As Zalando celebrates its 10th anniversary, Drapers takes a tour of its new headquarters and learns what it has planned for the UK market.
Looking out from the rooftop garden of Zalando’s new headquarters, Berlin’s East Side Gallery is clearly visible, just in front of the river Spree. Here, a portion of the city’s historic wall remains standing, covered in street art.
Seven floors below is the building’s large atrium, which reverberates with the sound of guests attending an event at the 300-seat auditorium located at ground level when Drapers visits.
Folding walls can open up the event space on to the atrium’s expansive high wooden steps, which are designed to double as seating, and a social workspace, flooded with natural light from the sunken glass ceiling above.
It is a brutalist construction, but the use of wood – sustainable and sourced from Germany – and glass walls softens the austerity of the concrete. LED lights snake around the curved ceilings, mirroring the layout of the work hubs below.
The headquarters officially open in April, and consist of two buildings – X and O – at the heart of the Zalando Campus, located in the Friedrichshain neighbourhood of Berlin. They will bring 2,500 creative staff together for the first time, across 450,000 sq ft of space, incorporating open-plan offices, a gym, childcare centre and rooftop basketball court.
The entire campus consists of twelve buildings across 1 million sq ft and accommodates more than 6,000 staff. It continues to expand as the company grows.
Drapers is getting a first look at the X building, where creative, technology, marketing and buying teams will be based in their “home zones” but are encouraged to break out into “project rooms”, “living rooms” or “silent spaces” as work dictates. The exact distribution of staff across the buildings is still being decided upon.
“We want people to work where they need to,” says team lead for real estate at Zalando, Robert Höhne, as he leads Drapers through the building. “You can choose every day or every week how you would work best to achieve your goals.”
Each “living room” is named after famous areas of Berlin. In “Prinzessinnengarten” – named after the district famous for its urban gardening project – stacked wooden crates are topped with plants and scattered with brightly coloured cushions.
The contemporary headquarters are surrounded by history. Just down the road from the head office, in an old postal distribution station, is the etailer’s studio. Here, under disused elevated railway tracks, 40,000 products are styled, shot, retouched and uploaded to the website every year.
Along the far wall, each illuminated railway arch is a miniature studio, their white backdrops stark in contrast to the exposed red brick.
Walking the length of the station, the tour passes 14 womenswear sets, each shooting more than 50 looks a day. The first model wears a long summer dress, the second a lilac double-breasted suit and in each recess a team of three: a stylist, make-up artist and photographer, work quickly to get the necessary shots and move the garment down the well-oiled production line.
In the time it takes to tour the smaller menswear, sports and premium sections of the studio the first model has been restyled, and is now wearing white jeans, a light brown T-shirt and snakeskin sliders. The make-up artist puts the finishing touches to a bold red lip as the camera clicks and she hits the first pose in her rapid stop-motion routine.
On average, it takes just a day and a half from when an item comes into the studio for it to appear online. The 300-strong team is precise in its content production, and critiqued images are pinned to large boards lining the walkways.
This expectation of quality runs throughout the company. Zalando has set its sights on becoming “the starting point for fashion”, underpinned by ambitious targets.
At the company’s first press conference, held last month at the new building, co-CEOs Rubin Ritter, David Schneider and Robert Gentz announced revenue growth of 20% to €5.4bn (£4.6bn) for the year to 31 December 2018. For 2019, a revenue growth target of between 20% and 25% has been set.
The UK is the most advanced market when it comes to ecommerce, especially fashion
Kenneth Melchior, Zalando
A key metric for the etailer is gross merchandising volume (GMV) – the total volume of goods sold on the platform. It grew by 21.1% to €6.6bn (£5.7bn) in the period, and the next goal is to reach €20bn (£17.2bn) in GMV by 2024.
Zalando does not release financials for individual countries, but director of Northern Europe Kenneth Melchior says the UK will play a significant role in its planned growth: “The UK is the most advanced market when it comes to ecommerce, especially fashion, in Europe. Aside from [its domestic market of] Germany, Austria and Switzerland, the rest of Europe is growing really fast and UK is part of that reason.
“We have established ourselves there and seen a really great trajectory in the last year, and a lot of growth. Our assortment – 300,000 SKUs and almost 2,000 brands – is very broad, and we are seeing customers reacting well to that.”
Pushing the boundaries
However, Melchior acknowledges that the UK market is highly competitive compared with other territories. This has forced Zalando to go further in an area at which it excels: technology.
“The presence of competition gives the consumer a better proposition and keeps us on our toes,” he says. “We have such a strong tech division, and personalisation is an area where we are much more advanced than our UK competitors.”
From the new headquarters, the tech team can use algorithms and purchase history to provide customers with sizing and styling advice, to reduce return rates and increase customer satisfaction.
“We’ve tested our algorithms against two human stylists and the approval rate was the same for both,” says Melchior. “As that algorithm gets better, it’s exciting how we can drive that operation forward. We have 26 million customers, and they should have 26 million different experiences.”
Increasingly, a focus of these experiences is sustainability. On the site, customers now have the option to filter for sustainable products, which in the UK presents them with 15,000 SKUs. Zalando is proactively working with brands to build up their sustainable offerings.
“If you look at the current market, only 1% of the assortment is sustainable,” says Melchior. “We are working closely with our partners to say, ‘How can we offer customers a choice and become the leading online destination for sustainable fashion products?’”
Another initiative, which Melchior hopes to bring to the UK, is Connected Retail. Launched in its home market in October, it brings bricks-and-mortar stores that would not otherwise be able to support a launch into ecommerce on to the Zalando site, and now has 600 stores on board across Germany.
We can make it easy for bricks-and-mortar stores to come online
He explains: “It’s a huge opportunity because 90% of fashion stock is offline in Europe, which is a lot of stock that we don’t have access to. But we can make it easy for bricks-and-mortar stores to come online and have access to, and ship directly to, our customers.
“It’s something that we’ve tested in Germany, and are now moving to the Netherlands as the first market. It could be a really interesting opportunity for the UK in the future, and would be a great customer experience.”
For now, says Melchior, the strategy in the UK is “evolution rather than revolution” – it involves expanding the assortment and growing awareness of the brand through digital marketing.
In just 10 years, Zalando has become a force in online fashion, and its new headquarters reflect the qualities that have allowed it to do so: a collaborative and project-led approach and a focus on technological advancement. In the face of intense competition, and with ambitious targets to meet, it will be hoping that the X and O buildings will be the key to supporting its aims.