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A store fostering a community of customers

Established in 1881 in Stuttgart, IADS member Breuninger has long been a cornerstone of the city’s retail landscape. It has evolved from a single department store located outside of the city’s retail centre into the multi-faceted and lively mixed-use Dorotheen Quartier that has redefined urban shopping and leisure in Stuttgart. Attached to this 62,000 sqm project, Breuninger’s flagship store plays an integral role, showcasing a curated blend of luxury goods, private-label success, and customer-centric services and experience. Together, these elements illustrate how Breuninger has managed to not only maintain its relevance as a modern department store but also lead the way in building an active community of local customers.

The Dorotheen Quartier : an example of a successful mixed-use area

As a company, Breuninger imagined and built Stuttgart’s Dorotheen Quartier in 2007, with the department store as its anchor. After 10 years in the making and a EUR 200 million investment, the company opened this 62,000 sqm mixed-use project in 2017 to revive the area located between Stuttgart’s gourmet Market Hall, the historic Karlsplatz and the Breuninger store. Complementing it and constituted of three 6-storey buildings, the area offers a mix of luxury-oriented retailers (including Louis Vuitton, a Porsche dealership and the newly opened Tiffany store), restaurants, apartments, offices and a 350-slot underground parking lot. The project included the transformation of a street into a retail space, the Karlspassage, now a small mall connected to the Breuninger store. Overall, the Dorotheen Quartier feels very lively and offers an alternative to Stuttgart’s high-street shopping area, the Königstrasse, which feels outdated (home to Peek & Cloppenburg and Galleria mid-range department stores).

The Breuninger store : five floors catering to casual, premium and luxury customers

The Stuttgart store has grown over the last decades, adding a second and a third building to reach 42,000 sqm of retail space. 900 people are working in the store (in total, Breuninger has 6,800 employees). The store has three managers:

• In charge of luxury, visual merchandising, marketing, and customer relationship.
• In charge of the men’s department, cashiers, cash desks and store finances.
• In charge of the beauty and sports department as well as store replenishment.

The customer base is mostly local, with only a few tourists coming from Switzerland and Italy.

With three buildings built at different times, the store has uneven ground levels, preventing some of the floors from connecting to one another. For example, the -1 level is home for women’s shoes, kidswear and men’s and women’s underwear: while the shoe department connects to kidswear thanks to a short escalator linking two of the three buildings, these departments don’t connect to the underwear section. This makes customer circulation a bit more complicated than in other department stores.

The store floors offer:

• Ground floor: home of luxury leather goods, beauty and casual women’s fashion. It took seven years to build the leather goods department as luxury brands were reluctant to come to Breuninger in Stuttgart as they had successful businesses in Munich, a 2-hour drive away that people easily do. The brands operate under the wholesale business model. The leather goods section offers large shop-in-shops: Dior is the best brand, followed by Gucci, Saint Laurent, Loewe and Bottega Veneta. This section has been beautifully renovated and is very airy. In comparison, the beauty department design looks a bit outdated and cluttered. With 1,500 sqm, it is rather small compared to the overall store surface. Breuninger considers redoing it and will focus on leading brands and niche brands, removing the “unremarkable middle.”1 Niche fragrances are numerous and have impressive results, with this section packed on Saturdays. Not directly connected to these sections, women’s fashion casual brands are also on the ground floor. It also accommodates a small Breuninger-owned mall in the Karlspassage with stores such as a florist, a newsstand, fashion and beauty stores, a Breuninger restaurant and Breuninger confectionary, a retail hit with locals that achieves way more in sales than neighbouring successful cosmetic brands. Located at one of the store entrances, the Breuninger champagne bar is a famous and packed meeting point for local customers, acting as a community-builder. Overall, the nature of the stores in the Karlspassage and the shopping mall relatively small size contribute to the impression of a community anchor.
• First floor: women’s fashion premium and luxury sections span 7,500 sqm. Brands are mostly run under the wholesale business model and don’t have their brand concept fixtures. Instead, Breuninger set up a harmonised store concept. The first floor also offers a large sunglasses section, premium handbags, jewellery and watches. A coffee place is available on this floor.
• Second floor: men’s fashion (with the same casual, premium and luxury segmentation as for women’s) and men’s shoes span 6,800 sqm and have an even better profitability per sqm than women’s. Men’s fashion achieves roughly the same turnover as women’s fashion. A coffee place is available on this floor./nbsp]
• Third floor: sportswear and sports equipment, including a large ski section and a ski workshop. Customers can either buy or rent ski equipment (skis and shoes). There is also a bike section that grows bigger during the summer. At the time of the visit, the store staff was setting up a new Lululemon shop-in-shop. Also, there is a unisex streetwear-oriented space catered to younger generations, but its location is not optimised. In the future, Breuninger might switch this section with kidswear. Finally, there are outwear sections for both men and women and women’s occasionwear on this floor. A travel agency partially owned by Breuninger is available on this floor.
• Fourth floor: home offerings, luggage, a 44-seat hairdresser, a large restaurant, and busy customer service are available on this floor.
• -1 floor: women’s shoes, kidswear and men’s and women’s underwear are spread out in the three different buildings, as explained above. The shoe department is very airy and has club vibes thanks to special lighting. In that perspective, Breuninger is considering hosting an actual party at night. A tiramisu coffee shop is available in this section. The kidswear department has a busy kid's hairdresser and a candy tunnel offering all sorts of sweets.

