Despite operating in an extremely discretionary market during an unprecedented cost-of-living crisis, specialist retailer Flying Tiger Copenhagen continues to succeed. What makes it stand out from the field, and what’s next for the Danish brand?
Flying Tiger Copenhagen (FTC) has been making waves in the value retail industry since its inception in 1995.
‘Tiger’ derives from the Danish pronunciation of the 10 krone coin, which was the price point at which most of its products were sold in the company’s early days (£1.20). The retailer’s affordable prices are a key aspect of its strategy to make its products accessible to a wide customer base.
Within the UK, despite some product crossover with value-led retailers such as The Works, Smiggle and The Range, FTC’s quirky and innovative design sets it apart.
As such, it is well-placed to deliver “must-have” products for cash-strapped consumers looking to treat themselves at minimal cost, while its pocket-money prices will also bolster its appeal to younger shoppers.
From its distinctive store layout and stand-out product design to its financial status, international expansion, and future plans, we examine five ways in which this value retailer stands out from the competition.
1. Maze-like stores
FTC is a variety retailer that was founded in Denmark and shares many of the distinct characteristics seen in other Scandinavian retailers such as Ikea.
One of the key features of its stores is the maze-like layout, which features a single-path design that takes customers on a journey through the entire space, with products showcased along the way.
This layout allows the retailer to strategically display products, improving flow and navigation, ensuring that customers are exposed to as many items as possible, encouraging them to discover new products, and ultimately increasing the chances of impulse purchases.
However, the forced path layout lacks flexibility and could deter customers with limited time to shop or who prefer a more straightforward shopping experience.
This style of layout risks overwhelming some customers, leading to unnecessary buying, which is not ideal in the current environment when inflation is high and budgets are tight.
Adding shortcuts could improve the experience, offering those customers who prefer a more straightforward shopping experience more flexibility.
2. Focus on product and sustainability
FTC’s brand identity is focused on playfulness and creativity, which mirrors the company’s products.
The retailer has a full in-house design department creating fresh designs. Its assortment includes categories ranging from home, kitchen, hobby and toys to electronic gadgets, food and accessories. New products are introduced on a weekly basis, which helps to refresh the offering and create a sense of excitement for customers exploring the stores.
The expansion of the Chinese retailer Miniso in the UK could potentially pose a threat to FTC, as Miniso is known for selling fun and affordable products that overlap with some of FTC’s product offerings. On the other hand, the closure of high-end British stationery brand Paperchase’s stores in March 2023 following administration could provide a real opportunity for FTC.
Meanwhile, FTC has recently implemented several sustainability initiatives to reduce waste and promote the responsible sourcing of materials. This includes using renewable energy in its stores, reducing packaging waste and incorporating recycled materials into products.
Sustainability commitments for 2026 outlined below demonstrate its ambitions to focus on sustainability throughout its entire value chain.
3. Change of ownership and improving financials
FTC was sold in February 2021 and it is now fully owned by the privately held Danish investor, Treville X Holding, and senior management.
As part of the transaction, a capital injection of DKK170m (£19.7m) was made into the business.
The global Covid-19 pandemic led to lockdowns in many markets during 2020 and 2021, resulting in a significant decrease in the Danish retailer’s total revenue. In 2020/21, its revenue declined 34.8% to DKK3.5bn (£414m), from DKK5.3bn (£625m) the previous year.
Furthermore, in 2021/22 FTC was not immune to market-wide global supply chain disruption. The retailer’s revenue climbed back slightly to DKK3.8bn (£441m) but remains below pre-Covid levels.
However, in terms of profit, the business performed very well owing to disciplined cost control and operational agility.
Pre-tax profit amounted to DKK 124.8m (£14.4m) in 2021/22, compared to a loss of DKK 1229.8m (-£146.6m) in 2020/21, representing growth of 101.0% and making it the retailer’s highest profit since 2015.
Five key ways that the retailer worked in recent years to achieve this:
- Focus on its core business: Building a strong value-driven brand with fantastic products and inspirational store experience
- Customer and digital: Increased focus on the customer’s digital journey and engagement, and strengthened the ecommerce platform
- Merchandise planning: Worked intensively on solutions to optimise the allocation and replenishment of products and volumes in stores at the right time
- Inventory: Improved inventory levels by reducing lead time from purchase to sale
- Retail initiatives: Focused on solutions to make retail operations more effective, such as self-checkout and a seamless customer experience
4. International expansion and new model
FTC currently operates over 800 stores in 27 countries and in 2021 the retailer’s five largest markets accounted for 63% of its total revenue.
The UK represents the company’s third largest market, with 11.9% share of total revenue, behind Italy and Spain.
The majority of its European markets operate under 100% ownership, where the retailer owns and operates the business.
In Asia, it has a joint venture partnership for the Japanese market and a franchise partnership in South Korea.
The franchise model has become FTC’s main strategy for entering new markets, as a 50-50 local franchise business model allows both parties to develop and operate stores jointly.
This business model enables the retailer to leverage local insights and expertise, making it easier to mitigate risks associated with expanding into new international markets.
FTC’s Middle East expansion has set a good example of this franchise partnership.
In 2021, the retailer signed franchise agreements with Saudi Arabian, UAE, and Israeli partners to expand its global footprint. The franchisees aim to open over 100 stores in these regions over the next five years.
5. Late online adoption and future plans
FTC was a late adopter of ecommerce and only launched its transactional website in 2020.
The initial small-scale online shop was available to Danish and Swedish customers only.
Following the success of this launch, the online store has now been expanded into a large pan-European ecommerce platform covering 22 global markets.
Since the launch, the retailer has received over 10 million visits to its official website and has used the online platform to test and learn about new products.
Moving forward, an important pillar of its strategy is to grow its online presence and adopt an omnichannel approach.
Other priorities include localising the online shopping experience through tailored content, payment options and local currencies; becoming more agile in team collaboration and operations; improving retail operations’ effectiveness through features such as self-checkout and providing a seamless customer experience; and expanding globally under new franchise partnerships.
Retail Week analysts forecast FTC’s total sales to reach DKK6,050m (£700m) by 2026.
No comments yet