People
In this first episode of the 2026 World Retail Podcast series on Unlocking volume growth, Ian McGarrigle, Chair, World Retail Congress, is joined by Sergio Bucher, Otto Group, and Paul Martin, Global Retail Growth Leader, Partner & Managing Director, AlixPartners, for a wide-ranging conversation on getting the basics right.
Listen to the episode on Spotify or Apple, or read the transcript below.
Ian McGarrigle:
Hello and welcome to the World Retail Podcast. This episode is part of our third podcast series, produced in partnership with the global retail team at AlixPartners.
This series, Unlocking volume growth: How to succeed in an ever-evolving retail environment, focuses on one of the most pressing topics in retail today. Margins are tight, consumer confidence is low, and competition is relentless. So, how do retailers grow when the old rules no longer apply?
Today, Paul and I are joined by Sergio Bucher, a member of the supervisory board of the Otto Group, one of Germany’s largest retailers with a turnover of over €19 billion. Sergio has extensive experience leading retail brands like Crate & Barrel, Manufactum, Freemans, and Grattan, and has held senior roles at Inditex, Puma, Amazon Fashion, and Nike.
Sergio, it’s our great pleasure to welcome you to the World Retail Podcast. How are you?
Sergio Bucher:
Hello, Ian. Hello, Paul. It’s a pleasure to be here. Thank you for inviting me to join you.
Ian McGarrigle:
Sergio, you’re part of the Otto Group, which you’ve described as one of the retail world’s best-kept secrets. Could you introduce the Otto Group?
Sergio Bucher:
Of course. We’re a multi-billion-dollar, vertically integrated retail business. What has made the Otto Group successful is our integration across various retail functions.
We have sourcing organizations, retail operations, a bank to provide credit, and supply chain organizations. For example, we own Hermes, a logistics company in Germany. We’re involved in the entire retail value chain.
Being family-owned allows us to take a long-term view—we optimize for the next generation, not just the next quarter. We operate about 30 companies in 40 countries worldwide. Around 80% of our activities are online, which is why we consider ourselves both a retailer and a tech company.
Ian McGarrigle:
Thank you, Sergio. The Otto Group is hugely relevant to this discussion. Paul, over to you.
Paul Martin:
Thanks, Ian.
Sergio, we’re very privileged at AlixPartners to have many conversations with retail leaders around the world. One thing that seems pretty evident to us in the current market, which is stagnant in many economies around the world, is that like-for-like volume growth should be a priority for retail leaders.
Do you agree with this statement, and why?
Sergio Bucher:
Retailers want to grow, but stagnant markets make it very difficult. Growth should be a priority, but it depends on the company’s current state. To grow, you need the right infrastructure, technology, supply chain, and sourcing capabilities.
Trying to grow a company that is not ready can lead to disaster.
I’d maybe highlight one example. When I joined the Otto Group a few years ago, the pandemic started, and Crate & Barrel was very successful. It looked like everybody was redesigning their living room, buying a new sofa, or buying a new bedroom. We grew incredibly fast. Over two years, we almost doubled our revenues.
And guess what? Our back end broke.
Eventually one day, we were left with 300 containers in a parking lot behind our main distribution center because we didn’t have the capacity to unload them.
So we basically spent the past three years getting rid of those good old AS/400s we still had, moving to the cloud, and bringing in state-of-the-art technology.
We used a period that was fairly quiet in the home and living industry after the pandemic to get our infrastructure in order, to master the fundamentals.
In the coming years, we have a plan to grow by between 8% and 10% every year. That is only possible because we have taken the time and invested the money to make sure everything in the back end is ready to serve our customers to their fullest satisfaction.
Ian McGarrigle:
That’s fascinating, especially how the pandemic really jump-started the focus on the fundamentals at the Otto Group.
How would you describe operational excellence? What does it look like within the Otto Group, and are there some fundamentals within that you would want to share with other retailers?
Sergio Bucher:
Definitely.
I’m a non-German working for a German-based company, and I would say every nationality and every country has different strengths and capabilities. My U.S. colleagues are very entrepreneurial. My German colleagues are fantastic with processes.
