He is the founder of the ‘everythingl under one roof’ approach in do-it-yourself and a European forerunner in franchising. What does retail pioneer Manfred Maus, the founder of OBI, think about the future of luxury department store sector?
King of DIY stores
Fifty years after the start, OBI is a leading player in the European DIY sector, with 7.3 billion turnover and 48,000 employees, active in Germany, Switzerland, Italy, Poland and the Czech Republic. Founder Manfred Maus is a true pioneer who continues to be tirelessly active in the retail sector even today, at the age of 85. We provided him with a copy of our book ‘The Future of Department Stores‘ and invited him for a discussion on the state of affairs in retail in general and in the department store sector in particular. This led to some sharp insights.
Herr Maus, is OBI actually a department store?
“OBI is not a department store, but a DIY store. And DIY stores fulfil a basic need for people: building is the activity, but the purpose is to live. You build in order to live. At OBI you will find everything you need to build and maintain your house and garden. As a retailer, you don’t have to sell a product but the application of it, the advantage. Take, for example, Kärcher, the cleaning company: they sell the cleanliness. Why wash your car? You can also drive a dirty car. Why do you clean your windows? What is the advantage of a Kärcher appliance?”
At the beginning of your career, you brought the idea of franchising from the USA here, and so you became the king of DIY stores. How did that happen?
“I worked at a tool dealer: we sold hand tools all over the world, to stores selling hardware, paint, timber or plumbing. My idea was to come up with a new type of store where you would have all that product range for the homeowner in one place. But my problem was: if I start a new retail business, I will be in competition with my existing customers. During a conversation in New York, I got to know the franchising concept. When I came home, I knew: I’m not going to confront my existing retailers, but I’m going to work with them, through franchising. Not in confrontation but in cooperation. I talked about it with Werner Otto, the founder of Otto Versand, who set up the first shopping centre in Hamburg in 1970. He said: that’s a fantastic idea, how many square metres do you need? I said: 800! That’s how we started the first OBI store in Hamburg 50 years ago. After we discovered that the system worked, we brought on board the first franchisee, Frau Auer from the Black Forest. Fifty years ago, people still did not understand the idea of franchising. So I set up the German franchise organisation, and then the European one, in Brussels. We were the first in Germany, now franchising is booming”
“Change is normal”
You brought everything under one roof for the do-it-yourself sector. For department stores too, everything-under-one roof was the formula for success. You know the sector: is there a future for department stores?
“We are experiencing dramatic changes, but change is normal. When I started with OBI fifty years ago, that was also change. The department store as we know it will no longer exist in the future. The whole shopping behaviour is changing, we can’t stop e-commerce. Customers no longer accept the department stores’ of the last century. We have to change the location and make the city centre attractive again. That is very well explained in your book. In order to make the city centre attractive again, you need multi-purpose buildings where you bring together offices, stores, restaurants, event venues… This is an issue not only for the retail industry but also for city councils. It’s not only about retail management but also about city management. You also have to involve the end user, to find out what they expect today. The department store as we know it today will not survive this century.”
Are you saying, then, that Galeria Karstadt Kaufhof has no future?
“They have no future in the present situation. They have to change. Their owner is a real estate guy. He bought the real estate, not the retail business. He will have to make changes to make the locations attractive again. And that is impossible with just retail. You also have to add housing, offices and restaurants. In Germany, Lidl builds discount stores on the ground floor with houses on the upper floors. You have to work together with the cities. But that is difficult, because they don’t understand these changes. They are bureaucrats.”
Galeria Karstadt Kaufhof has now restructured, they should be able to continue for a few years, but you say: only if they concentrate on a smaller number of multi-purpose buildings, they have a future.
“Yes, and perhaps some stores will no longer exist as retail locations. The property owner can do something completely different: turn it into a museum, for example. It’s the same with churches: not all of them can remain churches. Some will become stores.”
“It’s not the pandemic”
What about online? Galeries Lafayette says the future is ‘phygital’.
“Correct. We call it omnichannel. In do-it-yourself we already sell 15% via e-commerce or click & collect. Customers buy at home: they find the full information there and often know more than the store manager. They have the prices, and they buy with the push of a button. Within 12 hours they get the order delivered to their home or they come to pick it up themselves. For building materials it is difficult to sell online, but for hand tools, lighting or plumbing it is very easy.”
