Many were surprised to hear it – Schlecker is bankrupt.
For me, it was actually not quite such a huge surprise.
In my opinion, sheer size, never-ending growth and leadership when it comes to cost are no longer the critical competitive advantages. Additionally, the commerce is generally under pressure. The department stores can tell their stories about it – and I am sure the discount shops will soon follow suit. I already wonder when the first of those ALDIes, Lidls, etc. will have to throw in the towel.
Basically, the discount shops have exploited all there is to exploit in order to promote their turnover. The selection was enlarged all the time. First, the shelves containing tins and dry food were supplemented with vegetables, fruit, fresh food, a display refrigerator for dairy products, then with frozen products and fresh meat. Then they generated more and more sophisticated special bargains ever more frequently. Special bargains were supposed to stimulate the propensity to buy. Eventually, they even offered fotographic printing and travel, all just to generate more and more turnover.
Well, there is not much you can still think to introduce, is there? Or will they decide to sell motorbikes and cars? Or pets? No, growth through utilizing new product segments is probably at its end..
At the same time, the number of customers is on the way down. The consumers start getting more autonomous. They orientate themselves and buy less rubbish. Instead, they prefer quality.
Yet the huge enterprises keep building branches in the middle of nature, pretending nothing has happened. They start a new competition. It costs a lot of money. And it is quite likely that you can no longer generate the kind of turnover that would be necessary in order to finance all this construction work.
But they think they must expand, because, after all, the competition expands. Consequently, all those ALDI, Lidl, Rewe, Tengelmann, Metro, Käfer and the like shops build a circle around our communities. They seal the ground with flat barrack-like buildings and far too many parking places that are never quite full. The number of branches increases, but the demand does not. To be sure, many customers, especially from the Eastern European countries, fill their trolleys and cars to the brim before driving back home, because everything is so cheap in Germany. But that, too, can change in no time.
Their centralized organization is also a factor that might prove detrimental for these firms. Times will get harder and the competition will become even more ruthless. They will have to revert to putting more emphasis on the regional needs. In order to do that, new knowledge and many good ideas are necessary. Ideas and innovation, however, will have to come “from the bottom“, among other things from the “empowering of people“ that used to be so important in (former) times of Kaizen. And that, too, is something you probably can best achieve in small, independent and decentralized teams. Just like culture and values will always thrive better inside small structures than in mega organizations. Maybe the future belongs to models that function a little like the former cooperatives.
I read that, along with Schlecker, Kodak and manroland are also insolvent. They, too, were strong companies. They had to fight against technological change – and probably never had much of a chance.
It might have helped them if they had been able to actively downsize. Analogous fotography is a model of the past, just like the “soiling of paper“ is now. Being able to actively downsize might have helped to survive. That, too, is something small and regional structures with flexible and decentralized units can do better than huge giants.
RMD
(Translated by EG)
P.S.
In the report on Schlecker, I read that it is considered quite promising as far as drigstore goods are concerned. But that is something I cannot understand. Whenever I find myself in the gentlemen’s department of one of the drugstore chains, I am surprised about all those perfumes and skin tonics on display for my sex. And all I buy is a few razor blades. Thery will see me through quite a fw years. And for shaving lather, I now take soap, which does the job quite well, thank you very much.
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