May 8, 2014, 3:53 PM

A major German retailer restructures its business to ramp up online sales

Just days after the announcement, Media-Saturn CEO Horst Norberg resigns in the wake of a fierce power struggle with founder and minority shareholder Erich Kellerhals.

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Media-Saturn Group, a Germany-based electronics chain and e-retailer with 21 billion euros (US $29.14 billion) in fiscal 2013 sales, is restructuring its business to focus more on e-commerce.

As part of the strategy, the company has created Media-Saturn E-Business GmbH, which will bundle and manage all multichannel activities for its three retail brands: Media Markt, Saturn and redcoon. As part of the announcement, the company said it would cut 200 administrative jobs from its workforce of 65,000 to focus on growing and investing in its e-commerce business. The company booked 800 million euros (US $1.11 billion) in web sales in fiscal 2013.

The announcement was made last week by Horst Norberg who was chairman and CEO at the time. Just days later, Norberg resigned. Norberg, who had been with the retailer for 27 years, has been in a power struggle with founder and minority shareholder Erich Kellerhals over the direction of Media-Saturn’s online strategy and expansion plans. Kellerhals’ owns 21% of the business which gives him a powerful position as the company requires 80% shareholder approval to pass new initiatives. Kellerhals has been publically criticizing Norberg’s leadership even putting a job posting for Norberg’s job on his personal web site last month.

“After the events of recent days, I doubt whether I would still enjoy the full backing of all of our shareholders, Norberg said in a statement. “Media-Saturn operates in an increasingly tough market. I am confident that we have the answers, concepts and solutions necessary to overcome these challenges. We have charted a course to becoming a truly multichannel business. I am firmly convinced that we are on the right track with this strategic and organizational reorientation. At the same time, however, the chairman of the management board in particular requires the full support of all shareholders for this new direction. It is for this reason that I have decided to resign from my post and make way for a new manager who can join forces with all our colleagues to lead Media-Saturn to a successful future.”

Norberg thinks that having a physical presence is still important, but as customers find rivals like Amazon more convenient the company has to make sure it can operate effectively in both channels while keeping the business sustainable, a spokeswoman for Media-Saturn said earlier this week before Norberg’s resignation. 

Norberg’s contract as CEO would have been up in 2015. Metro Group, Media-Saturn’s parent company, on Tuesday appointed Pieter Haas to replace Norberg. Hass has worked in various positions at Media-Saturn from 2001 to 2013, most recently as the managing director and chief operating officer responsible for strategy, Saturn brand management, multichannel, online trading and I.T. In a statement the company says the repositioning of Media-Saturn is still going ahead, despite Norberg’s departure.

Media-Saturn Group, which sells in 17 countries and operates 950 stores, says it is placing all its multichannel projects under the new Media-Saturn E-Business GmbH division. The unit will align all retail buying processes across the brands, link sales and communication reporting and CRM, produce new store and delivery concepts, and digital marketing content, and direct new product launches. Media-Saturn also suggested it will explore new trends in retailing, such as enabling customers to order via TVs connected to the Internet, the company said.

“If all these measures are to be implemented efficiently, further structural development is required, first and foremost in the areas I.T., multichannel and the supply chain,” Norberg said.

Media-Saturn also announced a new aggressively priced discount store format. Media Markt Depot stores, which only sell basic product ranges, are being tested in Hungary and three stores are planned for Poland. It’s also piloting a smaller and trendier Saturn Connect store format that will sell mainly laptops and digital devices in city centers and shopping centers. There is currently one such store in Poland and two in the Netherlands. Media Saturn says it doesn’t plan to open those stores in Germany as it already has a large enough physical store presence in the country.

"European consumer electronics retailing is currently facing a number of major challenges,” Norberg said. “As the market leader in this sector, we have decided on a fundamental realignment of the company so that we can align ourselves to the new buying behavior of our customers over the next two years from a position of strength, and thus safeguard our future viability. This places us in a good position to tackle the greatest change facing our company since it was founded."

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