Dennree’s future plans

The Dennree corporation – one of the leading wholefood wholesalers in Germany – is 35 years old this year. Together with other pioneers, Dennree has shaped the wholefood landscape in Germany and has become the company with the highest turnover in the industry (2008: 330 million euros). Dennree has always been a leader the field, although its concepts have not infrequently met with criticism. Nevertheless the company pursued various strategies such as having its own stores, supplying the conventional retail trade and launching its own discount stores (Denn’s). The industry leader’s plans for 2009 were revealed to us at BioFach when we had the opportunity to talk to Maren Schimanski from Dennree’s marketing department, sales manager Dieter Kuhn and the commercial director of Denn’s Biomarkt GmbH, Uwe Zimmermann. (Picture: Lively interest: Dennree at BioFach 2009)
The policy of Denn’s Biomarkt GmbH is to increase its rate of expansion: ten stores are planned for this year alone. This means that by the end of the year there will be a total of 42 stores. Worms, Frankfurt, Bamberg, Würzburg and Linz are already earmarked as locations for new stores. Next in line comes Mühlacker in Baden-Württemberg where a partner project with the Füllhorn chain is being launched (nine stores), in the same way as has already happened with two stores in Pforzheim. Four of the 33 stores are being run currently as franchises. The stores in Erlangen are also being managed independently in collaboration with Gerhard Fritz Biomarkt GmbH and in Siegen with Wolf und Kraus Biomarkt GmbH. “The Siegen people have opted for both concepts,” explains sales manager Dieter Kuhn (picture). In the town centre they are operating a Biomarkt store, while an independently run Denn’s Biomarkt was opened in September 2008 in the suburbs.

In 2008 the turnover of Denn’s Biomarkt GmbH was 47 million euros that was produced with a staff of 360. In 2009 turnover could reach 56 million euros, and the number of employees is set to rise to roughly 500. In the current year the company is planning to increase investment by more than 30 %. The Dennree Group as a whole employed about 1000 people in 2008, and the wholesaler supplied around 1,500 retailers and achieved a turnover of 330 million euros.

Uwe Zimmermann explained that investment in the case of Denn’s GmbH was directed at expanding the store network and improvements on the sales side, but the primary aim was optimising the store concept. He said that saving energy was an important issue: by using floodlights instead of striplights and spotlights, an energy reduction of 30-40 % was already being achieved. As well as introducing the new lighting concept, they are going to use a combined heat recovery system in the new stores (chilling/heating/air conditioning). This will save nearly another 40 % of energy and also reduce CO² emissions by a fifth. They are also considering installing doors to the chilled shelves and converting to eco-electricity. Both of these ideas are currently being tried out in a test store.

“The store concept, with fruit and vegetables, cheese, wine and cosmetics as priority product groups, is being developed all the time so that we can improve presentation and optimise the concept,” the sales manager explained. This puts us in a position where we can operate our stores in the most economical way.” Another priority is increasing the volume of regional goods in the product ranges. As Mr Kuhn commented: “We want to emphasise regionality, because it is important – particularly in the case of fresh foods – to strive wherever possible for low food miles and at the same time to support local organic producers.” Currently the proportion of regional produce in the stores is between 10 % and 25 %. The target is to have as high a level of regional goods as possible in all stores. (Picture: Organic beer from Alsfeld in the market in Fulda) To achieve this goal, the company has developed a marketing concept that is already being implemented: at so-called Friday tasting sessions the focus is on, among other things, the products of regional suppliers. “Transparency is one of our most important goals. The products and goods of these suppliers make our customers aware of the farms, the production process and the quality criteria in processing,” said Mr Kuhn. According to Maren Schimanski, the number of Dennree’s own brands was about 400, and Mr Zimmermann pointed out that these accounted for roughly 10 % of turnover and remained relatively constant. “No other brands are being forced out. It is more a case of us supporting manufacturers, and we are creating for our customers an entry price level,” commented Mr Kuhn.

All Denn’s stores are integrated in the still young partnership organisation that comprises 200 businesses. These stores stock around 1300 of the best-selling lines in Dennree’s product range of 10,000 articles. The partners pledge to source 70 % of their turnover from the major wholesaler. In answer to which direction is to be taken regarding partnership arrangements, Maren Schimanski explained that they did not have a target regarding the number of partners. “We are very pleased that 200 stores have joined up straightaway. What we want is a real partnership in which we, as the main supplier, provide the best possible service, and the retail trade is more closely committed to us in return.” She said that for them service meant not just logistics but also advice on locations, store concepts and economic viability. “It’s all about give and take,” stressed Mr Kuhn. “The partnership is a cooperative model – that’s the only way it can work. It’s all to do with years of cooperation on a basis of trust.” In the case of retailers already working closely with Dennree, the supply quota of 70 % was not a big step.

Brief retrospective: Denn’s stores have existed since 2005, when Dennree’s own stores, that had been set up as test stores in the vicinity of regional wholesale facilities, were converted. After a short phase as Denn’s discount stores, and after a period of consolidation that saw only one new opening in 2006 (19 stores in total), they founded Denn’s Biomarkt GmbH in 2007 as a 100 % Dennree subsidiary and launched five stores (between 500 m² and 800 m²). With well appointed stores and a product range of 5000 to 6000 articles, Dennree pursued a new strategy and made its concept available to franchise partners too. In 2008, eight Denn’s Biomarkt stores were launched. A year ago, the company’s Dennree customer card was introduced in Denn’s stores as well, and by now about 35,000 have been issued. Of the independent stores, about 80 have taken advantage of the card, and 55,000 have been issued. The company is still looking for locations nationwide for Denn’s stores in towns with more than 80,000 inhabitants.