Our Business Model
We design our own products
Our product range is developed in our own product department and is inspired by our Danish heritage, with a strong focus on product relevance and uniqueness.
Our first graphic designer was hired in 2006 and now we have a whole in-house design department creating graphic design as well as product design in close cooperation with our Product Managers.
Through continuous retail insight and monitoring new trends, we aim to maintain a fresh and relevant product assortment that appeals to our customers.
Our assortment includes categories ranging from home, kitchen, hobby and party to toys, electronics and gadgets, food and accessories and has a broad appeal across age and income groups.
Each month the assortment is refreshed with around 300 new products divided into two product campaigns, typically adapted to seasonal themes and/or festive occasions, e.g. Valentine’s day, Back-to-School, Halloween, or Christmas.
The seasonal campaign products are complemented by our fixed assortment consisting of around 700 products that are relevant across seasons.
While the continuous work with product selection, innovation and development is mainly carried out internally, production is outsourced to external suppliers who commit to our Supplier Code of Conduct and our quality and ethical policies, while working under our supervision.
All products go through our product safety process, which coupled with our test programme seeks to ensure that quality and compliance requirements are met.
In order to ensure an optimal product execution in stores, we have established a cross-functional sales and operations planning process. This process monitors the full supply chain status and alerts in due time in case of any discrepancies in targets or planning.
On a daily basis we handle more than 70,000 boxes and ship more than 1,500 pallets. This means that in one year we can pave the way from Copenhagen in Denmark and the 315 kilometres to Gothenburg in Sweden with wooden pallets.
We love logistics.
An efficient logistics operation providing our stores with on-time deliveries is a corner stone in our business. We work with a number of logistics providers to ensure scalable and cost efficient operations around the globe.
In 2017, our logistics centers in Copenhagen (DK), Raunds (UK), Barcelona (ES), New Jersey (US), Shanghai (CN), Shimizu (JP) and Icheon (KR) shipped more than 500,000,000 pieces to our stores.
Every week we open two to three new stores around the world. We have been doing so for several years – and we intend to keep on doing so in the future as well. We have big plans and expansion is an integral part of our strategy – both in well-known markets and in completely new ones.
Our stores are leased to minimise upfront investments and are located in high-footfall locations on high streets and in popular shopping malls. The typical size is between 150 and 250 m2 of selling space.
The store appears open and light, laid out in a maze, simple to navigate, enabling the customer to seek inspiration and discover the full range of products as they go along, while the friendly, recognisable music creates a welcoming atmosphere.
The décor is Scandinavian with unpretentious, practical, wooden furniture, white walls and warm lighting from simple pendants that illuminate the products.
We want to ensure a positive customer experience and we believe that our store employees play an integral role in doing so. Their dedication and commitment to our concept is key for our customers’ shopping experience and the perception of our brand.
We owe a great part of our success to our store employees, as they interact with thousands of customers on a daily basis.
We prioritise the development and training of our staff, as we believe that this will help us sustain a fun and inspiring customer experience.
Our rapid growth is supported by a flexible and scalable supply chain model, investments in new IT infrastructure and continued strengthening of the organisation and business processes.
It is a strategic imperative to continue to strengthen our backbone to cost effectively support future growth.
Financial and operating model
We have an operating model with a governance structure anchored around our management team. Management monitor and review the business units’ operational and financial performance, aiming to proactively take advantage of opportunities as well as address potential challenges in our markets.
One area of focus is to ensure efficient supply chain operation and processes with low working capital requirements to service our stores effectively.
We look to free up capital for further store expansion and future partner buy-outs. Our initiatives aim to improve inventory levels by lowering lead time from purchase to sale, strengthening our forecasting process and improving working capital as well as enhancing coordination across the organisation.
Establishing stores in new markets is generally achieved through 50/50 owned partnerships with a local partner, which ensures local entrepreneurship and significantly increases our organisational capacity for international expansion while reducing the risks when entering new markets.
A jointly owned local company is set up, and Zebra shares investments, costs and profits with the local partner. In other words, the cooperation is a business partnership, not a franchise operation.
The partnership is assigned a certain territory, with the size of the territories ranging from a region to an entire country.
Zebra owns the concept and brand, supplies the products, store interior and marketing material, while the local partner is responsible for store roll-outs and day-to-day operations including staff, training and local marketing under specific guidelines set out by Zebra.
Increasing the store footprint in existing markets is also part of the expansion strategy, which is achieved through partnerships or fully owned subsidiaries.
Partners are typically individuals or a small group of people with an entrepreneurial mindset who are appointed after a thorough selection process based on their operational capabilities to roll-out the concept as well as their retail experience, local market knowledge, managerial and financial capacity.
The partnership model has a contractually defined exit mechanism. The partner holds put options that grant them the right to sell their non-controlling shares to Zebra in two windows annually and with a one year notice period at redemption prices based on contractually defined EBITDA multiples. At the same time, Zebra holds call options to acquire the partner’s shareholding, which are exercisable based at contractually defined EBITDA multiples. For accounting purposes, Zebra is considered to have control over the partnerships and they are therefore fully consolidated. The only exception is the Japanese joint venture, which is therefore not consolidated.
It is part of Zebra’s strategy to take full ownership of the local operating companies when this is assessed to be more beneficial than the partner model. Zebra’s operating companies in Denmark, Faeroe Islands, Southeast and Northern England, the Netherlands, Sweden, Finland, Iceland, Scotland, United States, most of Poland as well as Barcelona, Madrid, Mallorca and Valencia in Spain, and Berlin, Munich and the Northern part of Germany are all fully owned. Furthermore, during 2017, Zebra took over six partners’ shares in territories pertaining to Ireland, Northern Ireland, Northern Italy and the remaining parts of Germany and Poland.