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"You have to be crazy for real development"

TOPREGAL turns 15: a Swabian storage expert with a start-up heartbeat.

Interview with Managing Director Jürgen Effner

15 years of TOPREGAL - what's the story behind it?

Interview with Managing Director Jürgen Effner

"It's quite an extraordinary story. In 2009, we came up with the idea of selling industrial shelving online as easily as a pair of shoes. At that time, this was not possible without having to work your way through sometimes large and confusing tables on the online sites, and in many cases only by preparing a quote or a visit from a sales representative. Back then, everyone thought we were crazy and hardly anyone believed that it would work. The challenge was also very great, because it is a complex matter. In some cases, an industrial heavy-duty rack can have over 80,000 variants, depending on the location, loads, goods, depths, heights and loads, and safety requirements, regulations, tests and even certificates have to be complied with. Digitizing this mass of information and standardizing it in a certain way was the first difficult step. The second was to prepare all this information and options in such a way that customers could make a purchase online. My idea here was to make this online purchase simple, functional and clear for customers, so that anyone who wanted to equip their storage or operating space with heavy-duty shelving could do so safely on their own and at their leisure on their PC. The next challenge we faced was to offer attractive delivery times of just a few days for a new pair of shoes. Here we have set new standards in the industry. Instead of the usual 6, 8 or 12 weeks, our vision was for the delivery to reach the customer within one to three days - and that for products that usually weigh more than a ton. But despite all our doubts, we had the right instinct and within just a few weeks, the number of orders went through the roof. We had to build up the necessary structures and processes bit by bit, but still at full speed. This went on for two years. During this time, we financed ourselves exclusively privately, as no bank was prepared to get involved in this risky business at the time. For many, that was also incomprehensible."

Wasn't there a fear of failing or being dismissed as crazy?

"Of course I was. But if you're an entrepreneur with a dream and a vision that no one else understands, you may well be considered crazy. Many innovative, new and pioneering developments in history were often ridiculed at the beginning. If you ask 12 people, 10 will say you're crazy. I was told that too. And I'll be honest: for real development, you have to be crazy - and we are. However, the demand for our products and our growth shows that these crazy ideas strike a chord and meet the needs of companies, and we often fill the gaps that entrepreneurs with their own warehouse and logistics have."

How do you come up with these crazy ideas, what is the decisive factor in your visions?

"It has a lot to do with processes that run in the background. Market analysis, research, industry knowledge and experience and, above all, keeping an open eye and ear, being close to the people who need our solutions and services. I want to understand the market and know what is needed. Of course, I'm a businessman here and look very closely at the market situation, the competition, prices and conditions. So it's not as risky for me as it seems to outsiders. It was the same with our hall offices, for example. The general tenor was: 'Nobody buys things like that online'. Strangely, it works very well for us. A lot has changed with the younger generation and the times when sales and purchasing met for a long coffee and leafed through thick catalogs are simply over for many. In order to remain stable in the market, we take such changes seriously and continue to develop in a future-oriented way. That is our philosophy."

Isn't it difficult to generate sufficient sales in such new ways?

"Well, it depends on how you set your prices and choose your range. We select our range carefully, test a lot of things and only keep the items that are in high demand, so that the stock levels are low. In terms of price, we are unbeatable thanks to our purchase quantities and our own internal processes. Although we offer our customers prices that are often far below those of our competitors, we are still profitable. We are even highly profitable. During our development, there is one risk we have never taken - that of being in the red. We tend to be conservative here. We have only ever acted in a way that was possible for us. You could say that we are a conservative Swabian company with a start-up character. In operational business, you can think of it as a fusion of classic corporate management and start-up courage. I haven't come across this in this form at any other company, neither in our industry nor beyond."

But wouldn't it be even more effective to merge with other companies in order to gain room to maneuver quickly?

"Not for us. There have been many offers for mergers or investors and even competitors who have approached us along the way. But dependency was neither our path in the past nor is it our wish for the future. We are self-sufficient and owner-managed, and we want to stay that way so that we can continue to work entirely according to our own ideas and concepts. This also applies to the way we treat and support our employees and the ability to make quick decisions when necessary. That's what sets us apart."

You just mentioned employees, what exactly do you mean by 'dealing with employees', what does that look like?

"We work on an equal footing and in an agile way wherever possible. In concrete terms, this means that we also listen to opinions and suggestions from the individual departments. After all, who better to reflect on the functionality in the office and warehouse or at the customer's site than the people who work there every day or are in close contact with our customers? This constantly generates new ideas for products and changes to the existing range or suggestions for optimizing processes. We listen, check and if it's a good idea, we implement it - it's as simple as that. The time frame is crucial here. For example: it only takes us a few weeks from the idea for an online configurator to the roll-out of the first version for the customer on the homepage. We couldn't do that if we were dependent on investors or corporate partners. There, such decision-making processes and test runs are often much more time-consuming and progress is therefore slower. TOPREGAL's USPs of being fast, effective and innovative would then disappear or become slower - and that is definitely not in our interests. Precisely because we are still independent and make our own decisions, we are now in the advantageous position of being able to take risks. And that is crucial for development."

