Some like it hot.
Expansion strategy. In the early 1990s, the sauna and steam bath manufacturer Klafs went bankrupt. Then came Stefan Schöllhammer and turned the case into a hidden champion with a turnover of 100 million euros. Now an even greater entrepreneurial challenge awaits the co-owner and managing director. The core market - sauna - is declining in Germany. How can a company grow in shrinking markets?
Stefan Schöllhammer's paradise lies in China. 1.4 billion Chinese, a huge market. "Even small target groups are enough to be very successful," says the co-owner and managing director of market leader Klafs, who has been extremely successful in Germany for a long time. 1.7 million German citizens own a sauna in the basement. A considerable part comes from the Schwäbisch Haller premium manufacturer, who has built 225,000 saunas worldwide. However, new sales on the domestic market are now gradually declining.
"This has to do above all with the construction of our own homes - for us, building owners are the classic clientele with whom almost 60 percent of sales are generated." Whereas around 2,500,000 homes were built each year in the 1990s, today the figure is just 100,000. But Schöllhammer has a plan: "We can also grow if demand in Germany falls". With innovation and expansion into other regions of the world, the Klafs managing director wants to take countermeasures.
It is not the first challenge in the history of the sauna manufacturer. In the 1950s, company founder Erich Klafs had produced his first saunas in Schwäbisch Hall using element construction. In the beginning he delivered the EKS, Erich-Klafs-Sauna, still with his own car and a small transport trailer personally to the customers.
As business flourished, the installation of private solariums was added in the 1970s. But the more demand rose, the greater the competition from DIY stores and other low-cost suppliers. The competition crushed the medium-sized company. In 1991 only insolvency remained.
"At that time Klafs was one of our biggest customers," recalls Stefan Schöllhammer, then co-owner of G. Lufft Mess- und Regeltechnik, a company specializing in measurement technology. The sauna manufacturer bought thermometers and hygrometers there: "We had 60000 marks on accounts receivable. We would have survived, but it was annoying - we ourselves had only recently started our own business."
Schöllhammer took a closer look at the sauna builder and realized that the business could be continued profitably. "That's been a big risk, though. We had to finance everything privately. But we didn't want to be the businessmen who, as creditors, sent a company across the river Wupper with 300 employees and their families."
Together with family members and friends, Schöllhammer takes over the sauna manufacturer for a two-digit million sum. Since then he has been acting alone as managing partner: "The partners are all entrepreneurs who know and share the worries and needs of a medium-sized family business. We will therefore also try to arrange the succession in such a way that the company remains in family hands."
After the deal with Klafs had been concluded, he first "leaned back and breathed through".
He'll roll up his sleeves and change the company. The company had just been "to look at the long time of the infirmity". Schöllhammer makes a plan for EDP, production, sales, product range and marketing. He wants to put all this on a new footing. "For example, the computer system was completely outdated, people were still sitting on their sketches with paper and pencil," he says. "A thing of the past, because an individual sauna is a highly complex structure that can sometimes have 2800 individual parts."
Production is switched to commission, expensive warehousing is eliminated, Schöllhammer focuses on order-related individual items. The product range itself was of good quality, but innovative ideas were lacking. "There was a lot of spruce - and at best the curious sauna potty for the ballpoint pen."
From the door handle to the loungers and the woods, the entire sauna theme is completely rethought. And redesigned. The desired positioning in the luxury segment demands a different design language. Schöllhammer is thus far ahead of its time. "Today, everyone knows that design is one of the most important sales arguments."
On the sales side, the "hard-to-manage sales representatives" are replaced by Klafs' own specialist consultants. Some commercial agent would have counted at that time its gasoline consumption against a commission which can be expected and would have omitted then so some customer attendance, formulated Schllhammer stressed exaggerated. The entire system was rather inefficient, especially in competition with the DIY stores, as the large difference in quality was difficult to communicate, especially in the lower and middle market segments. In 1991, for example, a sauna module at Klafs cost 3500 Marks, whereas in a DIY store an almost identical cabin cost only 2900 Marks.
