Quelle Group

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Quelle Group

Nürnberger Strasse 91-95
8510 Fürth
Germany
(911) 742 3157
Fax: (911) 626 224

Private Company
Incorporated: 1927 as Gustav Schickedanz
Employees: 39,300
Sales: DM12.59 billion (US$8.31 billion)

The Quelle Group, headed by Gustav Schickedanz KG, is one of Germany’s largest retail and mail-order organizations. The mail-order business in Germany and adjacent countries is at the core of Quelle’s success. Quelle is the country’s second largest supplier of fashions and textiles, with its own trademarks and household catalog names: Shöpflin, Madeleine, Elégance, Peter Hahn, Euroval, and others. It makes its own Mars bicycles. Its own electrical goods are sold under the Matura, Universum, and Privileg trademarks. Quelle also operates 21 department stores, 151 technical speciality shops, 100 Apollo optical shops, 169 travel bureaus, 14 garden centers and is the franchiser of 1,103 partners in Foto-Quelle film and development shops. In the fiscal year ended January 1991, sales were up 23 % from the previous year.

Gustav Schickedanz, Quelle’s founder, was born in 1895, the son of a craft factory employee in Fürth, a small city adjacent to Nuremburg. He left school at the age of 15 to work at Speed and Son, the local branch of a sportswear firm. He soon was due to be appointed as a company representative in South America, but he decided to complete his army-service obligation first. World War I broke out and an expected service period of one year turned into seven. He was wounded and discharged in 1919. Schickedanz returned to Fürth where he worked as a salesman and married Anna Zehnder, a local master baker’s daughter, in September 1919. In 1922, he opened a small haberdashery business and struggled to keep the firm going in the midst of Germany’s period of hyperinflation. His employees were his father, wife, and sister.

Economic reforms led to a degree of stabilization and a short period of improvement. Schickedanz’s observations of customer behavior led him to believe that he could sell to a larger market through the mail. With the resulting low overheads and greater volume, he could offer lower prices. These ideas were not new, but hyperinflation presented great difficulties to mail-order firms. The new stabilization convinced him that mailorder could work. The mail-order venture opened in November 1927. The name chosen for the company, Quelle, means “source” in German. Schickedanz hired 15 new workers. One, Grete Lachner, would one day become his second wife and play an essential role in the company’s future.

His first catalogs emphasized wool, thread, and materials for home sewing, rather than ready-to-wear clothes. The company enjoyed a modest success in its first 18 months of operation. Schickedanz’s 33-year-old wife Anna and their 5-year-old son were killed in an auto accident in July 1929; his 72-year-old father died shortly afterward. His problems were compounded by the Wall Street crash, which halted the German economy’s faltering recovery and threw millions out of work. Schickedanz’s sister, Liesl Kiesling, stepped into Anna’s position in the company.

By the end of 1930, five million Germans were unemployed. Schickedanz’s new business survived, however, and, especially by the standards of the Great Depression, prospered. Quelle was able to offer lower prices than many shops, and quickly developed a reputation for reliability and good value. Soon Schickedanz began to offer more clothes and accessories. By 1934 Quelle had 250,000 customers. By 1936 this number had grown to a million, the majority of whom were women.

This success came about despite the restrictions on trade introduced by Adolf Hitler’s new Nazi regime, which came to power in January 1933. As Jews began to leave or face imprisonment, they disappeared as competitors in the clothing trade. In 1935 Schickedanz bought VP, a paper factory, to publish catalogs and make cartons. This factory had been Jewish property. Some suspected him of having an invisible Jewish partner, but this was never proved. World War II began on September 1, 1939, and the Nazis required that the paper factory be turned over to war work. Schickedanz continued to operate under severe restrictions and clothing rationing, but the dislocations of the war meant that mailorder provided an alternative source of supply to people in bombed-out cities. Schickedanz was offered several positions as an economic administrator, but he preferred to remain with the business.

In 1942 Schickedanz married Grete Lachner. One year later their only child was born in a bomb-proof bunker. As Allied bombers began to attack the Nuremburg-Fürth area, the Schickedanz family moved out to quarters in the nearby forest village of Hersbruck. In August 1943 Quelle was virtually put out of business when an Allied bombing raid destroyed 90% of the company’s warehouse in Fürth. On April 19, 1945, American troops occupied the ruins of Fürth and Nuremburg. Three weeks later, Germany surrendered. Although the Schickedanzes were fortunate to find themselves in the U.S. zone of occupation, their enterprise was not initially encouraged. Schickedanz was classified as a Nazi by the occupation authorities and prohibited from reopening his business. Buildings were in ruins or requisitioned by the occupation authorities and customer records had been lost.

Grete Schickedanz opened a small clothing shop in Hersbruck to support the family. It was a success, but was closed by the military authorities. Eventually, the Schickedanzes were able to use the influence of the anti-Nazi politician and economist Ludwig Erhard, a family friend who was also from Fürth, to gain permission to reopen. The Hersbruck shop remains open as one of Quelle’s smallest retail outlets.

Gustav Schickedanz remained under a prohibition and, in theory, could not even discuss business with former employees. The ban was removed in 1949. Former employees were found and Quelle was off to a fresh start. It was just in time to benefit from Ludwig Erhard’s currency reforms of the previous year. Following the founding of West Germany in 1949, Erhard moved as quickly as possible to remove restrictions and rationing and to encourage competition. He believed that sales of consumer goods would encourage production and jobs.

After many years of hardship, Germans responded by going on a buying spree. The Quelle name was remembered and respected by many former customers. By utilizing previous contacts, Grete Schickedanz was able to obtain superior but inexpensive goods for sale. It was on this foundation that the new Quelle was built. By the end of 1949 Quelle had a turnover of DM12 million and mailing list of 100,000 addresses, but the couple had also opened their first department store.

