German booksellers locked in combat

In scenes reminiscent of the UK book trade in the 1980s and early 1990s, when Waterstone's and Dillons were engaged in a fierce battle for market dominance through acquisition and expansion, the German book trade is bracing itself for a similar contest. Who will triumph is not at all certain.

The two leading German bookselling chains, Hugendubel and Phönix, could not be more different. Hugendubel is a traditional, family-run, highly effective and committed specialist bookseller that prides itself on organic growth, does not seek publicity and shuns the Internet.

Universitätsbuchhandlung Phönix is brash, unashamedly ambitious, closely linked with online bookseller Buch.de and in constant acquisitive mood. It is backed by the vast financial resources of leading German retail group Douglas Holdings, which had sales of DM4.945bn (£1.54bn) last year.

From modest beginnings

Phönix started nearly 32 years ago as Montanus aktuell, a chain of small high street shops that sold newspapers, magazines, records and a small selection of fast-moving bestsellers. In 1979, founder Hermann Montanus sold the company to Douglas. The new owner kept the format until 1988, when it bought well-known bookseller Phönix.

Douglas took to specialist bookselling very quickly and subsequently bought an array of prominent independent bookshops, while at the same time opening its own Phönix branches. Phönix now operates 56 bookshops across the country and has selling space in branches ranging from 2,000 sq ft to 22,000 sq ft. New branches average 11,000 sq ft. Another 10 shops—all in prime locations—are in the pipeline for this year.

Phönix has grown faster than every other German bookseller. In less than two years it has opened 18 large bookshops, making it the second-largest bookselling group in the country behind market leader Hugendubel.

Spend, spend, spend

Hugendubel is the thorn in the side of Jörn Kreke, c.e.o. of Douglas Holdings and Michael Busch, Phönix managing director. Mr Busch is holding the fort alone, after joint managing director Ferdinand Braun's recent departure for Bertelsmann. Both executives are driven by their declared aim to overtake Hugendubel as soon as possible, with price no obstacle. During spring 2000 speculation circulated about an imminent German acquisition surpassing DM100m (£31m), but the deal never materialised.

Instead, Phönix mounted a serious challenge to Hugendubel's title as market leader through expansion outside Germany. It turned to neighbouring Switzerland and bought leading booksellers Jäggi and Stauffacher in quick succession to become the undisputed Swiss number one, adding nine successful bookshops and sales of DM60m (£19m) to the portfolio (The Bookseller, 19th January).

Further shopping trips abroad have not been ruled out by the management, leading to speculation in Germany that Phönix might be on the verge of entering the Austrian market. Helped by its Swiss acquisitions, the bookseller closed the gap on Hugendubel significantly in 2000 without managing to snatch the number one slot—Hugendubel recorded sales of DM333m (£104m) in 1999 and is expected safely to pass DM400m (£125m) in sales for 2000.

According to preliminary results for fiscal 2000 that were published by Douglas last week, Phönix had sales growth of 39.4% to DM343m (£107m). Without the Swiss shops, sales would have been up by a substantial 15%, with comparable store sales up 6.4%.