So I would say discipline in the back end and operational excellence are in the DNA of this company.
We are extremely strong, extremely dedicated, and extremely good at analyzing the data we have in our companies.
You need to find ways to differentiate yourself. It’s not easy to have faster delivery than Amazon. They are really good at what they do. You need to find ways to do things that resonate with consumers and make you stronger.
For me, operational excellence and mastering the fundamentals are no longer differentiators. They are a question of survival for retailers.
You can’t disappoint your customers. If somebody bought a sofa six weeks ago and you said you would deliver it in six weeks, you have to do it.
That requires many different activities, from your manufacturer, your ordering team, your supply chain team, your distribution team, and your store teams, all being aligned. That magic only works when your processes are robust and your systems are robust.
There’s a KPI I love in our company: OPOR (Otto Perfect Order Rate). We actually measure what percentage of our orders was delivered perfectly, with zero friction to our customers.
Every single order that doesn’t score 100% is audited to understand the causes so that we can retrofit our process to avoid repetition.
It is that obsession with detail that has allowed us to improve our NPS performance by 10 percentage points over the past 18 months, which is huge. This obsession with operational excellence is one of the main reasons for that success.
Ian McGarrigle:
So you’re really pushing customer feedback to drive that and to know what the customer is thinking?
Sergio Bucher:
In the end, we all know what the customer wants.
They want the right product, the right quality, delivered on time, with no friction, and with a friendly delivery person who says hello and thank you.
If you get that right, you’re 90% successful.
Then you can do your qualitative studies once a year to understand more deeply where to go with improvement. But operational excellence and service are absolutely key to our success.
Paul Martin:
Building on Ian’s question regarding the fundamentals, you’ve already touched on some of the four Ps that I would describe as the cornerstones of retail discipline: place, product, pricing, and promotion.
You’ve articulated that you’ve done a lot of work on that, which has translated into a higher degree of customer satisfaction, and that’s really good to hear. As we know, the customer is the real litmus test of whether we are doing a good job or not. Spreadsheets can tell a story, but the reality is what the customer tells you.
I wanted to touch on two other levers of process discipline.
The first is the operational flywheel, which is perhaps a complicated way of describing how your organization is set up. Retail businesses are often quite complex, with lots of different departments, which over the years may or may not have been optimized.
For the customer to get a really good experience, you need to make sure those departments are connected. Your supply chain needs to be connected with the people who run your e-commerce website and your pricing architecture.
We are seeing more and more businesses failing to optimize those handover points between departments.
And of course, one of the elephants in the room is the technology and data structure that should be the foundational layer of all of this working well.
Do you agree that focusing on and optimizing those areas is really pivotal for the future, and that investment in these areas is required to accelerate excellence?
Sergio Bucher:
I could not agree more with you, Paul.
I would give a two-pronged answer.
The first is that as a group, we are vertically integrated, as I mentioned before. We have a company called Otto International, based in Hong Kong. They source all the private labels of the Otto Group and also work with other companies.
The benefit of being vertically integrated is that the sourcing organization becomes an extended arm of our buying teams and our design teams. They work together. They are not a separate organization.
So, there is an organizational component to working across silos. You can achieve excellence in each individual silo, but that does not guarantee you will be successful across the board.
Two examples come to mind of how we have gone about bringing integration between our silos.
The first is our Otto platform. Otto was a legacy business in the group, a catalog business that was very successful at the end of the 20th century. Then the internet came, and our shareholder Michael Otto realized that the internet could kill the business. That was when he decided to pivot the organization to become an online-first organization.
We became a marketplace a number of years ago. One thing we realized was that our processes and our organization were no longer fit for purpose.
The organization made the massive decision to redesign our processes completely and rebuild the whole tech stack. We knew our systems were no longer fit for purpose, and simply iterating to improve them would not deliver the results we needed.
So we spent five years changing everything, from the back end to user interfaces, payment methods, marketing tools—everything changed.
It is like doing open-heart surgery, while changing your kidneys and lungs at the same time. It can be a recipe for failure.
