In timely fashion: Martino Pessina

In the ‘New CEO Playbook 101,’ the fundamental rules for any recently installed leader are laid bare: arrive at the company with all guns blazing, fix the brand image, transform operation, adjust market position, embark on a hiring spree.

And, most importantly, stamp your indelible mark on the whole endeavor with such force, the business community will have no choice but to recognize that, yes, you are a managerial trailblazer.

Martino Pessina didn’t read that particular tome and if he did, he probably took scissors to it at the earliest opportunity. When he joined German-based fashion retailer Takko Fashion as CEO 18 months ago, following almost two decades at H&M, he decided to steer a different course: building upon existing base strengths and packaging his strategic plan under the banner of ‘SHINE 2028’.

"It aims to make Takko Fashion grow faster than the market, capitalizing on our core," Pessina says of his mission statement. "And ‘core’ means our core products, our core markets and customers.

"We don’t need to reinvent ourselves. We don’t need to develop new crazy products or enter new markets for us to grow. Takko Fashion has a very clear position on which we build growth."

Accelerated expansion

If you’re resident in one of the 17 European countries where Takko Fashion has a presence – including Italy, the Netherlands, France, Poland, Czechia, Austria and home market Germany – there’s a good chance you’ll be familiar with its distinctive yellow-and-shiraz-red branding.

Occupying the sweet spot between hard discounters who stock a combination of bargain fashion and general merchandise, and the likes of H&M and C&A (with their large stores and trend-driven styles), the company boasts a stable of around 2,000 stores, predominantly in retail parks and shopping malls.

Adding another 300 outlets to the current crop is an essential spoke in the SHINE wheel – a three-year stratagem Pessina divides into three overarching initiatives: a data-driven product-innovation process to encourage lower price markdowns on bestsellers; aggressive expansion into core markets (essentially Germany, Austria and the Netherlands); and a clear focus on customer relationship management through its wildly popular loyalty program, which now counts eight million subscribers, accounting for 60 percent of Takko Fashion’s revenue.

Interestingly, 98 percent of the brand’s sales are harvested in-store, a fact no doubt directly linked to Takko Fashion’s decision to largely remain on the periphery of the ecommerce arena.

"With the vast majority of fashion players within the discount segment, you see that their ecommerce penetration is very limited," Pessina explains.

"And I think the main reason is it’s complex for discounters to make ecommerce profitable because the basket tends to be quite small and there needs to be solid investment in logistics optimization for the profit and loss to work. And some of these discounters have been cautious about making big investments in logistics."

Physical journey

Pessina admits that, in the medium term at least, the company will likely be tempted to plunge deeper into the online sphere, but for now, all of the 18,000-strong workforce are trained on the ‘physical journey’ preferred by customers.

While not in the same high-churn, fast-fashion realm as, say, Zara and Shein – Takko Fashion instead favors a slower production cycle and an emphasis on durability, quality and sustainability – the brand’s business model remains firmly underpinned by price.

Pessina points out that some halo products have, staggeringly, held the same prices for a decade, and that strong, steady relationships with a tight coterie of around 15–20 partners and suppliers have made this possible.

"It enables us to produce consistent products," he says of the company’s long-standing alliances. "So you don’t have an issue where this polo shirt is great this year but bad next year. Or when you wash it 10 times it keeps the color, but when you wash it twice next year, it doesn’t.

"There’s a longevity of supplier relationships that translates into a consistent quality of products that has allowed us to maintain our prices on key products."

Keeping consistency

That scrupulous devotion to ultra-competitive price points hasn’t ruffled the balance sheet either; last year’s net revenue stood at US$1.3 billion – a record figure – up 3.3 percent on the previous 12 months.

As with any company at the center of a voracious, rapidly evolving sector, speed bumps loom on the horizon – during our interview, Pessina talks at length about inflationary costs, ever-mutating consumer sentiment and the challenges of recruiting personnel to the small German town of Telgte – but he stands resolute in his vision for Takko Fashion.

"We need to stay consistent in what makes us good," Pessina says. "The risk with a new CEO is always that the person wants to have their own legacy and then comes in and transforms things that shouldn’t be transformed just for the sake of saying, ‘I transformed it.’"