The German precious metals retail sector is doing good business despite the Corona restrictions. And yet, some suppliers are facing major challenges. This is the situation in the German precious metals trade.
Retail in Corona times
Retailers who do not have a substantial mail-order business have a very hard time in Corona times. In Germany, the second lockdown has already lasted 14 weeks. Many stores, as well as the entire hospitality industry, will have to remain closed at least until April 18, 2021, or will only be able to serve customers under severe restrictions.
Precious metals trading
German precious metals retailers are also affected by the lockdown regulations. However, since the introduction of the new money laundering regulations, business has increasingly shifted to the Internet. In the meantime, when buying precious metals in the stationary trade, one must leave one’s personal details for amounts of 2,000 euros or more. But during the crisis, demand for gold and silver is booming. In the past year many offerers could book record conversions and also 2021 hums the business.
Goldreporter has informed itself with German precious metal dealers about the current business situation in the Corona crisis.
Profiting from the crisis
According to Dominik Lochmann, managing director of ESG Edelmetall-Service GmbH & Co. KG: „Since we are traditionally strongly online-oriented, we have been able to benefit from the lockdowns, at least as far as business is concerned. The increase in online orders has more than compensated for the loss of table transactions. The employees who normally look after customers were urgently needed in the shipping department.
Robert Hartmann, co-founder of Pro Aurum tells Goldreporter: „We see a very brisk business. Both with our private customers and our affiliated banks. The interest of our clientele among precious metal dealers throughout Europe is also very appealing. In contrast to the times of the first lockdown, business is now spreading out better. In other words, in 2020, we had extreme utilization in March and April. In 2021, on the other hand, we see steady business and good buying interest every month. That makes it a little easier for us to handle. Bottom line, we’re at about the same sales level in the first quarter of 2021 as we were last year.“
Tim Schieferstein, managing director of SOLIT Management GmbH, is also satisfied with the current business situation. The company operates its precious metals trading business under the GoldSilberShop.de brand. One expects for March the turnover-strongest month of the last twelve months.
„We are very happy that our main sales channel is online and not the branch store. Due to the given Corona restrictions or the need to make appointments, significantly fewer customers find their way to our retail store in Mainz. On a positive note, however, customer traffic is increasing from week to week during the second lockdown. While gold purchases were initially put on hold, more and more customers are taking action and no longer want to wait,“ says Schieferstein.
Procurement of goods
One of the biggest challenges in the Corona crisis for precious metals dealers continues to be the procurement of goods. „The problem at the moment is not selling, but getting the goods from the mints. Here, distributors are only allocated certain quotas,“ says Henry Schwarz, managing director of GfM Gesellschaft für Münzeditionen GmbH (Anlagegold24.de). Enterprises, which did not receive commodity directly from the mints, would have problems according to its estimate.
A similar assessment comes from Pro Aurum: „The procurement of goods is still problematic, since many producers by far do not offer the usual product range. And in addition, for some products, delivery times are weeks long,“ says Robert Hartmann.
Branch business difficult
Companies with a larger branch business generally have more reason to complain. For example, Michael Tschugg, spokesman for Philoro Edelmetalle GmbH, explains, „We are very satisfied with our online business, but we cannot be satisfied with our branch business because of the restrictions. It is true that our concept of serving the nonetheless high demand from customers with Click & Collect has been enormously well received. However, it was not feasible at all locations, for example in Hamburg, due to the respective local conditions. And even though overall sales from Click & Collect are very encouraging, the restrictions in the branch business remain noticeable.“
Click & Collect in precious metal trading
Pro Aurum also operates numerous branches in Germany in addition to the Goldhaus in Munich. Robert Hartmann: „Starting in March, we were able to implement the models Click & Collect (order in the online store with pickup in the branch by appointment) and Click & Meet (business on site with appointment), depending on the incidence and the federal state. Customers are very grateful to us for this, even though it was not easy to organize. Many customers therefore switch to our online store and have the goods sent to them simply and conveniently. You can see that clearly in the figures.“
„The biggest challenge is the health of the employees. Of course, we cannot influence what they do in their free time, but here in the company we have strictly separated teams, high hygiene regulations, mandatory masks, air filters, and distance rules,“ says ESG boss Dominik Lochmann.
At Pro Aurum, more than 50 percent of the workforce is currently in the home office. In addition, for reasons of hygiene protection, they work in two shifts in the cash office and logistics. „This situation requires good and stable communication lines overall. Initially, this was a bit unusual for our employees. In the meantime, it works very well and our colleagues have become accustomed to the adapted processes,“ says Robert Hartman.
Andreas Heubach of Heubach Edelmetalle in Schwaig, Central Franconia, has meanwhile closed his branch in Nuremberg. „We closed our branch in the city center because we pay a very high rent and do not receive any government compensation payments, the branch has been closed for months due to regulations, and the trend is toward online purchasing,“ he explains. In return, however, capacities at the Schwaig branch have been tripled in order to meet customer demands there in a more targeted manner.
Closed branch of Heubach Edelmetalle in Nuremberg. Instead, capacities at the Schwaig branch have been tripled (photo: Goldreporter).
But the Corona restrictions (hygiene measures, customer registration, etc.) definitely limit the business. Says Heubach, „But what bothers us most is that we can’t give the customer the time and advice that the customer actually deserves, because everything has to be snappy at the moment.“
Heubach assumes that there may also be branch closures at other suppliers, unless they receive government aid. However, he does not expect bankruptcies in the German precious metals trade.
Kettner Edelmetalle closed its branch in Villingen-Schwenningen some time ago. Here, the company concentrates exclusively on online business.
At Philoro, they criticize the political decision-making processes „We are currently experiencing it again at Easter: the constantly changing framework conditions, especially for the trade, in addition to the different views and procedures in the federal states, make reliable planning, on which every company depends to implement its goals, incredibly difficult,“ says Michael Tschugg.
He emphasizes: „Investment products are always based on dialog and advice at their core. The personal appointment in the branch is therefore always a central element so that customers can make a decision that fits their particular situation. Especially for a company like Philoro, whose core values include security, solidity and absolute customer orientation, this is essential.“
Politics under fire
Tim Schieferstein comments, „Like many other retailers from other industries, the lack of a clear opening strategy and perspective is burdensome. Likewise, the fact that the rules to be observed for the retail store have changed several times in the last three weeks. In some cases, delivery deadlines are not met on the part of suppliers, as air shipments are postponed at short notice or production is curtailed due to Corona protection measures.“
In particular the last Corona summit showed once again that it was completely unclear when a halfway normal store operation would be possible again. With GoldSilberShop.de one sets however further on direct customer contact. „We are pleased that we recently agreed with a precious metal dealer friend that we take over his branch in Wiesbaden. Currently, the conversion work is underway. Our goal is to be able to open in early May and that under reasonably normal business conditions.“
Translated with www.DeepL.com/Translator