It was difficult to compensate for this simply by providing advice or on-site customer service. "I couldn't change the fact that the distribution channel of the DIY stores for simple saunas was actually more efficient. So I had to make the product so attractive that I could charge completely different entry prices."
At the end of 1993, he had the newly designed products lavishly staged with models. All measures now work together. "The employees were stunned, they were literally overwhelmed by orders."
Double-digit growth rates stimulate the previously "stagnating sales". In 1997, the company ventured into the commercial market with massive steam baths made of natural stone and ceramics. Thermae, fitness studios and public baths in the new federal states are the clients for these new products. "There wasn't any money in the old ones," laughs Schöllhammer. You would have got almost every other job.
In addition, Klafs now also offers steam baths in solid construction made of tiles and glass. "They had previously only been available in plastic." They are prefabricated at the Schwäbisch Hall site and installed on site. They are complex products from 100000 euros upwards - and with a nice return. Klafs has thus managed to become one of the world's leading manufacturers of luxury saunas "We have hit the nerve of our customers. This is how we succeeded in establishing Klafs as a high-quality brand."
According to the entrepreneur, this concept is still in use today. Actually. If it weren't for the saturation tendencies in the domestic market. Schöllhammer wants to compensate for the fact that the demand for home saunas is declining due to the low number of newly built homes with innovations. One of these innovations is the S1, a cabinet-sized sauna. At the touch of a button, it can be folded to a depth of 60 centimetres like the zoom lens of a camera.
And it is a completely self-contained, mobile system, so you can take it with you when you move. "That was a technological feat." The wooden sandwich wall construction is 40 percent lighter than that of a conventional sauna. Nevertheless, the construction can withstand high temperature and humidity fluctuations. The S1 costs between 12000 and 15000 Euro.
"It is not only a driver of innovation, but was also a major contributor to sales as early as 2016," says Schöllhammer. Unfortunately, he does not mention any absolute sales figures. Just this much: 92 percent of the S1 customers surveyed by Klafs had stated that they had never bought a sauna if this variant did not exist. However, this is not yet proof of the hoped-for sales success. After all - the design world reacts positively. In 2016, the S1 will receive the iF Design Award and the Red Dot Design Award, among others.
If S1 is to develop completely new private target groups, the entrepreneur will expand the existing potential in the market for health-promoting products. With the battery-powered MicrosaltProX device for dry salt inhalation launched in 2014, the Haller company has achieved a further coup in innovation, even according to expert opinion - awarded best product in the Plus X Award 2017.
Applications such as the dry salt mist and electronic gadgets function similarly well: the S1 cabins have a so-called RelaxAudio system. The rear wall of the sauna acts as a loudspeaker membrane. So your favourite music can easily be transferred from the smartphone to the sauna control via Bluetooth. "We are active and moving in all directions."
Schöllhammer also sees prospects for international expansion. In Asia in particular, he wants to score points with the S1, which is suitable for residential use. Today, however, a sauna there is still usually considered a cheap product. That's why it's first and foremost a matter of persuading customers how important quality is and that a premium product has its price. The entrance to paradise is not that easy to find.
Hotly contested: Der international sauna market.
Klafs generates 60 percent of its turnover of 100 million euros with private customers, 40 percent with commercial buyers - hotels, thermal spas or cruise ships. Saunas account for 60 percent of sales, the rest being steam baths, pools and additional products such as sauna loungers. The market for saunas in particular is fiercely contested today. The TyloHelo Group (72 million euros) and the Finnish company Harvia (52 million euros) are directly behind Klafs in terms of turnover. The Chinese are also one of the largest players with Saunalux, a German medium-sized company that has belonged to the listed Anhui Saunaking group since 2012. The Klafs group of companies with 700 employees in Germany, Austria, Switzerland, Poland and Hong Kong includes Röger, a cheaper second brand, and the pool builder SSF-Pools. One of the lighthouse projects of Schwäbisch-Haller is the 3000 square metre spa area on the cruise ship "AIDAprima". A shipyard in Japan is currently working on a project worth two million euros for a cruise ship: saunas with a panoramic view, steam baths and bathtubs.
Author: Mariella Bauer-Hallberg