Osiander success story defies tough market

Increasing pressure on sales and costs together with fewer customers on the shopfloor has created a challenging bookselling environment in Germany.

Sales in Germany were down 2% overall in 2017 according to trade newspaper Buchreport, and are flat this year after four months. But there are booksellers that still flourish when the going gets tough, and none more so than Osiander which is going from strength to strength. The family-owned company is one of German bookselling’s biggest success stories in recent years.

It is also perhaps the one under closest scrutiny from the industry, because Osiander joint chief executive Heinrich Riethmüller is also the current president of the trade association Börsenverein des Deutschen Buchhandels.

No other German bookseller is expanding faster through acquisitions and the opening of new stores than Osiander. In the 10 years from 2007 to the end of 2017, its number of branches rose from 16 to 44. Since then another seven have been added and more are already in the pipeline. At the same time, sales have nearly doubled from €43.2m to €83.4m. Last year Osiander reported sales growth of 5%, in 2018 and the €100m sales barrier is very much the target.

A family affair
Founded in 1596, the company has been 100% owned by the Riethmüller family since 1920 and remains fiercely independent to this date. It is currently run by two generations of Riethmüllers, 62-year-old Heinrich Riethmüller and his nephew Christian, 44. The two have made sure that nothing about Osiander’s rise into the top tier of German bookselling—only the nationwide operating chains Thalia (€950m), Weltbild (€440m) and Hugendubel (€340m) plus regional chain Mayersche (€155m) are bigger—is down to chance.

Instead they follow a carefully planned strategy dominated by three key strategic pillars: expansion, cost control and co-operation. Take the strategic partnership with Mayersche announced in October 2015 for example: while both companies remain commercially strictly independent businesses, they have installed a cost-cutting digital retail system tailor-made for them by Germany software company SAP that functions across both companies. With finance and accounting running smoothly, the system will next year be extended to cover the ordering process. Both have also become members of the Tolino e-reading alliance and publish two joint promotional catalogues a year.

The joint operation works well because neither Mayersche nor Osiander show any sign of competing against each other by moving outside their core markets. While Mayersche sticks to North Rhine-Westphalia in the west of Germany, Osiander is equally firmly based in the south-west. With headquarters in the university town of Tübingen some 20 miles south of Stuttgart, its branches cover affluent Baden-Württemberg and parts of neighbouring Bavaria.

Osiander’s success, says Heinrich Riethmüller, is based on a number of factors. But the backbone is its fierce independence: "The whole family is unconditionally behind
us, there is no in-fighting about the direction Osiander is headed; putting the bookshops first has over the centuries been deeply embedded in our DNA." The single-mindedness bears ample rewards: because all proceeds are consequently re-invested, instead of dividends being paid out to the family, Osiander is highly profitable.

Another factor working in Osiander’s favour is the lean management structure. "Decision-making for us is a very fast process," according to Riethmüller. This works especially well when opportunities come up for new store locations or when a competitor knocks at the door looking for a buyer. Osiander has repeatedly stepped in when independent booksellers have expressed an interest to sell their business. "While we know an opportunity when we see it, we do not enter a new location headlong but only after having thoroughly checked out the market."

Exacting standards
Potential Osiander stores need to meet a long list of requirements, headed by ground-level, standalone space of between 250–350 square metres in premium high street locations. But nothing is set in stone. Osiander’s flagship store in Reutlingen covers 2,500 square metres, of which 1,500 square metres are reserved for books. Upmarket stationery and a well-established classical music department fill the rest and bring in additional customers. Osiander also favours mid-sized towns with a population between 15,000 and 30,000, but it doesn’t shy away from large cities either resulting, for example, in three profitable stores in Stuttgart where the population is over 600,000.

Because Osiander is a well-known brand and is popular with consumers, landlords tend to lend an open ear when faced with location inquiries, and have on occasion even approached the company on their own initiative.

One of the key factors to survival as a brick-and-mortar bookseller is exemplary service and very well-trained booksellers, says Riethmüller, because "both are essential for long-lasting customer loyalty". Osiander has both in abundance. The company runs its own educational academy (Osiander Akademie), helping booksellers to improve their managerial skills. It also regularly trains around 80 school graduates to become booksellers, of whom 80%-90% will be given a job after their apprenticeship. A small branch in Tübingen is solely run by apprentices to give them on-the-job experience and financial responsibility early on.

Among the many service facilities some stand out—such as accepting vouchers from other booksellers (including Amazon), exchanging books that haven’t been bought at Osiander, or free postal delivery across Germany.

A few branches have successfully installed a delivery service by bicycle courier. The couriers, most of them senior pupils from local schools, deliver about 100 orders a day at each location and much more in the run-up to Christmas.

And then there are the occasional headline-making marketing gimmicks, like exchanging (for free) old Kindles for new Tolino e-readers. This does not come cheap, admits Riethmüller readily, but "the resulting media coverage is worth every penny".

Chief at the Börsenverein
His impeccable pedigree as a bookseller and his reputation as a smooth, effective operator stand soft-spoken Hermann Riethmüller in good stead, not only in his own company but also in his "second" job as president of the Börsenverein.

The german trade association is a big operation that, in contrast to the UK, combines publishers, booksellers and wholesalers under one roof. As diverse as the interests of the three groups may be Riethmüller, who is much respected among the association’s different divisions and is known as a good mediator, is very much in favour of an umbrella organisation for the industry.

"Yes, we do have occasional clashes of interests, but once these are balanced out, we speak with one, united voice. and the most important issues like copyright and fixed book prices concern the industry as a whole anyway." It does not come as a great surprise, therefore, that Börsenverein has the reputation of being a strong and effective lobbyist. The fact that it has three representatives in Berlin and two in Brussels—where the German association was at the forefront last year of aligning e-book sales tax to those for printed books in EU member states—speaks for itself.

Börsenverein is also the fierce watchdog of the law that regulates fixed book prices. "We have brought the message home in germany that books are a vital cultural asset. Politicians seem to acknowledge this because we always find an open ear," says Riethmüller. These ears might be put to the test sooner rather than later because a recent report by the independent monopoly Commission that heavily attacks the fixed price system has shaken the industry and brought the matter to public attention.

Even though the new coalition in Berlin hadn’t asked for this report and there are no signs (yet) of dwindling political support, the unwanted debate is on the table. But knowing the report was in the making, Börsenverein has already commissioned its own study about the importance of retail price maintenance for books which will be published soon. "Fixed prices help to keep a level playing field and enable small independent bookstores to compete with larger competitors," argues Riethmüller without naming Amazon directly, which has become the largest seller of books in Germany. The online giant does not release figures by country, but Buchreport estimates books-only turnover of amazon.de (including Austria and German-speaking Switzerland) to be around €1.3bn.

When he took over in 2013, Riethmüller brought into the honorary post the same level-headed approach he uses when dealing with Osiander matters. "Digitisation is no witchcraft and neither is good bookselling. Instead of burying my head in the sand or whining about Amazon, I’d rather grab any opportunity that is out there; there are plenty, you just have to look with open eyes."

While he dismisses talk about the bleak future of high-street bookselling as unfounded doom-mongering, he does acknowledge "some" ongoing consolidation in the German book market. It could eventually lead to a diminished presence of independent booksellers in some towns with "maybe only one bookshop where formerly there were two or three."

The ongoing migration of customers to the internet—which he describes as "regrettable and alarming"—is of course a big concern, but also an opportunity for booksellers to up their game. "This is the chance to make bookshops more hospitable and inviting by giving the customers a chance to slow down and chill; comfortable seats work well, so does a café, even if it is only a small one."