Hamburg, May 22, 2012 | Hermes Europe

Hermes: on track for further growth with global services for the retail industry

Companies operating under the Hermes brand were again able to grow their global revenues in the financial year 2011. Overall revenues increased to 1.8 billion euros, up by more than 4.7 percent year on year (prior year: 1.724 billion euros). Both Hermes UK, successful on the British home delivery market, and Hermes Einrichtungs Service, specialised in delivering furniture and bulky items, achieved record figures for sales and shipment volumes. Given the positive trend across all four business units - sourcing & product, transport logistics, fulfilment and distribution - the Hamburg-based enterprise was able to employ 773 more staff worldwide. Thus, by the end of the prior financial year 2010/11, the twelve Hermes companies were employing 11,011 staff in over 20 countries.

"Our strategy of establishing Hermes as a worldwide service partner for the retail industry has come up trumps. An increasing number of international retailers are making use of our individual service modules or are combining them, such as procurement and transportation. In the future, we are looking to become more involved in e-tailing - by also expanding on our own web-enabling activities. Ultimately, it is highly likely that clients who we can encourage to use the web as a sales channel, will also be calling on Hermes for other logistics and retail-related services," says Hanjo Schneider, CEO of Hermes Europe and member of the Executive Board Services at the Otto Group. "In 2012, we will be building on and internationalising our digital services significantly, always with an eye on emerging markets in BRIC countries. The online offerings of many retailers, for example those in Brazil, provide enormous potential that we are looking to tap, bringing in our experience in the clothing and consumer goods segments.”

As a globally unique company, Hermes offers its clients all the services they need along the whole of their value chain. The services provided begin with the sourcing and quality assurance in Asia, for example, and extend from international transport logistics and warehousing through to fulfilment and B2C logistics. In this respect, the requirements of both small medium-sized companies as well as large enterprises are uniformly serviced, with customized services provided for both pure Internet retailers as well as multichannel retailers.

"The start of the new business year has been promising, and even now, although transport logistics and distribution are particularly susceptible to high fuel prices, we are ahead of our figures for last year. And despite the continuing uncertain economic prospects, we remain optimistic about our growth chances in 2012 and about achieving our ambitious sales targets. To this end, we are looking to employ a further 500 new staff in 2012," summarises Hanjo Scheider the prospects for the coming financial year.

Distribution: Good result despite increasing competition and growing cost pressure
Hermes parcel services shipped around 430 million items in 2011, 389 million of which were parcels. This represents an increase of five percent on the volume of 371 million parcels shipped in 2010. Roughly 65 percent of the parcel volumes are attributable to non-Otto Group clients. In Germany alone, seven of the top ten distant sellers use Hermes to deliver their goods to customers' homes.

Hermes Logistik Gruppe Deutschland (HLGD) contributed the largest proportion of total Hermes revenues; at 986.3 million euros this marked an increase - for the eighth year in succession - of three percent compared to the prior year (958.4 million euros). With the launch of its small packet service - just in time for the Christmas business in 2011, and the consistent expansion of digital services in all matters relating to parcel shipments, HLGD is planning to continue its profitable growth into 2012. Significant investment in its last mile structures are aimed at increasing the quality of deliveries to the end consumer.

Parcel business: Cooperation with delivery partners is being certified

With this in mind, HLGD has developed a certification system in collaboration with specialists from SGS-TÜV Saar GmbH. All general contractors across the country that cooperate with Hermes in home deliveries will run through the certification process in 2012. Besides examining aspects such as processing quality and compliance with operational security guidelines, the certification process will also be paying particular attention to the working conditions of couriers and compliance with labour law regulations. Both HLGD and the general contractors operating in the last mile are looking to use this certification system - the first of its kind in the industry - to demonstrate their corporate responsibility particularly with respect to fair working conditions in the home delivery market.

In being awarded the certificate, tested general contractors can use the seal of quality for their own promotional purposes. Companies that are not certified, or whose certification is subject to conditions, have to follow up their work together with HLGD, or discontinue their work with Hermes.

Growing presence in the European parcel market

Developments at Hermes Einrichtungsservice GmbH & Co. KG (HES) were also highly encouraging. The market leader in the delivery of furniture and bulky items delivered 3.5 million items of furniture, electrical and household goods to end customers across Germany, a rise of 15 percent year on year (2010/11: 3,018 million items). On top of this, the company secured top marks in quality tests conducted by TÜV Saarland.