And TOPREGAL has developed. The range now includes more than just shelves.

"Absolutely. In the first 10 years, we expanded our expertise in storage and heavy-duty shelving down to the finest detail. At the end of 2018, we then used our experience - which included listening to our customers' wishes to a large extent - to start including accompanying products. Here, too, we didn't shy away from including products that, like cars, are not easy to sell online. But today, we even sell forklift trucks online every day and deliver the new electric forklift truck to the customer within a few days - just like our shelves. What we stick to is what we can do - deliver warehouse and office equipment and much more quickly and to a high quality."

How have you gone about maintaining your high quality?

"We have found our own style, which doesn't rely on selling expensive branded goods, but rather on building up our own brands, similar to common practice in discount stores. When we are interested in adding a new product or range, we dig deep, we analyze and compare with the aim of finding a high-quality solution that offers the best for the majority of our customers - also in terms of price. Because that's another of our USPs: we don't have a hundred variants, but instead select a high-quality solution that is perfectly adequate for 80 percent of our customers. This is at the heart of the TOPREGAL philosophy: quality instead of quantity. This has several advantages for customers. Through our pre-selection, we help them to complete such otherwise very time-consuming selection processes much more easily and quickly, while at the same time ensuring that they receive good quality that they can trust and, as we purchase these products in very large quantities at corresponding conditions, we can pass on very fair and favorable prices. This is also reflected in our service, as our employees are familiar with the models, can provide very specific advice on functions, our own workshop team can carry out repairs if necessary and we are also available promptly if spare parts are required. Incidentally, we personally put all products through their paces and also enter into dialogue with our partners to optimize these devices. We also continue to develop partner products as part of our own brand strategy, take customer feedback on board, implement it or find further optimization options ourselves with our own product engineers. As a result, many products from SolidHub, wipeket, TecMaschin and SoloPort are exclusively available from us in this design and technology."

Where does a company like this find the time and resources to develop itself further when day-to-day business is so dynamic and active?

"That's down to our internal structure. Gino Klatt, our second Managing Director, only takes care of the day-to-day business, handles it and manages it, I stay completely out of it. The same applies to our warehouse locations, sales and the entire administration of these. There are people working everywhere who I trust and who I give freedom to make decisions within their area. In this way, the team keeps my back free to pursue new ideas and visions. But that doesn't mean that I stay out of it. Gino and I have an open ear for all concerns and take the time to talk to the employees. And I don't impose my ideas in an authoritarian manner, but rather involve everyone in the ideas and development process. In this way, we avoid lengthy strategic planning that then fails when it comes to operational implementation. Instead, I am always fascinated by the wealth of ideas and the practical way of thinking of many employees and how quickly an idea reaches its goal as a result."

Is that a kind of recipe for success?

"Well, not every idea works. We have an open error culture and our flat hierarchies mean that if we realize something isn't working, we can quickly take countermeasures. This is the case with around 2 out of 10 ideas. But instead of assigning responsibility and blame, we take a solution-oriented approach. And let's be honest, everyone who has made a mistake is the most annoyed about it. Every pioneering step can also go wrong. The lessons learned are simply hard-earned successes. Since we act and react quickly as a company, these failures do not cause any economic damage. And then there are the 8 that work, and experience shows that these developments go through the roof - and that's enough."

After 15 years as an entrepreneur, how do you see the requirements for providers like you? What has changed in the industry?

"The storage, logistics and office supplies and equipment industry has changed dramatically, or perhaps it would be more appropriate to say that the industry is currently undergoing a major transformation. Of course, this applies above all to the topic of digitalization. The coronavirus period in particular has led to an unforeseen boost here. Digital processes and workflows were necessary and I think that this impetus will now continue to have an impact. This is currently being felt above all by entrepreneurial veterans who have been in the market for 40 to 50 years. Asian companies are pushing strongly into our European market, and with completely different business strategies. Our familiar business models, which have worked well for decades, are being disrupted. This is another reason why those who do not move with the times will no longer be successful in the long term. Selling, for example, will no longer work via face-to-face sales or trade fairs in the future. Faster processes are required here. But many are still clinging to this."

As the largest provider of warehouse equipment that operates purely online, you moved away from this many years ago. What does the future hold for TOPREGAL?

"We closed 2023 with a turnover of 82 million. We are now aiming for the 100 million mark in 2024. There are still many small adjustments we can make to further increase our efficiency. This applies to our entire business model, but above all to further market penetration. Here, too, we have already set a new course for 2023 with our expansion into the USA and recently opened our sixth location. Incidentally, this is also an idea that many people initially thought was crazy. But I have a vision: I don't want to dig up gardens, I can't do that, but what I really enjoy is digging up markets. And what I also really enjoy is working with people of all ages. At the age of 60, almost all of my employees belong to the younger generation. And these people have so much potential, so much commitment and spirit of discovery, it's really great. And I think that's also a big part of a company's success. People who simply want to make a difference, to change things, and companies that allow this to happen and are willing to use the potential of all age groups. I trust my people, let them work independently and also make their own decisions, that is very important and will continue to be the course of our TOPREGAL philosophy in the future."

Many thanks to Jürgen Effner for the interview.