I’m just so impressed with how this was delivered. Building on the strength of a structured, process-thinking organization, we were able to deliver it.
We finished this implementation last year, and ever since, we’ve been growing double digits in this marketplace because we mastered these fundamentals. It has now become one of the growth engines of the group.
The other example is Crate & Barrel. We are developing something called integrated business planning, which is basically new software. AI is playing a big role here.
The first thing we said was that we needed to build a data infrastructure that would allow future systems to be effective. To do that, you need a repository where all the information comes together and can be used in the future.
Then we decided to change our processes and systems.
Integrated business planning will allow us to plan our capacity with vendors all the way through to guaranteeing a delivery date to our customers in stores, all within a single system.
All functions will collaborate in the same system to deliver the best customer experience.
It’s heavy lifting.
We had to change our entire point-of-sale system. We completed that in November last year, just before Christmas, and it’s fantastic.
Customers can now sit on a sofa, design their living room with our design consultants, place an order, receive a pay-by-link in their inbox, and they don’t even have to go through the cash desk anymore.
This is the foundation that is now allowing us to focus on growth, because we know we can handle the additional volume we want to deliver within a stable and reliable environment.
Ian McGarrigle:
That’s fascinating.
Obviously, there’s the focus on systems and structure, but overlaying that is the people side of it. Behind the scenes, that sounds like a performance-driven culture within the business to implement all of this and keep driving it.
I’d love to hear more about the culture within the business that has helped deliver this and continues to do so.
Sergio Bucher:
It’s been a journey.
By design, we are not a centralized organization. One reason we have been successful in building businesses across several continents, where others have failed, is because we did not simply import one culture, one process set, one product range, and one way of thinking.
We operate our companies very independently. Each company has a CEO, an executive team, and a board, and they are free to develop their own strategies.
We have a common culture, but it flexes depending on the country because the needs and realities are very different.
In Germany, historically, we have tended to be a very friendly, family-owned business. We look after people, and sometimes that comes at the cost of focusing hard enough on performance.
On the flip side, our businesses abroad, in the U.S. and in Asia, are very performance-oriented. I think that comes with the local culture.
Our new CEO, Petra Scharner-Wolff, stepped up as CEO in March of last year, and she is making sure we focus on performance.
That doesn’t stop us from being constructive and friendly, but being constructive and friendly doesn’t stop us now from being demanding at the same time.
I would say we have taken our performance evaluation processes much more seriously. In the past, everybody was a great performer, and guess what? That is no longer the case.
We manage performance much more closely, and we use a whole series of KPIs to make sure we stay on top of it.
So I definitely agree with you. Culture has a lot to do with it.
There’s a saying that culture eats strategy, and it’s absolutely true. You just have to make sure culture evolves over time and delivers what the company needs as well.
Paul Martin:
The points you’ve just made are so important in this day and age.
At any event we go to, and in any publication we read, we are bombarded with the idea that AI is going to be the salvation for every industry going forward, whether we believe that or not.
But in that context, I do think it is increasingly evident that data-driven decisions are absolutely critical for organizations to succeed.
You gave us a couple of examples earlier, but to Ian’s point, human nature is also really important.
Could you bring to life some examples where that human element, especially in buying, merchandising, and the commercial function, is being improved and fine-tuned through better capabilities around data, inventory, pricing, and so on? How are the human and the machine working together to drive better outcomes?
Sergio Bucher:
That’s such a good question, Paul.
We ask ourselves whether AI will have good taste in the future. It certainly looks like AI is learning to do a lot of things.
We are working on both fronts.
We are prioritizing AI. I described us as a tech company at the beginning, and while we are not going to develop our own large language models, we do see ourselves as fast followers.
We have partnerships with companies such as Microsoft, Google, and ChatGPT, and I would encourage everybody listening to talk to these companies. They know an awful lot, and they have amazing resources that they can share with us to help us become better and faster.
We’re looking at data structures because AI will require us to think about data differently.
I mentioned that we are a decentralized business, which means we first need to centralize data company by company, so that these separate systems that did not share data can eventually come together and we can really leverage the power of information.
