While most retailers are focused on growth and profit, Christoph Werner, CEO of dm-drogerie markt, is setting his sights on something else – people.
As one of the largest drugstore retailers in Europe, headquartered in Germany and with a presence in 13 other European countries, dm-drogerie markt’s success story is rooted in its focus on its employees, shoppers, suppliers and partners. Werner believes that by taking care of people, the company will remain relevant and therefore naturally grow and thrive.
"We are a company that is built on relationships," he tells The CEO Magazine. "We have a very strong relationship with our vendor partners, and we have a very strong relationship with our customers. We believe that these are the key to our success."
To build strong relationships with employees, Werner emphasizes the importance of communication and inclusiveness. "We strive to turn those affected into stakeholders," he says. "We believe that everyone at dm-drogerie markt can best contribute if they’re able to participate in the design phase of work processes or products that affect them directly. This way, the design of the organization is not up to a few but to as many as possible, and we all collaborate to make it a success."
In order to do so, Werner stresses the importance of employee development. "We invest heavily in our employees," he says. "We offer a lot of training and development programs, and we give our employees opportunities to grow and develop their skills. This way they realize that they have a future at our company and that they can build a career here."
We are a company that is built on relationships. We have a very strong relationship with our vendor partners, and we have a very strong relationship with our customers. We believe that these are the key to our success.
This focus on employees has paid off for dm-drogerie markt. According to Werner, the company has a very low turnover rate, a testament to the company’s strong culture and employee engagement.
In order to build the company’s relationship with its daily two million-plus customers in Germany alone, dm-drogerie markt has focused on the human at the center of all these interactions. The company’s primary goal is to have satisfied customers that want to return by creating a great experience for its shoppers. This is reflected in the company’s motto: "Hier bin ich Mensch, hier kauf ich ein". Translated from German, it means, "Here I am a human being, here I shop".
"We want to make sure that our customers feel comfortable and welcome in our stores," he says. "We want them to know that they are getting great value for their money, and that they are getting high-quality products."
To achieve this goal, dm-drogerie markt follows an insight-based approach. "Employees treat shoppers the way they feel treated by the organization they represent," Werner explains. "That’s why it’s so important that work processes actually do work, and that individuals don’t feel at the mercy of an organization, but rather an active member of it."
Another focus is on ensuring that any concept of pressure is removed from the shopping experience. "Rather than spot promotions, where there’s this sense of short duration or limited stock, we have an everyday low-price scheme, including a four-month price guarantee," he explains.
"Shoppers can see for themselves from the price tag on the shelf how long the prices have been stable, something particularly important in these current times of inflation."
It’s a strategy, he adds, that allows customers to stick to intrinsic consumption needs. "We want shoppers to buy what they need and not what we want to sell," he says.
And a breadth of product range, including a robust private label selection, he says allows shoppers to always have real choice. "We have 28 different private label brands, and combined they account for over 50 percent of our volume."
Forefront of sustainability
With its private label brands, dm-drogerie markt stays at the edge of innovation. "This is especially the case in terms of ecological sustainability, which is a huge topic not only in Germany but in all the countries we are present in," he says.
"We try to innovate in terms of the formulas we use and we also collaborate with different stakeholders in the industry on plastic recycling initiatives to try and close those loops and really make a difference."
Werner believes that the company’s focus on sustainability is an important part of its relationship with customers. "Our customers are very environmentally conscious, and we want to make sure that we are meeting their expectations in this area," he says.
In an industry that has been historically notorious for its disregard for the environment, Werner’s focus on sustainability and his emphasis on ethical sourcing is one element that sets dm-drogerie markt apart from its competitors.
"We believe that the best solutions can come about through supply and demand in a market that has clear rules of engagement," he explains. "If shoppers want eco-friendly products and the rules of engagement make sure true cost accounting is applied, supply will respond and those with the best solutions will win. There are ideas out there with ordoliberalism that really can drive prosperity, and also make sure that we can tackle the enormous environmental issues that we have.
We believe in being open and honest with our customers, and we want to make sure that they can trust the products that they are buying from us.
"If we, as CEOs who can shape the world we’re living in, are not innovative and ambitious on this, regulators will step in, with negative effects on the entrepreneurial spirit that’s such an important part of the solution."
Werner’s focus on the human side of the business extends to the company’s supply chain as well. The company works closely with its vendor partners to build strong, long-term relationships.
"We believe in working together with our vendor partners for the benefit of the shoppers to create value for all parties involved," Werner says. "We want to make sure that in all the negotiations that do take place, shoppers are never lost from sight and that creativity is sparked to find ways to delight them."
Werner also emphasizes the importance of transparency in the supply chain. "We want our customers to know where our products come from and how they are made," he says. "We believe in being open and honest with our customers, and we want to make sure that they can trust the products that they are buying from us."
When asked about his future plans for dm-drogerie markt, Werner emphasized that he’s focusing on building upon the company’s strength, not just on growing it.
"What I have observed is that often organizations strive for growth, but there’s good growth and bad growth," he says. "If you become a strong organization, you will automatically grow because your service becomes better and more customers will turn towards you and want to shop at your stores."
The key to building strength, he continues, is to be extremely relevant to target customers, even if the definition of relevant is a fluid one that changes with shifting customer needs. "We want to make sure that we are always aware of what is on the minds of our shoppers, so we can seize those opportunities in order to transform them into a service that shoppers will be delighted by. Shoppers will then reward us by becoming loyal."
Omnichannel retail and personalization (or individualization) are two opportunities he names for the business, and these are two trends that go hand-in-hand. "People want to be seen as an individual, not as one of many," he says. "For retailers, the answer is to personalize the services that we have, something that can be done much better in an omnichannel setting."
However, Werner notes the differences between online and in-person shopping need to be acknowledged. "In a physical store you cannot personalize to an individual shopper. That’s not possible. But the experience you have when you interact online with a retailer can be much more tailored".
As he looks to realize his "strength plans", as he describes them, Werner is pragmatic in the face of the challenges to negotiate. "We are in an extremely shifting environment and there are always new surprises that make it difficult to define today what the next five or even three years will look like – and build towards it," he rationalizes.
But he also understands that the best chance to seize any potential opportunities lies in technology. "We have to work on technological solutions early on, so that we can scale them the moment they become relevant," he explains.
He cites click and collect as an example. "Thinking it would be an interesting service for our customers, we introduced click and collect in 2019 but, in Germany, there was no consumer response."
Fast forward a year, and when the COVID-19 pandemic swept across the globe, systems were in place that were able to be quickly scaled up to match the new-found need for such an offering.
Setting a new standard
Werner explains that the overall vision for dm-drogerie markt is to be a place of true customer loyalty. "Where shoppers come to our stores not only for the low prices, but also for the great experience that they get," he says. "We’re also focusing on developing an organizational framework in which each member of the dm-drogerie markt team can make a difference and grow to his or her full potential."
A Powerful Presence
Beyond its 2,000+ German stores, dm-drogerie markt can be found in Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Italy, Macedonia, Poland, Romania, Serbia, Slovakia and Slovenia.
Werner’s visionary leadership has helped to transform dm-drogerie markt into a Europe-wide drugstore retailer that values not just the bottom line, but the people who make it all possible. By prioritizing operational excellence, ethical sourcing and sustainability, Werner has set a new standard.
"We are really aware of the responsibility that we have, which is an enormous opportunity, because we touch so many people’s lives. And the way we work has a huge impact on how these people behave as citizens also."
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