Tchibo – Impulse Buying (and summer cheating)

This blog is cheating.  But then it is summer so a bit of laziness is understood.  Actually some folks asked me about some cycling blogs I made on a site called Toytown when I was living Munich Germany circa 2005-2006.  Before getting to the cycling blogs, I came across this gem on a European/German institution: Tchibo.

For those who have never been to Europe or never noticed the Tchibo stores, give this blog a pass.  For those who know Tchibo, read on for some information on them.  Be sure to take a read of comments from the original thread, posted about 8 years ago.

Original thread: http://www.toytowngermany.com/forum/index.php?showtopic=28469&st=0&p=404809&fromsearch=1&#entry404809

Typical Tchibo Store Front

Tchibo: A new experience every week

Get rich selling coffee, and toasters, and…

Tchibo is quintessentially German. When I first arrived, the now familiar Tchibo logo was simply part of the background noise. My wife nudged me toward awareness as she started to buy their coffee. It was then that I noticed a whole spectrum of seemingly bizarre and unrelated products. So, for those of you who are still in the background noise phase of their Toytown sojourn; or if you don’t have a kindly wife to point out the obvious, here is the basic synopsis of this business.

Tchibo started out in 1949 selling mail-order coffee. Given the post-war state of the West Germany at this time and the shortages of many basic food stuffs, this was pretty innovative. 1963 sees Tchibo expanding its distribution channels of coffee into local bakeries; 18 years after the war’s end and before the advent of the big box store, this was another bright idea. Expanding on this pre-existing channel, in 1972 Tchibo enters the consumers goods market, but with a twist.

Each week a different set of 15 products are offered linked by a common theme. However, once these items sell out, they are gone – no rain checks, back orders or second chances. They called this model is ‘A new experience every week’ and it relies unabashedly on impulse shopping. Given that 60% of Tchibo revenue is estimated to come from non-coffee sources, a weekly collection of related consumer goods obviously works.

Nor are these themes random act, carefully planned upwards of 18 months in advance, Tchibo buyers will review numerous competing products and select the best quality for the lowest possible price. As a result, Tchibo patrons may only be offered one iron but it will be the best valued iron for its price point and features. And if it breaks, a generous guarantee with good customer service backs up the product. After all, nothing kills an impulse buy then a bad past experience.

Tchibo is described as a ‘secretive’ company owned privately by the Herz family of Hamburg. Coffee and weekly products must be lucrative because Michael Herz, his brother Wolfgang (each estimated to own 34% of the business) are multi-billionaires. There other brother Günter and sister, Daniela are out of the business but are reported to have exchanged their inheritance for $5B. A fourth brother, Joachim, makes due with a 15% share of the pie.

Even if you have not met the Herz’s or bought a gadget from them, you have probably have supported their wealth. Tchibo Holdings owns about 50% of Beiersdorf AG, the maker of Nivea products. And, until recently, they owned a large stake in the world’s fourth largest tobacco company, Reemtsma (since purchased by Imperial Tobacco). Tchibo’s brand awareness is reported to be 99% in Germany and rising in the other markets they have entered such as Holland, Austria, Switzerland, Eastern Europe and recently the UK.

I do wonder if a Tchibo concept would work in North America? Americans and Canadians have had a historical tradition of using mail order services, but we are also accustomed to a big box store having every possible variation of a product immediately available 24/7. I don’t know if North Americans would have the patience for a New Experience Every Week, we rather have one every day… oh, and here is my rain check on last months experience that I missed!

So, what is your best Tchibo experience (good or bad)? UK’ers, impressions from the Tchibo invasion on your shores, is the model working amongst the English? Any takers on buying the franchise rights to North America, it could be the next IKEA!

Select Sources: http://www.tchibo.com and links http://www.nationmas…ionaires-(2005) http://www.hoovers.c…factsheet.xhtml