That matters for AI, but it also matters for business analytics and many other areas.
The second question we are asking ourselves is whether we should create a global repository of data where all the data from all the companies comes together.
That is a bit of a legal nightmare because of data protection laws, and we are not totally sure it would bring the benefits we need, but it is a good question.
Otto is also very focused on what we call agentic commerce. What will that mean? Will it disrupt only the sources of traffic? Will it replace online marketplaces? We don’t know yet.
Right now, it is exciting and scary at the same time.
On the other side, we are also building moats against AI.
For example, we do not sell our Crate & Barrel products on marketplaces because we want to have 100% control over the customer experience: how the imagery looks, how the payment process functions, and how the delivery process works.
At Crate & Barrel, we have stores where we aim for very high conversion rates. Our goal is to sell at least one thing to every single customer who walks through the door.
I don’t think AI is going to change everything in that personal relationship we have with customers in stores.
At the same time, AI will help us forecast better, plan better, and reduce working capital.
So yes, we absolutely believe we need to be AI-compatible.
But honestly, the biggest moat against AI is what I mentioned before: design services.
When a customer opens the door of their house or apartment and shows us what their living room looks like, and when you are present at the delivery of the beautiful room you designed together, you create a lifelong relationship.
Maybe next time, when they want to redesign their bedroom, or buy a new property somewhere, they come back to us.
We consider these services, which we provide free of charge, to be the best CRM system we have found so far—more than simply giving points or anything else.
Building this personal relationship between our people and our customers is something I struggle to see an AI agent replacing.
Paul Martin:
Real emotions powered by technology.
Sergio Bucher:
Exactly. It’s fascinating.
Things are changing so fast. In the past four months alone, new models have been launched—Claude and others—that are already changing the reality of technology in terms of how you develop systems and test systems.
If you’re not on top of these things, you’re going to be sitting on a cost base that you can’t afford anymore in the future.
Ian McGarrigle:
Is it difficult, then, to unify and bring together all of that repository of knowledge? Or is it simply not something you would want to do?
Sergio Bucher:
We’d love to. We’re just not sure we’re able to.
Is the effort worth the money in the end? Is there enough in common between purchasing behaviors in the U.S. versus Germany? Are there things we can extrapolate from one market to the other? I’m not totally sure.
As I said before, we favor company independence, local know-how, and local decision-making.
That said, we do have a business excellence team in our central group organization. Their role is to collect all the interesting ideas and projects that have been implemented in Asia, Europe, and the U.S., bring them together, and make sure the best ideas are shared.
At the same time, we have a company called OSP, which is basically a tech service provider. It provides services particularly in EU countries, because the regulatory framework is relatively unified.
This service provider allows us to provide joint services for companies. For example, in Germany, not every company needs its own payroll system. We can have one provider develop that and make sure it is fit for purpose.
So we are not centralized, and we are not fully decentralized either. We are just trying to be pragmatic.
Where there are real synergies to be achieved by centralizing, we will consider it. But our initial preference is generally to leave accountability local because that is what has made us successful until now.
Ian McGarrigle:
Turning to you personally as a retail leader, you’ve had vast global experience working with some amazing retail businesses—Inditex, Nike, Amazon, and now the Otto Group.
I’d be fascinated to know what leadership lessons you’ve taken from all of that that help you sharpen the focus on the fundamentals in a business.
Sergio Bucher:
I could write a book—maybe I will one day. It’s very interesting. I’ve worked in a number of companies, sometimes for many years and sometimes for fewer years. Generally, what gets me out of a company is when I get bored.
I love solving complex challenges, and we don’t have any shortage of those at the Otto Group, so that has kept me here for quite a while.
One thing I’ve learned is that culture cannot be copied and pasted. Processes cannot be copied and pasted.
Zara is a relentless, almost military organization that focuses on logistics and precision, which can be surprising for a company based in Spain.
I was lucky enough to work for Mr. Ortega, the founder of Inditex, and I remember talking to him about planning. He said, “Sergio, the only thing you know for sure when you plan is that you’ll get it wrong. So instead of investing my money in planning, I prefer investing my money in becoming more flexible.”
