decreasing sales, P&C Groep introduced the shop-in-shop system in six of its Peek & Cloppenburg stores such as in Brussels and Antwerp. Besides the company's own brands such as Somebody, No Matter, and Sideway, P&C Groep started selling designer brands, including Bugatti, Esprit, Levi's, S. Oliver, and Marc Aurel, and also introduced baby clothing under the Beebies label. However, P&C Groep's efforts to stop the downward trend were not successful. With consumers in the Netherlands and Belgium holding back on clothing purchases, the cost for advertising and reorganization didn't turn into higher profits. Consequently Peek & Cloppenburg sold off most of P&C Groep's stores in the late 1990s. Between November 1995 and February 1996, the Mac&Maggie stores in the Netherlands and Belgium were sold; the two German stores in Essen and Cologne were sublet. Another 22 stores were sold to the German Charles Vögele Group. By spring 2001, the number of Peek & Cloppenburg stores in the Netherlands and Belgium had decreased to less than ten. All of the remaining stores were planned to be transformed into Anson's stores.

Besides its activities in Belgium and the Netherlands, Peek & Cloppenburg also ventured into neighboring Austria. In spring 1997, Peek & Cloppenburg announced that it had teamed up with Hamburg-based Peek & Cloppenburg North to expand into Western Europe. The two independent companies which already cooperated in purchasing, personnel and advertising, founded a subsidiary in Austria in which the Düsseldorf-based group had a majority interest. In 1998, two Peek & Cloppenburg stores opened in Vienna which were stocked with women's fashion by Peek & Cloppenburg North, while Peek & Cloppenburg West managed the menswear department. In 2001, Peek & Cloppenburg opened its first store in a shopping mall in Warsaw. The company planned to open more stores in Austria and Poland and to expand into Hungary after 2001.

Reorganization and A New Image

The late 1990s were a hard time for Germany's fashion department store chains. Many of them, such as long-time market leader C&A, were struggling with declining sales. Others went out of business or were bought up by larger competitors. Peek & Cloppenburg managed to resist the trend mainly by opening new stores, thereby generating more volume. However, sales per square meter were stagnating and even declining in some locations. The variety of Peek & Cloppenburg stores--from big houses with over 16,000 square meters of shopping area in big cities such as Frankfurt and Berlin to small stores with only about one sixth that size in small cities--became more and more of a management challenge. In addition, smaller competitors with marketing concepts that were high fashion oriented and well-targeted, such as Swedish Hennes & Mauritz and Kiel-based New Yorker, as well as outlets competing with low prices, were luring customers away from bigger stores such as Peek & Cloppenburg. The company reacted in two major ways.

First, it reorganized its structure, partly to keep the company from being split up by family shareholders, partly to avoid becoming large enough to be required by the law to publicize key financials. Peek & Cloppenburg's major company, James Cloppenburg KG, was split up into three smaller ones while the number of shareholders actively involved in management was diminished. The newly founded Harro-Uwe-Cloppenburg-Stiftung based in Liechtenstein became the second largest shareholder after James Cloppenburg's widow Elisabeth. Second, the company tried to cut cost in different ways. When sales were declining in the mid-1990s the company reduced its workforce through layoffs.

However, despite relatively rigid German labor laws, Peek & Cloppenburg managed to significantly reduce the number of full-time employees by giving some part-time contracts instead. Soon about one quarter of Peek & Cloppenburg personnel was employed on an "on-call" basis and did not receive a fixed salary. Peek & Cloppenburg also refused to pay the license fee charged by Germany's national recycling company Duales System Deutschland and set up their own recycling system to comply with German law. When German banks pushed an electronic payment system with high fees, Peek & Cloppenburg refused to participate. Instead, the company pioneered a system of electronic charge card purchases based on the commonly used Euroscheck check banking card which was later adopted widely throughout the retail landscape. Another way to cut cost was to increase the percentage of house label sales, which traditionally yielded higher profits, while keeping a high profile through selling top designer brands. To reach that goal the company started improving the coordination of collection design, logistics, and marketing and strengthening the visibility and image of its own brands. At the other end, Peek & Cloppenburg reduced the number of vendors.

A second measure to counteract the market trend, Peek & Cloppenburg executed a general image overhaul. Starting with a new typeface especially developed for the company, the modernization of Peek & Cloppenburg's own "outfit" also included the architecture and interior design of the company's new flagship stores to be built in Dusseldorf, Cologne, and Stuttgart, which were planned by international star architects. The company's traditional advertising method--catalogues included in major general interest, news, and fashion magazines--was continued with a fresh, more modern image oriented on the standards of upscale fashion magazines such as Vogue and Elle, including the booking of top models such as Claudia Schiffer. These measures were accompanied by an image campaign under the slogan "We are family," showing VIP testimonials such as singers Nina Hagen and Ute Lemper in Peek & Cloppenburg clothes.

In 1998, managing director Hartmut M. Krämer left Peek & Cloppenburg to become the new CEO of French retail group La Redoute. One year later with the retiring Hans Peek, the last member of the Peek family left Peek & Cloppenburg's management. By the end of the 20th century Peek & Cloppenburg had almost reached its limits of growth within Germany and was preparing for further expansion into Europe.

Principal Subsidiaries: James Cloppenburg KG West; Anson's Herrenhaus KG; P & C Groep N.V. (Netherlands); Peek & Cloppenburg G.m.b.H. (Austria); Peek & Cloppenburg BV (Belgium); P&C Sp.z.o.o. (Poland).

Principal Competitors: H&M Hennes & Mauritz AB; Otto Versand GmbH & Co.; C&A; Karstadt Quelle AG.

Chronology

• Key Dates:
• 1901: The first Peek & Cloppenburg stores open in Berlin and Düsseldorf.
• 1911: Peek & Cloppenburg North is founded.
• 1936: Peek & Cloppenburg stores start carrying women's clothes.
• 1945: All of the company's stores are destroyed.
• 1986: Harro Uwe Cloppenburg takes over as CEO after his father's death.
• 1991: Anson's is established as a second store concept.
• 1995: Peek & Cloppenburg's flagship store in Berlin opens its doors.
• 1997: Two Peek & Cloppenburg stores open in the Austrian capital, Vienna.
• 1998: Dutch P&C Groep becomes a wholly owned subsidiary.
• 1999: The company launches an image campaign under the slogan: "We Are family."
• 2001: The first Peek & Cloppenburg store in Poland opens in Warsaw.