Germany, especially, benefited from the economic expansion stimulated by the Korean War in the early 1950s. Between 1949 and 1952 the company’s turnover rose by 900%. By 1952 Quelle had one million credit customers and sales of DM103 million. The company now faced the classic problems of a successful business: how to expand without overextending and damaging a reputation for quality. The answer was to invest in new computer and data processing technology that was just appearing in the United States and barely known in Europe.

Schickedanz hired the best experts and gave them a free hand to design systems that would enable Quelle to handle millions of mail-order and credit transactions per year. Thirtyfive engineers from the firm SEL in Stuttgart worked for two years to develop and set up a system appropriate for Quelle’s needs. In 1955 the first phase of the company’s new mailorder center was finished. By 1957 SEL had completed the building of the new system. It was one of the most sophisticated mail-order computer information systems and attracted worldwide interest. Quelle was able to rationalize its operations and achieve even greater efficiency. The company has continued to give high priority to updating its computer and data information systems. In 1990 it maintained information on some 32 million customers.

A new emphasis was placed on quality control. In 1953 Schickedanz set up an institute for testing products to be sold through Quelle. It became known as the Quelle Institute fur Warenprüfung and is the largest institute of its kind in German commerce. At first only textiles were tested, but gradually it began to examine other product types. In 1990 it had made more than 25,000 annual tests. The institute also attracted international interest.

Grete Schickedanz was increasingly responsible for buying. She also directed careful attention to new catalogs and added more color pages. By 1954 more than half the pages of the spring-summer catalog were in color. She carefully monitored fashion trends. Later, the company hired prominent German designers such as Heinz Oestergard as advisers.

The range of mail-order products was continually expanding. In 1954 the company bought a bicycle factory and began to sell bicycles. The next year, a favorable response to a line of small electronic appliances led to the introduction of washing machines and large appliances, which Quelle was able to offer at very competitive prices. In 1957 one of its most successful ventures was into photographic equipment, where it was able to offer large mail-order discounts. By the early 1960s it was even offering travel services.

Quelle learned how to target special-interest groups and to develop special catalogs alongside its main catalog to spotlight lifestyle groups and hobbies such as gardening. A bank, NORIS Bank GmbH (later Quelle Bank) was started in 1956 and developed to help customers with credit. By 1958 Quelle had a turnover of DM406 million. It had become the largest mail-order firm in West Germany.

From the early 1960s, Grete Schickedanz traveled to the Far East on buying trips. In 1962 Quelle opened an office in Hong Kong. Eventually, the region became one of the company’s most important sources of supply. Later, Grete Schickedanz established important business contacts in the People’s Republic of China and opened an office in Shanghai.

In 1964 Quelle had a turnover of DM1.64 billion and called itself “the largest mail-order house in Europe.” The 1960s and 1970s were a period of continued growth for Quelle in Germany, but unlike its competitor, Otto Versand, which made a very successful investment in Spiegel in the United States, Quelle has been more cautious about foreign expansion. The process has been slow, mainly into neighboring countries. It began in 1959 with Austria, where results were so encouraging that the company decided in 1966 to make a much more risky move into France, opening a new mail-order facility in Orleans.

Gustav Schickedanz died on March 27, 1977, in the 50th anniversary year of the company. He was succeeded as chairperson by Grete Schickedanz. Because the two had worked as partners for many years, Gustav’s death did not disrupt the company or bring about any major policy changes. Grete continued her worldwide buying trips. By 1981, Quelle had a turnover of DM10 billion.

In May 1985 Grete Schickedanz broke new ground in West German-East European trade politics by signing an agreement with Hungarotex, the Hungarian foreign trade organization. The agreement allowed Quelle to sell by mail in Hungary and included plans for a new chain of jointly owned department stores. In 1990 Quelle started Intermoda, a joint-venture catalog operation in the Soviet Union. In 1987 Grete Schickedanz relinquished her position as chairperson of the board of Quelle, but she remained as head of its supervisory board. Into the 1990s she still traveled widely on behalf of the company.

The speedy German reunification process, which began with the collapse of the East German regime in November 1989 and culminated a year later, presented both new markets and challenges from Otto and other German competitors. Quelle moved quickly to distribute its catalog to nine out of ten households in the former East Germany. New stores and facilities were opened in Gera, Jena, and Erfurt. A huge new regional mail-order complex was opened in Leipzig, creating 3,000 new jobs. Quelle described its investment in the new Germany as the largest in its history, creating a total of 7,000 new jobs.

At the end of 1990, Quelle surprised many German financial institutions by entering into a new agreement, through its subsidiary Quelle Bank, with the Bank of Scotland to enter the undeveloped German credit card market. The German market had been thought to be resistant to credit cards. According to the plan, Quelle was to offer direct banking and credit card services using its mail-order data base, with more than 30 million customers in Germany, France, and Austria. Bank of Scotland would handle the processing in its facilities in Dunfermline, Fife, Scotland. Quelle expected to issue about one million cards in its first five years. With the 1992 European economic unification approaching, Quelle sought to acquire a foothold in the United Kingdom and began negotiations with Littlewoods for its mail-order division.

Principal Subsidiaries

Quelle Beteiligungs GmbH; Quelle AG; Foto Quelle; Apollo-Optik GmbH; Möbel Hess GmbH; Quelle Bank GmbH (25%); Sinn AG (51%); Grossversandhaus Schöpflin GmbH (99%); Peter Hahn GmbH; Elégance; Madeleine Mode GmbH; UTS Universal Technik-Service GmbH; Quelle S.A. (France, 99%); Distribución Quelle S.A. (Spain, 51%); Peter Hahn AG (Switzerland).