End of the pandemic will spur rise in demand, says Fourlis Group head
Vassilis Fourlis, executive board chairman at the Fourlis Group, predicts that following the coronavirus pandemic, there will be a boom in consumer spending in this interview with Kathimerini. However, he believes that the predicted increase in demand will not be spread equally across all sectors. Fourlis stresses that despite the losses faced by the group’s retail chains (Fourlis holds the franchises for furniture and home accessories giant IKEA and sportswear retailer Intersport in Greece and elsewhere), which recorded an almost 20% drop in sales from 2019, he is trying to view this period not as a time for wallowing in self-pity, but as an opportunity to improve and innovate.
He affirms that the group’s online sales have seen exponential growth, as have those of many retailers internationally, and he expects that a large part of this growth will persist past the end of the pandemic.
He also addresses the new challenges facing businesses, stating, “We believe that at the center of digital transformation is the process by which we handle and analyze data.” For Fourlis, data represent a “competitive advantage.” The Fourlis Group is investing in new e-commerce platforms, CRM software, call centers, delivery mechanisms and logistics. At Oinofyta, approximately 60 kilometers northwest of Athens, the Fourlis Group is planning to install a cutting-edge system that will automate the storing and sorting of goods. Fourlis mentions that, “with this system, we will be in a position to supply a hundred stores in four countries daily while also fulfilling online orders, which in Greece alone have climbed to over 4,000 a day.”
Additionally, Fourlis provides insight into the strategy of the group’s new property management branch, Trade Estates SA. While existing retail properties owned by the group serve as a basis for the new company, Fourlis explains that, “soon, the firm’s property portfolio will be enriched with property rented to important international businesses.”
Fourlis also talks about the Greek government’s reaction to the pandemic and the measures it has taken to support businesses in these trying times. He says that “we operate in five countries and none of the others reacted as fast as Greece did.” He concludes by discussing the bold decisions currently being taken by the group as well as its pending expansion into new fields, which he does not want to reveal too much about just yet.
How widespread is the damage caused by the restrictive pandemic measures to the retail sector?
Due to the constant lockdowns as well as the difficulties facing international supply chains because of the pandemic, we saw a reduction in sales of almost 20% compared to those of 2019. The number is different from product to product and from country to country. As I’m sure you understand, when a retail company loses 20% of its sales, its profits are squeezed or even completely eliminated. We are trying to view this year as an opportunity for improvement and innovation though, and not one for self-pity.
Do you believe that demand has been suppressed by the pandemic and that a return to normal conditions will spur a rapid recovery?
In the period immediately following the end of the pandemic there will be a boom in consumer spending. In fact, we witnessed this occur in the days immediately after the end of the first lockdown. We know that bank deposits have increased as people have not had the opportunity to spend as much. It follows therefore that we can expect an increase in demand when the pandemic is over. What we cannot say with any certainty is whether this increased demand will be enough to support a stable recovery. We also believe that there will be discrepancies in the rise in demand for various types of goods. Basic goods such as children’s clothing will probably see a higher surge in demand. This will also hold true for goods related to habits developed during the pandemic, such as equipment for working from home.
What has the pandemic taught us about online sales?
Online sales have seen a sharp increase worldwide and part of this increase will remain after the pandemic. The pandemic has essentially accelerated the development of existing new trends. Online sales will continue to rise but we should be careful not to overestimate. The proper combination of online and offline sales will vary between goods. Meanwhile, having an exclusively online presence is not enough. Quality must be ensured throughout the chain of customer service and customer experience, a user-friendly website, availability, timely delivery, ways of payment and so on.
Do you believe that the government measures to support businesses hit by the pandemic are in the right direction? Would you recommend any further measures?
Considering the impact of the pandemic on the economy, no measure is enough to make up for the huge damage. However, we have to acknowledge that the measures taken by the Greek government, given the country’s fiscal space, were immediate and quite targeted. We operate in five countries and none of the others reacted as fast as Greece did.
Have you invested in the company’s digital transformation?
Digital transformation is not only about offering products online. It is a far broader concept. We believe that at the center of digital transformation is the process by which we handle and analyze data. Data offer a competitive advantage. As a retail firm, we need to know our customers so that we are able to provide customized services. We are investing in new platforms: e-commerce, CRM, call centers, as well as delivery and logistics.
Could working with Austria’s Knapp in the supply chain – an 11-million-euro investment if I am not wrong – give you a competitive advantage?
We have been working with Knapp for many years. Cooperation started with IKEA many years ago and it is constantly developing. Trade Logistics, our subsidiary, relies on Knapp systems to manage IKEA’s 50,000-square meter warehouses. From there, our stores, online orders and – soon – all the new small and medium-sized IKEA stores are served. Now it is the turn of Intersport, the largest sportswear chain in Greece and Cyprus, with a significant presence in Romania and Bulgaria. We plan to move the existing warehouse to new 25,000-square meter facilities in Oinofyta, where a state-of-the-art automatic system for the storage and sorting of products will be installed, again by Knapp. With this system we will be in a position to supply a hundred stores in four countries daily while also fulfilling online orders, which in Greece alone have climbed to over 4,000 a day.
Do you have plans that will be activated right after the pandemic?
As I said earlier, 2020 was full of future plans. We completed a five-year plan of development and improvement for 2021-25. This includes plans for IKEA and Intersport, as well as new projects. We have already announced the establishment of a real estate investment company (REIC) for real estate development. We also plan soon to enter a new retail sector. Of course, we live in a fluid world which is changing at high speed, mostly because of technological progress, so long-term plans must be constantly adapted.
Tell us about your plans to enter a new retail sector.
We shall make everything known in due course.
What is your strategy with Trade Estates?
Our ambition is to create a separate REIC. The key characteristic of Trade Estates will be the focus on retail and logistics parks. We believe that the focus improves company effectiveness and helps investors better understand what they are investing in. Furthermore, we aim to achieve low management costs and transparency.
While commercial real estate is the leavening of our group, soon the firm’s property portfolio will also be enriched with property rented out to important international businesses.