Private label successful segmentation

The Stuttgart store visit is also  an occasion to highlight Breuninger’s private label strategy defined by clear segmentation, with each brand targeting specific customer demographics and market segments:

• Darling Harbour has the highest turnover, representing 50% of women's private label turnover and the second-best margin. Positioned to compete with Marc O’Polo, Darling Harbour is contemporary, cashmere-focused, with 5 to 6 collections annually. With large displays, the brand is extremely visible and has additional locations (in the outerwear section for example). Sweaters are priced between EUR 50 and EUR 230.
• Mrs. & Hugs is a bit more modern, having great success with cashmere in winter and summer dresses. The brand has the best private label margin, representing 40% of the women’s private label turnover. Customers think it’s a real brand. It is positioned at the same aspirational level as Essentiel Antwerp and Samsoe Samsoe. Since the brand is the most aspirational of all Breuninger’s private labels, they advertise the brand a lot online, on social media and in the store windows. The brand appeals to younger demographics and offers more frequent drops. Sweaters are priced between EUR 100 and EUR 300.
• Lilienfels represents 10% of the women's private label turnover. The brand is very classic, offering great materials like cashmere and leather. The margin is lower than for the other private labels (approx. the same margin as for national brands) as products are primarily ready-made designs from external suppliers. They maintain the brand as it sells well and doesn’t require too much manpower. Sweaters are priced between EUR 80 and EUR 350
• Johann & Johanna is a new premium brand with a higher price point, inspired by a traditional German wardrobe. The first results are great, with items 100% sold out in 2 months. Sweaters are priced between EUR 100 and EUR 200, with dresses up to EUR 530.
• Paul targets men between 30 and 50 and competes with brands like Fred Perry and Samsoe Samsoe. Shirts are priced between EUR 40 and EUR 200. The brand is showcased in different locations in the store.
• Strokesman’s is designed for older men as it is more classic. The brand competes with Marc O’Polo and Mr Marvis. Shirts are priced between EUR 50 and EUR 80.
• Finally, Breuninger has a home called Private Label, E.B. Home, which mainly offers home textiles.