Do you have a favourite department store?
“I remember Harrods in London. I walked in around eleven in the morning and didn’t come out again until four in the afternoon. Unbelievable! But that was twenty years ago. I also often come to Switzerland and then I visit Jelmoli on Bahnhofstrasse in Zurich. Or Migros. But they too have to change.”
Why is change so difficult for department stores?
“Boards always react too late. Department stores had a problem five years ago, ten years ago, and that had nothing to do with the pandemic. But they didn’t understand the change. And now they are pointing to the pandemic. It’s not the pandemic, it’s management… But where do you learn to manage? I’m considering setting up some sort of academy for management. How do you run a company? You don’t learn that at university today. The university provides you with knowledge, but it’s not a question of knowledge. It’s about behaviour. If you are Coop or Migros, then the question is how to build a corporate culture where the whole management feels responsible and accepts change at the right time rather than too late.”
Motivated employees, satisfied customers
That is exactly what Maurizio Borletti answered when we asked him about the biggest threat to department stores: not online, but mismanagement is the biggest threat, he said.
“Indeed, and that is why I want to set up that academy. You can’t change behaviour with a lecture, but you can change it in a dynamic process where you can measure your own management style by how people react. What feedback do you get? Do you give trust or not? So many people don’t do what they say. Look at what happened at Volkswagen: if you lie, if you don’t tell the truth to the customer, then you have a problem. Or think of a value like freedom. How much freedom does a store manager have? Trust is needed: trust brings results. I cannot tell my store managers that we have to make one million profits every year. We taught our people that the most important thing is to have satisfied customers. If we have satisfied customers, the customer will always come back and the result will be a million profits. But not the goal.”
“At Harvard University, I learned that you can only change what you measure. We started to measure customer satisfaction and we discovered that customer satisfaction is related to employee satisfaction. Only motivated employees who love their job can ensure satisfied customers. That’s why we also measure employee satisfaction.”
“If we look at our balance sheet, we see that when customer satisfaction is high, the balance is fantastic. Everyone tells me: that makes sense. And then I say: of course, but do it! Just do it. That’s still the biggest problem today: we have a lot of wisdom, knowledge, but this is not a question of knowing. We know we should not lie, but we lie every day. You have to translate know-how into behaviour. It’s not just about knowledge, it’s about behaviour. You want the customer to behave such and such. I’m a Catholic, and you know the ten commandments from the Bible. But you also have to apply them. That is still relevant today.”
You’re 85 now, and you want to start another academy. Where do you get the energy and motivation? Is work still a pleasure?
“Yes! I’ve never worked in my whole life. I’ve always done what I liked. I get up in the morning and I thank God I can still do it without help at 85.”
In the Vatican
You have received many awards and accolades in your career. What are the most important ones?
“From the Polish Pope John Paul the second I received in the Vatican the Knighthood of Saint Silvester, which is the highest distinction for lay people in the Catholic Church. I gave a lecture in Rome where the Pope was also present, and one of the South American cardinals asked me: Mr Maus, you talk about franchising, but we do not understand what you mean by that. Well, how could I explain that in Rome? So I made this comparison: the Vatican could be the franchise headquarters. That is where the know-how is. The cardinals would be the master franchisees, the priests would be the franchisees and the church council would be the franchise league. They could laugh at that. You know, when you give a presentation to the Vatican, your speech has to be printed on Vatican paper. I wanted my speech on OBI paper, but they said it was not possible. I said: if that is not possible, I won’t come… Then it turned out to be possible anyway. So the Pope read what I told the audience on OBI paper.”
What is the best, most successful idea you ever had?
“That you have to give people a purpose. Every person should have a purpose. All my life I have tried not to do everything myself, but to bring people together as a team and give them the opportunity to work on their strengths and weaknesses. Installing that kind of culture was the best idea in my life. Develop people.”
What advice would you give to people who want to start a career in retail?
“Read the book The Future of Department Stores. There are so many stories in this book. You can learn from them and then try to change things at the right time. There are so many ideas in your book, it’s fantastic!”
