Sustainable Success: What we can learn from Germany's top drugstore chain
Here I can be myself, here I like to shop. An extremely successful slogan, inseparably linked to German drugstore chain dm. 45 years after its foundation, the company has a network of 3,500 stores in 13 countries with almost 60,000 employees. And despite stiff competition from Rossmann, Müller, and others, dm is selected again and again as one of Germany’s most popular brands, the last time in 2017. Here are some of the most important success factors of a truly sustainable company …
Götz Werner opened his first dm drugstore in Karlsruhe, Germany, in 1973. Selling toiletries in a specialized supermarket at reasonable prices turned out to be hugely popular in a price-conscious country like Germany, and the economic upswing of the 1970s also helped. As early as 1976 dm expanded into Austria, and in 1986 the company introduced its own private brands which are still extremely successful today. Now, the total turnover generated by the dm subsidiaries in 13 countries amounts to 10 billion euros and sales growth between 4 and 8 percent. (Source: dm website)
Leadership Culture: Trust through Authenticity and Stability
Götz Werner, the dm founder, was known as a “contrary philanthropist” and an avid follower of Rudolf Steiner’s spiritual anthroposophy. He made this philosophy an important part of how he ran the company, and even after him stepping back from the business in 2008 it continues to be an important pillar for the company’s management team, including his son Christoph Werner. This authenticity and stability are rewarded by dm customers, despite the occasional bad press because of openly fighting competitor Rossmann or outsourcing the production of cloth bags from Germany to India.
Employees: Satisfaction Catches On
A good work environment is more important than profitability. This creed made the founder of dm one of the pioneers of modern corporate culture in the 1990s. Personal responsibility, flat hierarchies, and employee participation are of greatest importance. Theatre workshops as part of your training? Employees deciding on hiring new colleagues? More often than not, Götz was ridiculed as an ineffective “Waldorf manager”. However, success proves him right: dm regularly occupies top positions in employer rankings. While the retail industry as a whole feels a sore lack of junior employees, dm is inundated with 150,000 applications each year according to an article in the magazine Wirtschaftswoche. A pleasant work environment and friendly employees naturally have an effect on the customers who are happy to spend time in the stores and love coming back, not just because of cost-effectiveness.
Own Brands: Letting Customers Have Their Say
As early as 1986, dm came out with its first own brands. Balea, Alverde and roughly 20 other private labels are not only inexpensive but have also become high-quality alternative products. Product Management invests a lot in confidence-building and bringing an emotional element to the brands and lets customers vote on developments through the company’s social media channels. New products of third-party brands are quickly incorporated into the product line in order to participate in trends.
The Shopping Experience: Parcel Collection and Cash Withdrawal
In early 2020, dm announced the introduction of new in-store services: After rolling out a free cash withdrawal service across Germany allowing customers to take out cash when making a purchase, a new parcel collection service is now being tested in selected stores. It allows customers to choose for their parcels to be delivered to a dm store in their area regardless of where they ordered their goods from. In addition, there is a drop-off service for returns handled by DHL. This way, dm is looking to create an even customer-friendlier shopping experience.
Marketing: Innovation with Influencers, Social Media, and Others
dm invests a lot in bringing an emotional element to its brands. It does this with innovative and modern marketing strategies. Customers can vote on the next “Limited Edition” of the body care brand Balea and give feedback about products through social media. And almost from the beginning, the company has invested in cooperations with influencers. Whether it is about female bloggers choosing products in stylish packaging or about providing YouTube influencer BibisBeautyPalace with her own brand: dm demonstrate marketing skills and a willingness to experiment with new trends. A sure way to become the brand of choice for the next generation of dm fans.
This article is based on the following sources (in German):