Services build and nurture an active community of customers

With 636,000 residents, Stuttgart is a relatively small city. Besides, having a vast majority of local customers makes it key for a luxury retailer such as Breuninger to build a strong community of customers. To that end, they offer remarkable services:

• Recently rebuilt, the Beyond store loyalty programme is paramount to Breuninger’s strategy, knowing that more than 80% of the customers are local. The programme has four tiers: bronze, silver, gold, platinum. It is point-based (EUR 1 spent = 1 point) and offers various benefits such as cashback, early access to products and discounts, free shipping, event invitations, birthday presents, longer product returns and dedicated customer service.
• Most importantly, the loyalty programme offers two credit cards (basic and platinum), with which EUR 1 spent = 2 points. Seventy-one per cent of the turnover is made with Breuninger credit card holders. The platinum level equals EUR 7,000 spent annually and grants customers access to invitations to specific events and their dedicated customer service, fostering a sense of belonging and community.
• Seven personal shoppers pamper 3,100 active customers who are extremely attached to the store. The average basket with a personal shopper is more than ten times higher than what a customer purchases without such service. Several private lounges are available for personal shopping appointments. To increase the personal shopper customer base, Breuninger finances tickets to the opera or any relevant event for them to attend, introduce themselves, mingle and attract these potential new customers to Breuninger.
• Events: Breuninger was used to organise paid events proposed to their best customers. They were, for example, buying opera tickets to organise a special night for their best customers who pay for their tickets. These initiatives have been so successful in the past that Breuninger is now organising its own events. For example, they hire a singer, rent a venue, hire a catering company, and organise the whole event. Only customers who are part of the loyalty programme and spend at least EUR 7,000 annually are informed and can access those events. This is probably one of the most remarkable community-building initiative run by Breuninger.
• Customer service: in addition to traditional customer service, gift-wrapping and tax-free shopping, it includes a separate service for platinum customers, which is connected to the store staff office space. It is very common for customers to enter the office and ask for anything that they might desire. As a result, it is not the usual small and uncomfortable store office space: it’s airy, properly furnished and tidy.
• Click & collect: included in the customer service, it offers approximately ten fitting rooms equipped with special lights to try garments in different lighting conditions. Click & collect represents 28% of online orders.

They also offer services related to product categories:

• Runners: the women’s shoe section has runners to better serve customers who complained about being left alone when the sales staff went to the stockroom to fetch shoes. All shoes are equipped with a bar code scanned by the sales associates, who then choose the required size. During weekdays, the sales associates alternatively sell and act as runners. On Saturdays, Breuninger has dedicated runners. Depending on how busy the store is, shoes are delivered to the shop floor in one to three minutes.
• Made-to-measure: the department can make anything from suits to knitwear, shoes, belts and even denim pants. A suit is sold for between EUR 5,000 and EUR 10,000. The service is extremely successful. Breuninger is considering expanding it but lacks the highly skilled staff needed.
• Ski department and workshop: customers can buy or rent skis and ski shoes as Breuninger runs a ski workshop. During wintertime, customers must book appointments on Fridays and Saturdays as the department is extremely busy. During summertime, the staff working in the ski department is attached to the bike department.
• Luxury buyback: Breuninger partners with a luxury second-hand company coming in-store four times a year for customers to sell their luxury goods. Customers are given a Breuninger store voucher in exchange for the products. Breuninger finances an additional 10% voucher value.
• There are many F&B options, with almost one per floor: a candy tunnel in the kidswear department, a tiramisu bar in the women’s shoe section, Breuninger Sansibar restaurant, a champagne bar and confectionary on the ground floor, coffee shops on the first and second floors, a large restaurant on the fourth floor.

The Dorotheen Quartier exemplifies how Breuninger leveraged a real-estate project to create new sources of revenue. The thoughtfully designed mixed-use project has invigorated the area and set an alternative city centre, seamlessly blending luxury shopping, dining, residential, and office spaces to create a lively urban ecosystem. Meanwhile, the flagship Breuninger flagship store showcases a deep understanding of consumer needs with its curated and clearly segmented departments, strategic private-label offerings, and exceptional customer services, from personal shoppers to bespoke tailoring and a tiered loyalty programme that fosters long-term engagement. Ultimately, Breuninger’s success is rooted in its ability to maintain deep and personalised connections with its community of customers.

Credits: IADS (Christine Montard)