Global-A Victory for Direct Marketing in Germany (645 words)
This January, the German government announced its plans to scrap two laws that have been thorns in the side for direct marketers doing business in Germany. Enacted in the protectionist era of the 1930s, the first law limited companies from offering consumers discounts of more than 3 percent. The second piece of legislation, which has attracted a good deal of press coverage in the past few years, was its bonus gift act. This law forbade any free giveaway of significant value with a purchase. U.S. cataloger Lands' End was most notably affected by this piece of legislation.
Following the launch of the cataloger's German subsidiary in 1996, a local retail trade association claimed its famed unconditional guarantee was free and had value, and as such, was in violation of the bonus gift act. During the next few years, Lands' End battled its way through the German courts. After winning the initial ruling, the cataloger lost—on appeal—its right to advertise its unconditional guarantee within Germany. Although it has discontinued advertising its guarantee, the cataloger continues to honor it.
With the explosion of e-commerce, these antiquated laws now are perceived as threats to German competition. As such, the government plans to remove the Nazi-era legislation from its books come May.
According to Sam Taylor, Lands' End's vice president of international, neither the ruling nor the high profile court proceedings have hurt business. Instead, it has increased brand awareness to the extent that it is a better-known brand in Germany than it is within the United Kingdom, which is home to the cataloger's first global subsidiary. What's more, Lands' End's business in Germany has enjoyed continued growth, year after year, and is the cataloger's largest business in Europe.
Following the repeal of the bonus gift act, Lands' End hopes to advertise its guarantee in Germany as early as this summer.