Competitors

Once Ferdinand understood the whole story, he immediately took action. Although he looked down on those flour capitalists, he still extended a little goodwill, and Volvo added several more brands of flour.

At the same time, he decided to teach Kotei Department Store a lesson and establish his standing in the industry, warning certain people in the process!

Ferdinand investigated more deeply and discovered that although Kotei was a giant in the Austro-Hungarian Empire's department-store industry, its financial situation was not very good.

It still relied on traditional business practices and family management, which were increasingly out of step with the times.

Its current head was Robert Hurd, an Austrian not yet thirty years old. Robert was ambitious and couldn't stand Kotei Department Store's traditional business model. He was eager to forge ahead, and his relationship with the company's management was strained.

But because it was a family business, most of Kotei Department Store's senior executives were relatives, including his two uncles and a younger brother. They also controlled a large share of the company.

Robert had pushed through the move into supermarkets precisely to free himself from the management's constraints. Of course, Ferdinand had no interest in figuring out what role those flour capitalists played in all this!

After learning about his opponent's situation, Ferdinand handed the task over to Franz. To be honest, Ferdinand didn't think much of Robert. The man was capable enough, but clearly had the young man's tendency to bite off more than he could chew.

Otherwise, once he learned about Volvo's background, he should have known to keep a low profile and pay his respects—not charge in like some greenhorn!

Besides, given Kotei Department Store's current situation, it shouldn't have blindly launched a new project and spread its limited resources thin. It should have focused on reforming its own management structure!

Even if it wanted to enter the market, it shouldn't have chosen this moment. And even if it did, it shouldn't have chosen Vienna. Competition in Vienna's retail industry was now at its fiercest, and this would burn through Kotei Department Store's already limited ammunition.

Robert had not only entered the market right away, but had also made Vienna his main focus. He opened ten supermarkets all at once with great fanfare. Who he was targeting was plain as day!

Two of them were converted department stores, with vast floor space and lavish decor—the finest in Vienna. It was obvious they were going after the aristocratic-supermarket market as well!

But Volvo had made it this far, and now was the time to reap the rewards. With other regional markets to support it, Ferdinand could afford to keep spending. The small capitalists would be the first to fall.

As Kotei Department Store's supermarkets flooded into the market, the air grew more and more charged. Surprisingly, the large supermarkets were the first to buckle.

Their operating costs were high. A large customer base should have been a good thing—customers meant profits—but now, the more they sold, the more they lost. The financially weaker independent operators were the first to drop out!

On May 18, 1884, Qatar Department Store, unable to endure its prolonged losses, declared bankruptcy, sounding the death knell.

Within the following week, another department store, named Philip, declared bankruptcy. After that, there was no stopping the slide. Before long, a supermarket was shutting its doors every few days.

By then, no one in Vienna could escape unscathed. Every supermarket was operating at a loss; the only question was how much.

Volvo was no exception. Even with its vast network of stores keeping purchasing costs down, several of its Vienna branches were now losing money.

Three of Volvo's five Vienna branches were losing as much as five hundred pounds sterling a month. The two supermarkets catering exclusively to the aristocracy, however, remained profitable!

The newly arrived Kotei Department Store supermarkets had landed in the worst of it. A big investment meant big losses. On top of that, Kotei had carried over the grand style of its department stores: its outlets were lavishly decorated, poorly laid out, and wasted enormous amounts of space, adding to operating costs. Their situation was now a complete mess.

Ferdinand had to admit that Robert was indeed talented. The sumptuous decor drew in huge crowds, including a large number of middle-class customers—the kind any business would want. Business was booming.

Unfortunately, this was 1884, not the twenty-first century. Vienna's middle class was too small to support a large department-store supermarket, so prices still couldn't be raised!

As for the aristocrats, they belonged to an entirely different class. Apart from the newly rich, the old aristocratic families still looked down on them!

To seize market share, Kotei had no choice but to cut prices too. In fact, it had been offering discounts ever since it opened. It was losing more every day, with no end in sight.

Franz wasn't idle either. First, he mobilized the employees of the Shineway Food Group to shop at Kotei Department Store's supermarkets. Thousands of them poured in, instantly bringing Kotei a huge surge of customers.

Even the products they bought had been selected in advance. They were then secretly transported to other cities in Vienna and sold through Volvo outlets for a profit. For a time, this brought in quite a tidy sum, enough to make up for the losses at Volvo's Vienna branches.

Robert was in a very bad mood. In the space of a week, the vase in his office had been replaced three times.

Seeing the bright prospects of department-store supermarkets, he had rushed into the business with the support of Hungarian flour capitalists. Then the losses began.

Well, losses were losses. Robert had been mentally prepared for them; he'd simply treat them as the cost of building a customer base. But he hadn't expected business to be so good—and the losses to be so enormous.

Last month, the smallest of Kotei's ten Vienna outlets lost more than eight hundred pounds sterling, while its flagship store set a record with a loss of three thousand. Kotei was simply big enough to weather it; anyone else would have given up the fight long ago!

The goods in department-store supermarkets were now being sold straight from the factory at five percent below cost. Volvo had started the practice, and businesses with the means to follow had quickly joined in.

Once operating costs were included, losses were reaching around ten percent of sales. The more they sold, the more they lost.

Kotei Department Store's supermarkets could now proudly announce that they were Vienna's leading department-store supermarket chain, with the largest market share—leaving Volvo, in second place, far behind.

That was precisely why the atmosphere at Kotei Department Store had grown so strange. Even though Robert controlled the majority of the shares, things were hardly easy for him. Last month, Kotei Department Store's supermarkets had lost fifteen thousand pounds sterling, and this month the losses looked set to climb even higher.

The department-store business was still profitable, but even its earnings couldn't fill this bottomless pit. At this point, it was no longer a matter of simply choosing to withdraw. Kotei had already poured eighty thousand pounds sterling into the supermarket project.

Robert decided to lay it all on the table before the shareholders. Things were already this bad, so he might as well go all in. They could either abandon the eighty thousand pounds sterling they had invested and take a total loss, leaving Kotei Department Store badly weakened; or keep investing, squeeze out a pack of competitors, wait for the market to return to normal, and earn back what they had lost!

The meeting room at Kotei Department Store was gloomy. More than ten people attending the meeting puffed away, and soon the room was thick with smoke.

"All right, now that everyone's here, let's begin today's meeting." Robert had lost his usual composure.