There has been a series of debacles on the German IPO market, including Chinese companies that listed there. But Zalando is a precursor of a different kind. It’s the largest German online shoe and fashion retailer. It’s known for its no-holds-barred marketing. It’s one of the stars of the vibrant Berlin startup scene. It’s going to change the world. Founded 6 years ago, it went public on Wednesday with enormous hoopla, hype, and hope.
The front of the stock-exchange building in Frankfurt was decorated in the style of a Zalando box. Ten mannequins lined the entrance to the building. Inside, before trading started, six models strutted Zalando’s stuff, circling once around the trading floor where Zalando managers, bankers, traders, and journalists jostled for position. This IPO was a big event.
Instead of just ringing the bell amidst a round of wild applause, the way it is done traditionally and shown on TV around the country, board members Robert Gentz (CEO and cofounder), David Schneider (cofounder), and Ruby Knight took the bell out of a signature Zalando box and then rang it. It was a fabulous PR stunt: showing that branded box on TV to millions of people, for free, under these glorious circumstances.
So it’s just a retailer with thin margins in an ultra-competitive industry with no barriers to entry and a lot of big established players whose key markets are in the possibly toughest retail environment in the world – the Eurozone which can’t seem to get out of its long-term recession. And its largest market, Germany, is famous for its dreary retail sales (here’s my chart for annual retail sales 1995 – 2013; it may be better to avert your eyes).
This post was published at Wolf Street on October 3, 2014.