Interview

ABRAND new promise

Data and service – these are the two core concepts at the heart of Germany’s Schäfer Shop. Everything else around is just nice padding, says CEO Andreas Reuter

In the grand scheme of things, Schäfer Shop is not an old company. It was founded in 1970 as a mail order and catalogue firm by the entrepreneurial Schäfer family, who already owned two other, unrelated businesses, the first one dating back to 1937.

But it has certainly achieved plenty in a relatively short period and is particularly well known in its home nation of Germany, first as a pioneer in the B2B mail order sector and then as an e-commerce expert with a digital go-to-market strategy.

With a reach across nine European nations, Schäfer Shop is currently in the midst of an overall brand restructuring and strategic review, due to be completed in March. When Heike Dieckmann caught up with CEO Andreas Reuter in this first-ever Schäfer Shop interview with OPI, the conversation quickly turned to the importance of data and service – and how best to use both – in our commodity-driven industry.

OPI: Let’s begin with your OP career. Some of our readers might know you, as you had quite a long stint at Staples in Germany, I believe, before joining Schäfer Shop in 2012.

Andreas Reuter: Yes, I’ve been in the business supplies B2B space for 20 years now. I started in 2001 as District Manager of Staples Germany. I then worked in several roles in the company before becoming Managing Director of first Retail at Staples Germany, then of all of Staples in the country, and finally Managing Director of the reseller’s German and Austrian operations.

I really enjoyed working for Staples, but as you know there was plenty going on at the parent company, and in 2012 I decided I wanted a change. When I had the first conversation with Schäfer Shop about the CEO role, I asked them what exactly they expected of me. The answer was simple: make this business successful again.

OPI: Again?

AR: The firm had been going through a large-scale restructuring process and changed its outlook from a B2C focused organisation with quite a different product portfolio to a predominantly B2B orientated operator. That’s the nutshell version.

OPI: Quite a vague remit, wouldn’t you say?

AR: Absolutely. But I said, yes sure, I will do that. I haven’t regretted it for one moment. Schäfer Shop is a family-owned business. As such, my team and I have an enormous amount of freedom to do what we think is right for the company.

OPI: That must be quite different from your Staples experience.

AR: Definitely. I reported to Mike Miles, President of Staples Europe at the time. He was based in Framingham, Massachusetts, so not exactly the office next door, which gives you some indication.

But it wasn’t just the fact that working for a family business is more personal or that there is time to develop and implement ideas because you’re not tied to quarterly results. In terms of digitisation, Schäfer Shop was streets ahead of Staples and, to be honest, a lot of companies in our sector.

OPI: Why is that?

AR: Much of it has to do with data, the company’s biggest asset I would argue, and also the long-term employment of staff. We’ve been collecting data since 1995 when we first established a digital presence, so we have amassed a vast pool of customer behaviour information. We use this data differently now than we did back in 1995 or even in 2012 when I joined, but that’s not really the point.

By comparison, at Staples, we had all these ideas about how to work with customer information, but didn’t actually have the data to start with.

OPI: Before we talk more about the present, could you just give a quick rundown of your major milestones? You’ve just mentioned 1995.

AR: Sure. The company was founded just over 40 years ago by two members of the Schäfer family with a focus on the catalogue. Sometime in the 1970s, they started opening some stores. I think at its peak, we had about 32 stores in Germany. The last one was closed in 2016.

As I said, we began our digital activities in 1995 and opened the first online store later that decade. Another milestone I would say came when we set up our key account management and sales force team in 2010. We now have 60 to 70 account managers in the field across Europe.

In 2018, we founded our premium service business. That’s become a huge differentiator for the company as we offer customers complete turnkey solutions, not just products. The next milestone is definitely our current rebranding and restructuring project.

Schäfer Shop CEO Andreas Reuter

We’ve been collecting data since 1995 [...] so we have amassed a vast pool of customer behaviour information

OPI: I’d like to hear more about your premium service proposition. But beforehand and perhaps to give some context, can you tell me where your core product focus lies?

AR: I would segment it into three categories. In terms of revenue split, the biggest group is warehouse and industrial goods – shelves, racking, waste disposal, maintenance and cleaning products, and so on. The second is furniture. These two categories combined account for about two thirds of our revenues.

The remaining third is office supplies. But while office products is the smaller part, it’s nevertheless vital and strategically very important to us because of the repeat business. It allows us to stay in regular contact with our customers.

OPI: You are a German company, but your coverage is much broader, I believe.

AR: Yes, we are in nine European countries currently. Germany is by far the biggest, accounting for about 66% of revenues, followed by Austria and Switzerland. We also have a direct presence in Belgium, Luxembourg and the Netherlands, while we use agencies in three countries – Poland, Portugal and Spain. We are hoping to set up direct businesses there in the short to medium term too. AR: It is. We know there’s great potential in many of the markets we’re in – and several we’re not in yet, such as the Nordics – but language can be a bit of a stumbling block.

OPI: What are your total revenues? AR: About €250 million ($304 million).

OPI: What has the past year been like for you? Has demand dipped considerably?

AR: It hasn’t, thankfully. We haven’t achieved our targets, for sure, but 2020 was on a par with 2019, so we’re fine with that. The reason for this consistently good performance is that we’re supplying such a broad customer base – predominantly in the mid-sized range – across many different sectors.

Obviously, demand from verticals such as gastronomy and the retail space is hugely down, but we also service factories in various industries, and here demand has been growing. In fact, we acquired plenty of new customers over the past year, due to our flexibility and ability to offer products they needed.

