Schlecker

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~ the last words ~

Ehingen is a small town on the Danube in Baden-Württemberg, and that is where Anton Schlecker opened his first shop in 1967, selling meat. When German resale price rules on branded goods loosened in the mid 1970s he opened a drugstore instead, in 1975, and the format he picked was the one that eventually killed him: the smallest possible shop in the cheapest available location, staffed as thinly as the law allowed.

It worked for thirty years. There were more than a hundred branches by 1977 and a thousand by 1984, and by the middle of the 1990s Schlecker was the largest drugstore chain in Europe. The 2008 figure was over 14,000 branches and roughly 50,000 employees, spread across Germany and nine other European countries.

The shops were tiny and identical, often under a hundred square meters, wedged into village high streets and the ground floors of apartment blocks. That density was the entire strategy: a Schlecker within walking distance of everybody, stocked with detergent and shampoo at a price nobody undercut. What it was not was pleasant to shop in. Competitors built wider aisles and better light, and once Germans had a car and a choice they drove to the bigger store.

The labor practices were a running scandal for two decades. Undercover reporting in the 1990s described surveillance of shop staff and pressure against forming works councils. In 1998 the Stuttgart regional court gave Anton and Christa Schlecker suspended sentences of ten months each and a fine, for paying below the collective agreement. The women who staffed the shops became a recognized category in German public life, the Schlecker-Frauen, and the term was not affectionate.

The company bought the rival chain Ihr Platz for €150 million on 31 December 2007 and tried to modernize with larger XL stores, but it was late and the cash was gone. Schlecker filed for insolvency on 23 January 2012. Half the German shops were told to close by 29 February. The administrator could not find a buyer for the rest, and the remaining branches closed on 27 June 2012.

~ the record ~

~ the cheapest square meter in germany ~

The legal structure mattered more than anything happening in the shops. Schlecker was run as a registered sole proprietorship rather than a limited company, which meant Anton Schlecker was personally liable for everything and also that the business never had to publish accounts. For most of its life nobody outside the family knew whether it made money.

That is why the insolvency went the way it did. When the administrator went looking for investors in early 2012 there were no audited figures to show them and no board that had been watching the decline. A transfer company that would have kept about 10,000 sacked staff employed on partial pay while they retrained collapsed in March when the federal economics minister refused a state-bank loan and Free Democrat economics ministers in several states declined to guarantee it. Around 25,000 people in Germany lost their jobs, most of them women.

~ the stuttgart verdict ~

Prosecutors went after the family for what happened in the months before the filing. The charge was Bankrott, deliberate bankruptcy, and the allegation was that Anton Schlecker moved money out of the business to his relatives while he knew it was failing. The figure in the indictment was about €3.6 million in gifts and transfers.

The Stuttgart regional court ruled on 27 November 2017. Anton Schlecker, then 73, got two years suspended and a €54,000 fine, less than the three years prosecutors had asked for. His children Lars and Meike were sentenced to two years and nine months and to two years and eight months, and those terms were not suspended.

The sentences read strangely against the scale of the thing. A chain that had employed fifty thousand people across ten countries finished in a courtroom argument over three and a half million euros, which is roughly what it turned over in a couple of hours at its height. The 25,000 people who lost their jobs in 2012 were not parties to the case.

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