Is Redcoon closing shop?
October 3, 2016
According to an unconfirmed internal email seen by Hardware.info, Redcoon’s e-shops in the Benelux, Spain, Portugal and Austria will be closed by Media Markt Saturn as they are “competing too much with the physical stores of Media Markt”. Redcoon’s activities in Germany and Poland are not mentioned in the email.
If all this is true, the business rationale is likely that Redcoon Germany and Poland have sufficient scale to survive, and the other Redcoon countries were not reaching the minimum scale to have a realistic perspective on profitability. So that it makes more sense to integrate them with the online portals of Media Markt. It can also be seen as a step towards the planned and opposed divestment of MediaMarkt by mother company Metro Group.
It’s another example of how classic retailers are struggling with e-commerce, and how challenging an omnichannel strategy often is for such companies, who have troubles fending off pure play e-tailers, that have become market leaders in e-commerce in most Western countries. A proven business strategy for classic retail conglomerates is to kill overcapacity in physical store space, and invest in online growth at the same time.