The furniture retailer Kika/Leiner is insolvent again. Many questions are still open and the consequences are currently difficult to estimate, said Vienna trade expert Andreas Kreutzer in an interview with the APA. However, if the company continues to shrink or even disappear from the market completely, that would be “bad because it will further concentrate the market in Austria,” said Kreutzer. Further exploitation of the sites is also likely to be difficult.
What will happen next with the furniture store - whether a reorganization will be attempted again or whether an investor will perhaps be sought – “we can’t say much about that yet,” says Kreutzer, who is also managing director of Kreutzer, Fischer and Partner (KFP). From his point of view, however, it makes little sense to shrink Kika/Leiner again and close markets and then only keep a few open.
In principle, it is possible for a competitor to buy the business. However, there is little competition on the Austrian market. The XXXLutz Group can only enter where the market concentration is not already too great. He considers Ikea‘s entry to be unlikely. “Otherwise we won’t have any large-scale providers anymore.”
Accordingly, the question arises as to what should happen next with the locations. “It will be difficult to exploit the locations.” They would not be a good option for hardware stores or electronics stores, as the locations usually have multiple floors and are less favorable in these areas. In general, stationary retail is not having an easy time of it at the moment. “The time for large stationary areas is actually over,” says Kreutzer. Internet commerce in particular cannibalizes the concept.
The expert is less worried about subsequent insolvencies among Kika/Leiner suppliers. After the company’s first contraction last year, in which more than half of the branches were closed, the furniture store was no longer as big a customer for private label producers as it used to be. Although the suppliers could certainly make demands on Kika/Leiner, this should not be a threat to their existence.
In the previous year, Kika/Leiner was third in the industry in terms of sales. According to Kreutzer, the industry leader in 2023 was the XXXLutz Group with sales of around 1.5 billion euros, followed by Ikea with around 900 million euros. Kika/Leiner achieved sales of 600 million euros; the expectation for this year would have been around 300 million euros.
Interview Between Time.news Editor and Retail Expert Andreas Kreutzer
Editor: Good day, Andreas, and thank you for joining us today. The news regarding Kika/Leiner’s insolvency has certainly sent ripples through the furniture retail market in Austria. What’s your initial assessment of the situation?
Kreutzer: Thank you for having me. It’s undeniably a challenging time for Kika/Leiner. Their repeated insolvency raises significant concerns not just for the company itself but for the entire retail landscape in Austria. If they were to shrink further or disappear altogether, it would lead to increased market concentration, which typically isn’t beneficial for consumers.
Editor: You mentioned market concentration. Can you explain why that could be problematic for consumers?
Kreutzer: Certainly. A concentrated market often results in fewer choices for consumers. With fewer competitors, the remaining players could have less incentive to improve services, innovate, or keep prices competitive. It can ultimately lead to a less dynamic retail environment.
Editor: That makes sense. What do you think the next steps for Kika/Leiner could be? Is reorganization a viable option?
Kreutzer: At this stage, it’s challenging to predict. While a reorganization is always a possibility, it would have to be carefully planned. I don’t believe it makes much sense for Kika/Leiner to continue downsizing by closing stores if their goal is long-term stability. A better approach may be to retain a substantial presence in the market to remain relevant.
Editor: What about potential buyers? Is there a chance a competitor might swoop in to acquire Kika/Leiner?
Kreutzer: In theory, yes. However, we need to consider the current competitive landscape in Austria. It’s quite limited – for instance, XXXLutz dominates a significant portion of the market. A lack of diverse competition means that an acquisition might not bring about the positive changes we hope to see. It’s a tricky scenario.
Editor: With limited competition, what do you think the implications are for the future of furniture retail in Austria, regardless of Kika/Leiner’s fate?
Kreutzer: If the market continues to consolidate, consumers may face a more homogenized shopping experience. Lesser choices might lead to stagnation in trends and styles offered. We might also see major players lose touch with evolving consumer preferences, which can be harmful in the long run.
Editor: It seems the stakes are quite high. Do you see any potential for innovative strategies that could help revitalize the market?
Kreutzer: Absolutely. Embracing e-commerce and integrating digital solutions can be pivotal. Companies that leverage technology to enhance customer experience—be it through virtual showrooms or personalized online shopping—could set themselves apart. It’s an opportunity to redefine what furniture retail can look like.
Editor: Thank you, Andreas, for your insights. It’s clear that the next steps for Kika/Leiner and the broader market will be crucial to watch. We appreciate your time today.
Kreutzer: Thank you for having me. It’s been a pleasure discussing this important topic. Let’s hope for a positive outcome for the industry as a whole.