Looking ahead, I expect that many operators will go out of business as a result of the pandemic which may of course have an impact on us. We will see this in the coming months, as financial support schemes are withdrawn and companies have to fend for themselves again.

OPI: What are these products you’ve just mentioned that you were able to supply? The whole gamut of PPE?

AR: Partly. We had most of these items before, but not in a broad scope. A selection of our product portfolio comprises industry goods – masks, gloves and signage are part of this. Our range is much bigger now, but more importantly perhaps, a year ago, we weren’t known for selling PPE to anyone outside the industrial setting. Our office-based customers would likely not have known that they can get nitrile gloves from Schäfer Shop – now they do.

And because these items were already part of our range, sourcing wasn’t a big issue.

OPI: You said furniture is one of your core ranges. Demand in this category must have fallen off a cliff outside small home office orders.

AR: It’s not actually so black and white. In the first few months, starting last March, demand was very low, absolutely. But by August, home office needs were ramping up and we adapted our assortment with these kinds of products.

At the same time, we saw another growing trend for equipping new office buildings. By that, I mean empty buildings where we would start from scratch with our premium service.

OPI: Tell me a bit more about that.

AR: The competitive landscape has changed fundamentally in the past few years. The reality is that an operator like Amazon can offer far more products – we can’t compete with its sheer range. We also typically can’t compete on price.

But we stand for high quality. From a furniture perspective, we figured out a few years ago that there was a real gap between what customers expected and what the market could deliver. We decided to hire interior designers and architects, project managers, a dedicated sales force – all in an effort to bring this premium service to the customer demographic of mid-sized businesses.

We started in Germany and are now finalising the rollout in the remaining European locations. This service has been the fastest-growing revenue part of the company in the past couple of years. The next big project for us is to replicate this premium service in the industrial and warehouse space with all the products it comprises.

OPI: Your background is in mail order and the focus used to be on the catalogue. Do you still have a physical publication?

AR: We do and it’s important. But the role of catalogues – or let me just say print – is changing dramatically. More than 50% of our turnover is generated through e-commerce. But print is often the marketing vehicle. We don’t send out a 1,500-page catalogue anymore; instead, we have direct mailshots, smaller catalogues, etc, to motivate customers to buy from our shop.

The catalogue is no longer a channel to buy from, it’s a motivator for customers to go online.

OPI: You’re often hailed for your e-commerce expertise. Is that a big differentiator for you? AR: It isn’t actually. The biggest differentiator, as I said, is the data we have. A lot of operators sell the same products in our space. It’s how you use customer behaviour data and how you create an experience for them – that is what we’re good at.

We haven’t just bought a ready-made web shop from SAP or IBM, but created our own shop based on artificial intelligence and all the data we have.

OPI: Talking of e-commerce and doing something very well brings me to one of your main competitors in Germany – Böttcher. That company passed the half a billion euro mark recently. What’s the secret sauce there?

AR: Well, it didn’t get this far through sheer luck, that’s for sure. Böttcher worked very hard for these results. The team knows what the market needs; they know their customers, are extremely good at service, realise when they need to slightly change their model, assortment, etc. And they do all this with a great deal of passion.

OPI: What about Lyreco? Germany has been a challenging market for this operator.

AR: Lyreco is very well known in Germany and one of the top players in office supplies in the country. But 2020 was a difficult year for anyone with a core focus on OP and a substantial direct sales force. Diversification and digitisation are big topics now – Lyreco knows this as much as anybody else.

OPI: Staples Solutions – Office Centre now for its former retail part, of course – and Office Depot Europe: what’s your view on these former giants you’re very familiar with?

AR: All I would say is that a permanent restructuring process is typically not in the best interest of the customer.

OPI: On the topic of restructuring, Schäfer Shop is going through that process too, isn’t it?

AR: We are, in terms of branding and assortment. Our own brands, for instance, are hugely important to us. About a third of the company’s total sales comes from these brands which are classified as good, better and best.

For office supplies specifically, it’s under 20% – that’s comparatively low, certainly a lot lower than what Staples had many years ago. We see plenty of potential here, across the entire range. It’s one of our largest projects this year.

Another big focus is our rebranding, due to be completed in March. We’ve not just created a new logo and corporate design, but concentrated more than ever on the core of what we stand for. Our brand promise is to create positive working environments that make our customers more successful, with a passion for quality products and services. Every touchpoint to Schäfer Shop will be affected by that brand promise.

OPI: As an overall assessment and to wrap up: where are the best growth opportunities?

AR: Internationalisation. We are in just nine countries now, but have a business model which can be adopted in many more, so that’s definitely the biggest opportunity. We talked about the Nordics earlier – that’s potentially a very interesting market for us.

OPI: Are you thinking beyond Europe too?

AR: Let’s start with Europe – there are plenty of white flags left for us here. Even the UK could be part of Europe again, from a Schäfer Shop point of view at least! Founded: In 1970 by Hans and Gerhard Schäfer Ownership: Schäfer family, dating back to Fritz Schäfer and his first company founded in 1937

Leadership:

Andreas Reuter, CEO Andreas Dietz, CFO

Headquartered:

Betzdorf (near Cologne), Germany Revenues: €250 million ($304 million) Staff: 650

Geographical

coverage: Austria, Belgium, Germany, Luxembourg, Netherlands, Poland, Portugal, Spain and Switzerland

Members of the Schäfer Shop team in their various verticals and settings