The full Obi – all or nothing

Obi, the biggest DIY retailer in Germany and third-biggest in Europe, is going for more stringent structures and binding systems for the further expansion of the company. The ideas and terms of reference from head office in Wermelskirchen, North Rhine-Westphalia, are in future to be implemented as a whole and more rapidly. As a result of this Sergio Giroldi, spokesman for Obi’s management, sees no room in his company for franchisees who at the same time operate franchise outlets with another competing company such as Hagebau. “Either you are one hundred per cent with Obi – or one hundred per cent with a competitor,” he said in an interview with diy, which appeared in the December issue of this specialist magazine. Obi will be paying more attention to maintaining loyalty to the system in the future. This may involve phasing out some franchise agreements, or even terminating them prematurely. These statements relate to the partial departure of the Münchener Heimwerker Verwaltungs GmbH (HEV), Obi’s biggest franchisee, which is moving eight of its 16 franchise stores over to the Soltau-based competition, Hagebau, on 1 October 2013. To recap: Obi is a DIY retailer with around half of its business in Germany carried out by franchisees. Its parent company is the Tengelmann trading group. Obi’s top management around Sergio Giroldi has for some years now been trying to implement a strategy that is determined more clearly by the group, with the idea of restraining the influence of the franchisees. The company’s expansion abroad, and increasingly in Germany as well, is being carried out through stores that are developed and operated by central office. In recent years it has repeatedly come to publicly held disputes and legal proceedings, some quite acrimonious, between the franchisees and the group’s top management. These primarily concerned the distribution of profits and the franchisees’ right of participation in Obi’s brand and marketing concepts. Obi’s executive is now planning to dock several small-format stores onto individual large DIY outlets like the one in Miesbach (ref. cover story in diy 10/2012) and so use the large stores as a hub. It is planned to implement this strategy throughout all the countries where Obi is involved over the next few years.  Download: