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Unabridged interview of our owner Friedrich Knapp with Textilwirtschaft on 03.03.2021
Mr. Knapp, what do you think of the decisions of the federal-state conference to extend the lockdown?
Nothing. The past conduct of the politicians has been one big spasm, and unfortunately these new decisions have confirmed that again. We've already had two and a half months of lockdown and now we're adding another month, because in the vast majority of the states, the required incidence levels of infection are not currently being achieved. Hardly any company will survive this. It is inconceivable that politicians and the judiciary have no idea what they are doing with their decisions and rulings.

What do you think is the reason for this?
I don't know. But just look at all the decisions made from past days and weeks. When the politicans say that everything is not so bad and that we fashion retailers should just sell online, it leaves me speechless. For the vast majority of companies, this is simply not a viable alternative.

What is your demand to politicians?
I demand that, with immediate effect, we be allowed to reopen all stores in compliance with the hygiene standards from last year. The fashion trade has proven that this works. I take the corona pandemic very seriously, and have even lost a friend due to covid. Nevertheless, I demand that stores reopen with hygiene standards in mind. Retailers should not be pawns for politicians that screw up getting vaccines, developing testing concepts, or protecting the elderly members of the population. I call for a better balance between protection of health and public life. 

So the initial relaxation of restrictions are not enough for you?
No. Politicians must act now and for everyone, otherwise we will have a commercial landscape in Germany that will never get back on its feet. If that doesn't happen promptly, then we'll have to take to the streets. And all together, blockade all cities on one day, so that everyone becomes aware and understands what is happening here right now, otherwise nothing will happen. We can no longer stand by while livelihoods are destroyed and we run into walls everywhere. We have to demonstrate, that is the only language that politicians understands. We are voters too! The farmers drive their tractors to Berlin when they don't like something. However, I am in favor of each company demonstrating decentrally at its respective location.

So what are your concrete plans for attracting attention?
As I said, we need to make our voices heard by uniting the retail sector in the streets. Perhaps an alliance can be established that we can join to organize demonstrations in different cities at the same time. We would definitely be there and help. Actually, we expected such initiatives from the trade associations or the IHK. We expect the HDE to stand up for the retailers and organize this action on a regional basis. Or are there already entanglements that prevent the organization of protests in the form of demonstrations? In our opinion, it is not enough to place nationwide ads. All companies must get involved locally. 

There has been previous and some current action by companies. Why do you think this has not had the desired success?
There are too many different pots being stirred with the actions coming to nothing. I also don't think much of a constitutional complaint, which has in some cases has been filed. By the time these are processed, the year will be over and everyone will be broke.  

New Yorker is very international. What is your experience in other countries?
Things are usually much better abroad in all areas. Austria, Switzerland, Finland, Sweden, Poland: the stores are open again, although the incidence is sometimes higher compared to Germany. Also, the RKI (Robert Koch Institute) recently confirmed that the retail sector is not a hotspot. We can also confirm this from our experience; we are not aware of any cases of infection among our colleagues in stores.

But the rulings also provide for initial opportunities to reopen. To what extent will New Yorker take advantage of these?
We reopened 200 stores in Germany on Monday. Depending on incidence, with normal access for customers or with pre booked appointment.

Is making an appointment compatible with New Yorker's business model? Isn't the expense too high for the expected sales?
The biggest problem is the unmanageable patchwork of permanently changing regulations at the regional level. There is absolute uncertainty as to which incidence values one has to adhere to. The state of Lower Saxony, for example, actually intended to use the state incidence as a base. Then, for example, Hanover could open up. However, this is not the case today. Hanover remains closed. This promotes shopping tourism, which should actually be avoided, right? In any case, we have made sure that the contact tracing system is ready to be used. But since retail has not been and is not an infection hotspot, that probably won't be taken up. Also, I wonder why retail grocery, for example, has not and will not be subject to the same model? 

How much does the shutdown affect your own business?
The Corona crisis has cost us several hundred million euros in sales. We now have gigantic inventories, which are leading to intangible losses with every month of lockdown. When even - as has happened - suppliers from Bangladesh write a letter to the German Chancellor asking for a relaxation, you can see the worldwide impact the shutdown is having, even abroad. Planning is almost impossible at the moment, so our suppliers are also having to cut capacities and the entire procurement market is changing as a result.

A large proportion of your employees are on short-time working. Do you top up their salaries?
In principle, yes. We take a flexible approach. In the lower salary groups in the stores, for example, we increase salaries by up to 100%, and less in the higher groups.

Numerous companies have had to file for bankruptcy. Is that also an option for New Yorkers?
Absolutely not, no one has to worry about that. We, on the other hand, are worried about the other retailers. If even more of them have to give up now, then the city centers will no longer function, and then we'll be threatened, too. What's more, the entire German textile industry is being seriously affected at the moment. Businesses will continue to lose customers, and their existence will be in jeporady. To introduce a supply chain law for the textile sector at this time is a mockery. Something like this can only work if everyone in Europe or worldwide adheres to it and speaks the same language. This is a matter for the government to agree directly with the manufacturing countries and not to make the weakest in the chain responsible for everything. Competition is now confined to the whole world and must be treated as such.

To what extent was New Yorker able to take advantage of government aid?
Apart from short-time allowances, there was no government aid at all. What is also extremely annoying is this tedious back and forth with regard to aid for larger companies with annual sales of over 750 million. The economic incompetence of politicians is frightening. They have no idea how our business model works. They say to themselves, 'Oh, the store will be open again someday, and then everything will be fine‘. But it's not like that. Politics is letting us all down. Here, livelihoods that have been built up over generations are being destroyed in one fell swoop.

You're known as an online shop denier. New Yorker is one of the few international fashion retailers that doesn't operate an online store. Have you changed your mind about that?
Not at all, I couldn't be that stupid. E-commerce in fashion retail means that half the pieces come back. I don't even want to begin to imagine how time-consuming it is to reprocess that. 50% of the returns - everyone tells you that - are unusable and can only be thrown away. The other 50% cannot even be sold at cost price. And then there are the costs for handling and reprocessing. 

So why are so many companies still focusing on expanding their online presence?
Because they are driven by shareholders. They believe that the future lies in online business. Many don't seem to realize that they are destroying their own brick-and-mortar business. For me, e-commerce is a bet on a future that will never happen. Huge amounts of unsold merchandise are everywhere, and I consider most companies' balance sheets to be inflated. If online retailers ever took a proper inventory, the business model would be unsustainable. I am convinced of that.

So they deliberately and voluntarily remain 100% dependent on opening stores.
Yes, and that's why something must finally happen now. We have to go out on the streets every day, all at once, in lots of locations. Until the government notices. We need to organize a unified national strike week, as soon as possible.