And guess what? He has been rather successful.
But if you try to translate that into a different company, it just doesn’t work.
Nike is all about the brand and the product.
Amazon is probably where half of the world's smartest people work. By training, I’m a mathematician, and I was probably the least smart guy in the whole organization.
It has a very particular way of functioning and thinking, and you can’t simply transfer that elsewhere.
The same applies to our organization here at the Otto Group. We have our peculiarities. Some of them are strengths. Some of them are simply facts of life.
Every time I’ve changed jobs, I’ve had to look into my toolbox and think: what are the tools I can keep using because they have made me successful so far? What are the tools that made me successful before but are no longer relevant? And what are the new tools I need to acquire?
I think that is what has helped me in my career. Every time you move into a new position, make sure you question yourself.
And the other thing is simple: hire people who are better than you are. It makes your life so much easier.
Building great teams, again and again, in every company, is the common denominator. They deliver great results and make my life a lot easier.
Paul Martin:
You’ve just touched on your toolbox, and you’ve also spoken about hiring a broad array of skills.
We’ve spoken a lot about focusing on the fundamentals and fixing the basics. In many organizations, and I would argue in many businesses generally, that won’t be the only source of delivering like-for-like volume growth.
You also need, increasingly and in parallel, to be thinking about how you differentiate from your competition to drive demand. And as we know, in times of economic stagnation, there is often an opportunity to place some big bets to grow inorganically or through other mechanisms.
How important is it to think across these multiple layers—fixing the basics, differentiating to drive demand, and placing big bets?
Sergio Bucher:
We all love big bets. They’re exciting. They’re new. There’s risk. And they allow you to leave an imprint on a business.
But what can sometimes feel like the boring stuff is just as important.
You need to master your fundamentals.
All retailers know that unless you run like a Swiss clock, you’re never going to be successful because your customers are not going to be happy.
Some businesses get away with mediocre performance because the product is so on trend. But how long does that last? Two years, three years, four years? Then the next brand comes along, and you go down.
So I definitely like your three layers: starting with the fundamentals, then getting market share through differentiation.
We’ve talked about fixing the basics. Differentiation is key.
We are a big competitor to marketplaces like Amazon, Temu, or Shein here in Germany, and yet we are gaining market share, which means we are doing something right.
What are we doing right? We obsess over perfection in serving our customers.
The other thing that brought me to the Otto Group is that we are an extremely ethical company.
We only onboard companies that have a presence in Germany, meaning they pay taxes there. We have very stringent controls over how products are made and where they are made.
We pride ourselves on having an organization that is second to none in making sure the products we sell have the right ethical background—that they are not made by children and that they are not made with harmful materials.
I think that is something our customers recognize.
I would also say that we are nice to our customers. We are a family business. I said earlier that sometimes we are too nice, but when customers call us, we pick up the phone. Our phone number is not impossible to find on our website.
Yes, we have AI customer service agents that can answer questions, but this personality we have developed creates trust with our customers, and that trust allows us to grow.
Now, on the big bets, of course we are making some as well.
The first thing is that you need the money to fund them, because big bets are generally not cheap. So you need the financial stability that gives you the means to afford them.
At Crate & Barrel, we have an organic strategy and a non-organic strategy. There are new things we are going to do that we haven’t done before—I’m not going to say what they are, otherwise Janet, our CEO in Chicago, will be on the phone immediately.
Of course we are expanding categories. Of course we are improving product. Of course we are doing many things that generate growth.
We are also going to open more stores in the U.S. because we are very successful with our stores. We have been able to make them very profitable, and right now they are a great investment. We are understored.
Then there are the new creative ideas.
Having a fail-fast mentality—trial and error—is important, because out of 10 big ideas, one is going to work, two are going to be okay, and seven are going to fail.
So having strategies, teams, and processes that allow you to learn by doing—and avoid burning €100 million on something your customers don’t actually want—is critical.
That learn-fast mentality is very ingrained in our organization.
