75 years of Tchibo: Legendary coffee house has to reinvent itself

75 years of Tchibo
Legendary coffee house has to reinvent itself

March 15, 2024, 2:49 p.m

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In the post-war period, two Hamburgers founded a coffee roasting company called “Tchibo”. Soon they are selling much more than just the luxury food and attracting hundreds of thousands of customers every day to browse the store. However, after decades of success, the retail giant is forced to rethink its approach.

Actually, the Hamburg merchants Max Herz and Carl Tchiling-Hiryan only had coffee in mind. 75 years ago, a few weeks before the birth of the Federal Republic, they founded a small company in the Hanseatic city on March 15, 1949 with the then quite unusual idea of ​​offering freshly roasted coffee by mail. “Tchibo”, formed from the first syllables of the name “Tchiling” and the word “Bohne”, expanded rapidly under Herz’s leadership.

He traveled around the country with his wife Ingeburg to find new locations for branches. Decades later, Tchibo is – also thanks to the takeover of its competitor Eduscho in 1997 – a top dog on the German coffee market – and at the same time a trading group omnipresent in supermarkets, its own branches and on the Internet.

The development of the retail business as a second pillar was an “actually rather accidental success story” right from the start, as the business economist Verena Platzer reconstructs in a master’s thesis written at the University of Graz about Tchibo’s path from coffee retailer to retail giant. Tchibo had repeatedly distributed small consumer items such as drying towels, measuring cups or storage containers to add to the coffee. However, a cookbook that was published millions of times and was distributed with the purchase of coffee angered the competition so much that it became a case for the judiciary – with the result that such a combination was banned by the highest court in 1973.

Tchibo shouldn’t just sell coffee

This gave birth to the idea of ​​selling various products alongside coffee. “Every week a new world – Tchibo surprises its customers every week with new consumer goods on a wide variety of topics,” was the motto. The focus of the rapidly changing ranges includes clothing, household items and home accessories.

Occasionally, supposedly bizarre products have attracted ridicule. On a topic page under the heading “26 Tchibo products that Germany has to explain to the rest of the world”, the media portal “Buzzfeed” shows, for example, a “sprint parachute” for endurance training, a coffee cup holder for the bicycle handlebars or an LED reading light the glasses can be mounted.

Tchibo has even dedicated a blog post to such items: “Banana cutter, energy frog, towel dress, kiwi to-go box, butter stamp, dog bathrobe. Ridiculed by many, loved by even more: our crazy Tchibo products,” it says there. “But the fact is: these gadgets only make up a fraction of our theme worlds. The vast majority of products serve to beautify and make our everyday lives easier.”

Coffee house forced to rethink

Tchibo realized by 2022 at the latest that the business model was no longer a sure-fire success, when the company, spoiled by profits, recorded a loss of 167 million euros with sales before interest and taxes stagnating at a good 3.2 billion euros. This was explained when the figures were announced in summer 2023 with dramatically increased raw material, energy and freight costs as well as the global supply chain crisis. Another factor mentioned was that the planned sales in the retail business outside of food had not been realized “due to customers’ reluctance to buy due to inflation”.

The company did not comment in detail on the announced “reorganization measures”. What is certain, however, is that the coffee business should become more of a focus again. The Tchibo holding company Maxingvest, which also owns the Hamburg consumer goods company Beiersdorf, will not announce how 2023 went for Tchibo until the summer. “Tchibo is back on track and will be back in the black in 2023,” is the only statement from the company so far.

Retail expert Gerrit Heinemann from the Niederrhein University of Applied Sciences attests to Tchibo’s “certainly remarkable pioneering achievements”. Tchibo was “virtually the first to shape the path of food retail into the non-food sector, or at least at the very beginning”. And Tchibo was also “at the forefront” when it came to switching from printed catalogs to online business.

Tchibo’s pioneering character is fading

From the perspective of Heinemann and other retail experts, such as Carsten Kortum from the Baden-Württemberg Cooperative State University Heilbronn, the concept of marketing items in rapidly changing subject areas is getting old. “In times of inflation with tight budgets, impulse purchases of non-food items decline sharply,” writes Kortum in a blog post from his university. “All providers of weekly promotions on small topics across the entire world of goods are affected by this.”

According to Thomas Roeb from the Bonn-Rhein-Sieg University of Applied Sciences, this is also because many offers no longer have the bargain character. In the past, customers would have perceived the goods on offer as a good opportunity that wouldn’t come back any time soon, says Roeb. “Today, opportunities like this happen all the time.”

In fact, Tchibo is no longer alone. Other discounters such as Rossmann with its “World of Ideas” or Lidl with theme weeks for things like DIY or kitchen utensils have also designed similar concepts. In addition, Chinese cheap marketplaces such as Temu or Shein are now ubiquitous. “These are all new sharks that feed on the market volume that is not growing and in the end a Tchibo notices that, that’s just the way it is,” says Heinemann.