Hermes UK was awarded the prize of 'Best home delivery/service solution 2011' by ECMOD* jurors at Britain's main annual distance selling and e-commerce event. In 2011, the company grew its revenues by 22 percent from 248 million euros in 2010 to 303 million euros, thereby reinforcing its position as the country's second largest home delivery service. In addition, the company works with such renowned clients as Cloggs, MandMDirect and New Look, with constantly high parcel volumes. What's more the Hermes UK network was expanded to include another hub in Warrington and a depot in Gatwick, and now embraces a total of 20 sites. Drawing on the successful German model, around 1,000 ParcelShops - particularly in retailers in urban regions - are to be opened by the end of 2012. These provide customers the chance to pick up their parcels and/or drop off returns.

Since the end of 2011, Hermes has also been providing customers in Russia with an alternative, reliable delivery service in a growing B2C market, that has been tapped with particular success by the Otto Group in its distance selling segment. Together with DPD, a joint venture has been founded that is pursuing a strategy of developing a powerful network of ParcelShops. To date, over 300 ParcelShop have been set up in a variety of cooperations with retail chains in eight major cities, including Moscow, St. Petersburg, Yekaterinburg, Novosibirsk and Nizhny Novgorod. The aim is to establish a network of 1,500 shops in 44 cities across Russia by 2014.

Fulfilment: Internationalising business

E-commerce does not recognise country boundaries. Ever more fashion retailers and brands are becoming international through their webshops. This is why service providers are increasingly required to follow retailers into new markets and to integrate more countries. Hermes Fulfilment supports their customers in their international expansion. This is one reason why the company expanded its collaboration with the American logistics provider Kenco Logistic Services. The collaboration aims to provide a service on both sides of the Atlantic to European web-retailers looking to set foot in the American market and to American companies targeting online business in Europe using a provider they know from their home market. In this way, client can make use of the expertise of a local logistics partner that is familiar with local conditions.

One of the companies that is already benefiting from the Kenco/Hermes collaboration is the Austrian clothing manufacturer Wolford. Hermes Fulfilment has now set up the webshop for the luxury brand in 14 European countries and in the USA. Other markets in Europe and abroad are to follow, thus driving the company's internationalisation process. Hermes NexTec, founded in 2010 is responsible for shaping the country-specific character of the Wolford online shop. The company is specialised in developing and managing online shops for fashion and lifestyle brands and together with the services of its parent company, Hermes Fulfilment, rounds off the full-service, e-commerce package for Wolford. On top of this, Hermes NexTec has implemented the online shop for the maritime fashion brand Arqueonautas, including the development of an iPad app. Plans for 2012 include helping retailers set up e-commerce activities in China and Brazil.

Transport logistics: New services for medium-sized companies

Having previously focussed on efficient network transport, Hermes Transport Logistics (HTL) significantly expanded its services in ground transport during the past financial year. With its 'HTL Direct', the company is increasingly addressing medium-sized clients looking for a more customized response from its logistics partners. Correspondingly, new regional offices have been opened in Hamburg, Berlin, Stuttgart and Dortmund and more will follow in 2012. Transport capacity has been enlarged to include 120 trailers, largely used for a key account from the furniture segment. These are added to the 7,500 swap bodies used to date.

The 'Sea & Air' unit has added fashion label Gerry Weber to its client base, which processes 90 percent of its air freight and its complete sea freight with Hermes. To provide clients with an operational contact at key air freight sites, Frankfurt Airport was added to Leipzig as another air freight support base.

Sourcing and Product: New non-Otto Group clients

In 2011, Hermes-OTTO International (H-OI) was able to expand its business with clients outside the Otto Group. Of the 15 largest clients the production and procurement specialists have, five are not part of the Otto Group. In the course of the past financial year, an exclusive contract was signed with the LHD Group, the leading providers of work clothes and protective equipment in Germany. In addition, H-OI is now focussing on developing its online activities still further. In December 2011, KeenOn Fashion, the world's first B2B trading platform for international brand fashion, was started. This organises the complete processing of order, payment and logistics for retailers and branded-goods providers.

Over 1,300 retailers are currently making use of the service to supplement their product ranges with about 40 brands, partly unknown internationally and in Germany. Minimum order volumes have been consciously kept low in an attempt to meet the needs of smaller fashion retailers. With 360o views, the platform provides high transparency in the presentation of goods, thereby granting interested fashion retailers with optimum purchasing conditions. The aim is to increase the number of retailers registered on KeenOn Fashion to 2,500 in 2012 and the brand portfolio to 100 providers.

In 2011, Hermes Hansecontrol, specialised in accredited testing services and consulting services for consumption goods, expanded its client base to include renowned brands such as S. Oliver, Marc O'Polo and Reno shoes. In 2012, the company is planning to strengthen its sales activities in Germany as well as to production sites in China, India, Bangladesh and Turkey.