Some of our big bets started as small bets and then became big.
About 15 years ago, we started a company called About You. It was a startup we founded here in the Otto Group. It competed with Zalando and other online fashion retailers.
Its differentiation was that it was deeply integrated with social media, and its traffic sources came from social channels.
We sold that company very successfully last year to Zalando. It became a multibillion business, and it started small with a small team of entrepreneurial people sitting here in Hamburg.
That is exactly the kind of mentality we want.
It’s tough when you’re a multibillion business to think and feel like a startup. What we’re trying to do is create spaces within the organization that are not eaten up by corporate sludge, where people still have the freedom to act.
It started small, and it became huge.
Ian McGarrigle:
You’ve just underlined the sheer scale of the challenge.
For a business the size of yours, when you’re thinking about fixing the fundamentals, there are so many things to focus on. Paul referenced this in his question, but in the pace of the world we live in—where there is enormous change happening constantly—the luxury of doing things sequentially and logically doesn’t really exist, does it?
You have to keep making choices, especially when capital or human resources are limited. How do you approach that in this increasingly fast-changing world?
Sergio Bucher:
I don’t think any company has an unlimited amount of capex to invest, although AI companies seem to be in that league.
We all have to prioritize investments.
We are a pragmatic company. Our investments go to places where we know we can grow or improve profitability.
We are cautious with our big bets, but deliberate in the way we pursue them.
You asked whether we have to do things at the same time. Of course we do. Retail is not that complicated. Retail is about doing a lot of simple things well at the same time.
It’s not rocket science. You just need the ability to multitask.
That said, sometimes you do have to make very conscious trade-offs.
At Crate & Barrel, for example, we deliberately decided not to grow for three years. We said we’re not going to grow because we can’t afford to. We need to fix things first.
During that time, we still did many things at once in systems. Last year, as I mentioned, we launched a new point-of-sale system, a new credit card provider, and a new payment system all at the same time.
That was overly ambitious. We had some teething problems, but we have resolved them now.
Retailers are impatient people by nature. We all want everything yesterday. Having a roadmap for the next three years can sound boring because so much will happen before then.
But that is also what makes retail exciting. Things move very fast, and you need to have the ability to multitask.
If you don’t, maybe you should work in a slower industry.
Ian McGarrigle:
Sergio, sadly we’re running out of time, so that brings us to our final question.
You mentioned a roadmap, and this year’s World Retail Congress theme is Retail’s Roadmap to 2030. Looking ahead to 2030, and based on everything we’ve discussed today, where do you see the biggest opportunities for retailers that get the basics right to outperform their competitors?
Sergio Bucher:
If there were a magic formula, I wouldn’t be sharing it. I would be doing it and gaining market share against everybody else.
The truth is, your question is very company-specific. The circumstances of every company are different. Not everybody can do the same things at the same time on the tech front, the process front, or the financial front.
But one universal piece of advice is to manage your cash responsibly.
As we’ve seen over the past five years, there are pandemics, good times, and bad times. Thinking long term is a luxury that only financially stable companies can afford.
Ensuring the long-term cash stability of a company is key to success. That may not only be true for retail. It may be true for most industries.
But in retail, we have very cash-intensive businesses, with hundreds of millions in working capital to fund. So financial discipline around cash management is what makes companies successful.
Once you are financially strong, you then have the means to differentiate, develop services, renew your systems, create new products, or launch a new brand.
And of course, over the next four to five years, AI is going to play a big role. What role exactly, nobody is really sure yet, but we all need to stay tuned.
I also think size matters.
We’ve seen in the U.K., for example, how many companies below £200 million in turnover have had serious difficulties and gone into insolvency.
So I would go back to what Paul said earlier. Growing and differentiating will become the next requirement for survival, after making sure you have a reliable back end.
Ian McGarrigle:
Sergio, thank you.
Everything you said there, and especially in that last answer, really underlines why this has been such an important and valuable conversation for this episode in our podcast series on fixing the fundamentals.
So I want to thank you, Sergio. And Paul, thank you as well. This has been a fantastic conversation.
