XXL – already a Nordic champion

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XXL Sports and Outdoor is one of the biggest successes in Scandinavia in recent years. The Norwegian big box chain has completely changed the sports market in Norway and Sweden – and started the same journey in Finland last month. In June, the Swedish country manager, Marcus Wibergh, will become Nordic manager. Exclusively for ScandinavianRetail.com he sums up XXL:s first four years in Sweden and why all competitors are knocked down, licking their wounds.

It’s a fantastic warm and sunny Wednesday in Stockholm City in May. The street Hamngatan is crowded with people on their way to work or shopping.

On a prime location, across the street from the NK department store, among balloons and event people wearing black bodysuits is an ongoing queu into XXL:s first citystore. Number 15 in Sweden and a great roundup for Marcus Wiberg as a country manager who has lead the chain from no sales at all to over 2bn SEK turnover in three years.

With profit.

“I never thought I’d be standing here four years /September 2010) after opening out first store in Bromma.”

“Our concept has been crucial. It’s easy to say today, but we’ve known what the market wants: Well known brands at low prices is our pay-off. And all under one roof.”

Let’s go back to 2010.  Intersport, Stadium and Team Sportia dominated the Swedish market. Many saw a potential for a new actor.

European giant Decathlon was one of them, The new project Usports with strong finacial investors another one. And then XXL. They all had big box-concepts, bigger stores than none of the previous big three in Sweden had.

Usports opened Sweden’s largest sports store (5 000 sqm) in Malmö in October 2011, Decathlon opened in Ulvsunda, Stockholm, a month later an even bigger store (7 000 sqm).

Usports opened two more stores, and went bankrupt in march 2013.

Decathlon had a lot of contracts going on, and still has, but only opened their second store in September last year. And closed down the first by the end of March this year.

Intersport tried a consolidation, making all store owners give up their ownership in their stores and become shareholders instead and to go for the stock market. All plans were set, contracts signed – and then cancelled on overtime due to financial difficulties.

Team Sportia, owned by the franchisees, managed to avoid a total crash and is recently reconstructed.

 

The only participant who not seems to be wounded is Stadium, which first tried to steal the XXL-appendix by naming their first flagships Stadium XXL. Today they’re called Stadium+.

Marcus, his succeeder Lars Bengtsson, and Toni Stigzelius, the country manager of Finland, all have a Stadium-background. Maybe it’s not a coincidence.

“Stadium has been very consequent with their concept and has not tried to challenge us. They have a growing outletconcept, but it does not have any effect on us. They make good profit, but it’s not the same go as before. The previous management would have shaped up their store over there when they knew we were coming”, says Marcus Wibergh and nods at the Stadium store further up the street.

 

In 2010 everyone in the business knew about Decathlon. But Marcus Wibergh met property owners who thought XXL was selling clothes in big sizes.

And in Stockholm they were fighting about the same locations as the french giant. Maybe the outcome of the game was set when XXL chose Bromma before Ulvsunda – Decathlon did the opposite.

“I am so glad we did not jump on to Ulvsunda. It was much cheaper. You often choose between A- and B-locations and compare with the rent.”

And Decathlon could not come to a decision about Arninge, so XXL stole the contract.

“Decathlon has made so many strategic mistakes. I think they will have a huge problem to get back. They have 95 percent own brands and  it takes 10-15 years to build a new brand. All business is local and you need to be humble and learn the market. Otherwise it will get consequences.”

Marcus Wibergh thinks Usports was too much excelsheets and less passion about retail.

 

He returns to the key factors behind XXL: Passion – and cost effectiveness.

“We are very cost effective, very few people, and we work very hard! And we are consequent with one concept.”

“G-Max in Norway is an effort to copy us and it’s not easy to have several concepts. The costs rise when prices and marketing have to fit them all. Look at Intersport which has stores ranging from 10-80 million SEK turnovers. They need an assortment offer, marketing and logistics that fits all – and a working price strategy. Besides that they have a great share of franchise with strong local owners. When we adjust a price, all stores adjust the price.”

And Team Sportia?

“They’ve come through the reconstruction, but all logic says they won’t have the same supply deals as before. We’ll see what happens there – their journey starts now.

Back to 2010 again. Another key factor for XXL was the successful launch in Bromma Blocks. The marketing was massive.

”We went all in there. I can tell you I did not sleep well the nights before opening.”

“But it could not have come out better. It was a 10 on the scale.”

“You get one chance to succeed – the first. It’s a chance you don’t get again. It’s almost the same here in the city location. And when we launched our first store in Tammisto (Vantaa, Helsinki-area) we made a Bromma-copy. And it was fantastic.”

Apart from the planned marketing  – XXL got a lot of positive mouth to mouth-marketing. And in a nation wide Mystery shopper survey they came out as one of the best in Swedish retail.

”We were very proud of that. It was a strong feedback we were doing things the right way. We are a low cost concept. But we have specialists on all areas. We are a specialist store in a big format and the costumers don’t expect that kind of service. And we’ve worked hard on the customer experience from the start.”

XXL was profitable from the first year in Sweden and has been able to expand as planned – or even better.

Will they copy that in Finland?

“We’ve made a big commitment, we’ve signed up for 50 000 sqm of sales area so far. We have ten contracts on a total of 450 mn SEK (appx EUR 47 mn). So we will keep a high speed there too. We’re aiming at 15-20 stores, three this year”.

The 4000 sqm stores need a population-area of 100 000 people, this means Sweden got a potential for 35 stores.

“We’re looking at the larger cities. We’ve still got Malmö left for example.”

Denmark?

“We say no all the time. Everyone know how tough it’s there and how many retailers that had to give up. And my previous employer struggles there now and talk about closing down stores. But strengthened by Finland we might as well put a store there and try online shopping for the rest. Then we wouldn’t need that physical presence in the same way.”

Marcus Wibergh has also mentioned a further expansion in Europe. The new organisation will value  the markets, first of all countries with similar seasons as Scandinavia.

“I think we would fit in well in countries like the Czech Republic, Austria and Switzerland”.

Is it a way into Germany?

“No, that is a completely different market.”

Is there something to be unsatisfied with so far?

“We’ve done plenty of mistakes with our online shopping so far. We are people from the physical stores and we’ve often had meetings saying that online business is important without putting it in the centre. Now we’ve done that in a new way and put much more effort into it. Logistics is very important and that’s one area we’ve done wrong. Now we have a central warehous in place and will get a completely different availability of our stock.

You will go back to Norway with the new organization. Have you become more Norwegian?

“I must say yes there. I’ve learned a lot through these years. The Norwegians have got some skills they do better than Swedes.”

Which skills?

“The Swedes look for consensus, common agreements, all the time. Norwegians need a good feeling and some logic to make their decisions. Then they take a few step forwards – and when they bump into problems they take a new decision.”

“It’s very cool to watch how they go forward. They have a balance in problems versus possibilities.”