The Great Minimum Wage Woolworth Comeback

For Woolworth it's not about the sausage, but you can still advertise with it. It's a November day, the day before they open a branch in Unna, already the second in the city, and there's a sign in front of the shop window. The poster shows a bratwurst in a bun. For each purchase, customers receive a coupon that allows them to buy a sausage at a local snack bar for a cheaper price.

Advertising is also already being done on the shop windows. "Super bang offers" are promised, a scratch card campaign and a wheel of fortune. Almost as if the good old 90s were back. Gloves and hats for 1.50 euros can be seen through the shop windows, thermal undershirts are available for seven. The branch of the department store chain has moved to a shopping center near the train station, left the shoe discounter, above the gym discounter - and Woolworth, the household goods and textiles discounter.

It will be the 540th branch in Germany, and now at the latest the question arises: wait a minute, Woolworth – does that still exist? Yes, more than ever. Except that the once US company has become a German one. While Galeria Karstadt Kaufhof has just ended up in bankruptcy, Woolworth has long since survived it. In Unna, where the Ruhr area gradually merges into the Sauerland, the company not only has two branches, but also its headquarters. More than 8,800 people work for the department store chain throughout Germany. Although the 2020/21 financial year saw a loss of almost eight million euros with sales of almost 463 million euros, according to the company this has mainly to do with Corona. Eight million euros lost in the Corona year, that is actually “not particularly much” “in relation”, says trade expert Gerrit Heinemann, professor at the Niederrhein University of Applied Sciences: “Which non-food retailer did not make any losses in 2020/21 ?” The year before, the profit was almost twelve million. So how did Woolworth make it out of the blue?

Heinemann says Woolworth "fills a gap with its branches in smaller and medium-sized cities". This was also due to the fact that Galeria Kaufhof Karstadt said goodbye to many cities with their smaller department stores. "You could also see the Woolworth branches compactly as a reduced condensate of a Karstadt," says Heinemann. They contribute to the local supply, sometimes with products that are otherwise only found on the Internet today.

The company once helped usher in the age of mass consumption. The first Woolworth store opened in the United States in 1879. The goods lay openly on the counters, there were only two prices: five and ten cents. This was new at a time when shopkeepers were still pulling the products off the shelves themselves. In 1927 the first German branch opened in Bremen. However, even before online trading really took hold, the company closed its last stores in the USA in the late 1990s. In Germany they continued on their own, but didn't have much to counter the crash. Insolvency came in 2009.

Just one year later, HH Holding from Dortmund, which also operates the household goods discounter Tedi, took over 158 branches and founded Woolworth GmbH. From chic Frankfurt we went to tranquil Unna, not far from Tedi's holding company and headquarters. Roman Heini can explain why things got better. The 46-year-old has been Chairman of the Management Board, which consists of six men, since 2021.

The day before the opening, Heini stops by the branch in Unna. In front of the shelves with the pots, he tells what Woolworth is doing differently today. Today, the focus is primarily on private labels, he says. They accounted for more than 90 percent. This increases profits and the company has more control over the product. The branches have become smaller, mostly between 500 and 2000 square meters, the number of goods has been reduced. He says they have also increased the quality of the products. Of course, this is hardly verifiable. Although Woolworth is a traditional brand, in the past it was not associated with quality but with junk. The new Woolworth wants to convince customers that the goods have gotten better despite the lower prices.

Retail expert Gerrit Heinemann points out that the strong growth also costs profitability - and the sales per branch are quite low, "that could lead to problems". But discounters are generally on the rise again, "and in bad times anyway," says Heinemann, referring to chains like Kodi and Tedi.

When Woolworth boss Heini speaks, you can hear that he grew up in the Black Forest. He wears sneakers with his suit, he prefers not to say "cheap" or "cheap", but "price entry". He shies away from the term "department store" because it is associated with the Kaufhof crisis, while "discount" is easy to say. "It's not a negative thing for us. The discount also makes it possible for people with lower incomes to get supplies that meet their needs.” They advertise with the slogan: “Home of discount since 1879”. In principle, it is not an advantage for them that people now have to pay more attention to money, says Heini, "but new customers are coming who previously just walked by".

However, the fact that the prices are so low also has something to do with the fact that the management keeps costs as low as possible. According to the company, the employees in the branches, with the exception of the management, receive the minimum wage. According to the annual and consolidated financial statements for 2020/21, 24 percent of the products come from the European Union, the rest from Asia, from countries like China, Pakistan and India, where wages are significantly lower than in the EU.

In 2020, Woolworth opened its new company headquarters on the outskirts of Unna, right next to the A1. There is now an office building and one for logistics, five bays, 360 meters long and 138 meters wide. All goods arrive here before they are driven to the branches. 300 trucks a day, says company spokesman Roland Rissel. The company canteen is called Frankies, named after Woolworth founder Frank Winfield Woolworth.

Despite the stately headquarters, Woolworth doesn't really deal with superlatives, preferring to be down-to-earth and modest. They don't want to be hip. That could scare off customers, who tend to be 50 plus and female. "We're not recreating the zeitgeist," admits company spokesman Rissel. They are not an innovator, but "local suppliers of everyday items" in cities with 20,000 or more inhabitants.

According to Woolworth, it would like to help stop the bleeding of the pedestrian zones. The company is interested in this because it still does not do online trading. Then they could not keep the prices given the shipping costs, says Heini. Where a branch of Rossmann or C

While the German public takes an interest in the fate of Kaufhof because it somehow scratches the German soul and childhood memories, Woolworth's comeback is taking place rather quietly. Advertising runs only in local media. There are supposed to be 1000 branches in Germany, and next year the first shops will open abroad, in Poland. Do you plan to return to the US at some point? "Not an issue at the moment," says Rissel.