dm-drogerie markt is a chain of retail stores headquartered in Karlsruhe, Germany, that sells cosmetics, healthcare items, household products and health food. In this industry sector, dm-drogerie markt is Germany's largest retailer measured by revenues. My guest for WSI magazine is Dario Klemar, one of the top corporate managers in drogerie-markt in Croatia. During the conversation, Dario talks about the leading company on the Croatian drugstore market with 156 stores, his professional experience and education. He reveals how much innovations and IT industry are important for this chain of retail.
You've graduated from Faculty of Mechanical Engineering and Naval Architecture, and today you are a member of the Management Board of dm - the leading company on the Croatian drugstore market. How did your professional development lead you to this position?
After graduation I have worked in my profession for a while. I've done my internship at Končar – low voltage switches and circuit breakers (1995 – 1997). Back then, Končar was a big system in transition. I worked on implementing the ISO9001 in charge of calibration. After the implementation of the standard I still strived for quick changes, which is not simple in a big system. I have responded to a job advertisement for the position at dm's IT department, a company which was relatively unknown in Croatia at the time. I got the job and my hobby became my profession - information technology.
You are a member of the Management Board of dm for IT, Finances, Controlling and you are in charge of Dalmatia sales region. What is the greatest challenge in your work at the moment?
The diversity of areas I deal with is the greatest charm, as well as the greatest challenge. IT, Finances, Controlling and sales in one function demand a high level of concentration. dm uses the matrix structure, so each Board member is also in charge of leading one of the sales regions, which enables each and every store to directly communicate with the Board. I got the most beautiful region in the world - Dalmatia, with all the beauty of its nature and its characteristics. At first it might seem impossible to join these areas together; however, if they are set right, you get full insight into processes which take place within the company. At one point, you're talking about information network infrastructure or introducing new technologies. Then you take a look at the financial aspects, with analysis which estimate the improvement of the efficiency of the processes. Lastly, you visit the store in which everything you have done (logistically) is implemented in direct contact with the end consumer.
You've worked at dm for twenty years - practically since the very beginning of dm in Croatia. How would you describe those first years?
The first two to three years were a real pioneer phase in the development of the company. We were starting from scratch, fully aware that we can do something great if we lay the foundation in the right way - which was truly motivating. Everyone was doing everything. All nine of us who worked at dm's headquarters at the time helped stock the shelves in the stores, we did inventories, met with clients. There were no departments. Alongside our primary responsibilities, we helped each other whenever it was necessary. I remember, my first work assignment was to unload toilette paper in store number 1. The company developed fast, and so did I. There were many educations, external and internal, and, in a growing company, there was plenty of room for advancement. Soon I was offered the position of head of IT for customer support which was my first advancement towards management. In 2005, I was offered the position of a member of the Management Board for IT. Soon I started a two-year MBA programme and the experience I've gathered until then really helped me to master the programme.
Can you compare the experience of working at the only drugstore in Croatia twenty years ago with working at dm today - with over 1,300 colleagues and stores in 60 cities?
The number of stores grew from three to 157. Sales grew from 620.000 USD to over 310 million USD. The number of employees rose from 20 to over 1,300. I think those numbers best describe the changes that took place in the last 20 years. From a little-known company, dm had become the First Choice Employer and Best Employer in the category of big companies. During twenty years in Croatia we have built a brand known in each and every corner, which is confirmed by the Store Equity index of 5.7 - one of the highest in the world. SEI index is calculated from four key questions/statements given to the respondents: favourite drugstore, I would recommend this drugstore, willingness to pay a premium price for products in the drugstore, willingness to travel to shop in the drugstore. Our loyalty programme with over 900 thousand members (which is an impressive number for a country with the population of a little over four million) is recognized as a programme which offers the most benefits. We have approved discounts of over 25 million USD to the members of our loyalty programme in the last financial year alone. Today, dm implements a series of campaigns aimed at encouraging our customers to lead healthier lives in accordance with principles of sustainable development and at supporting the development of local communities. Of course, all of this is coupled with continuous investments into professional development and education of our employees.
To what extent has your job changed, considering the technological developments? How do you follow these changes and what helps you in their implementation?
During the last 20 years we have seen unprecedented technological development in all aspects of life and business. I remember that, 20 years ago when we used the IBM host system, communication with our colleagues from Austria took three days. Data was transferred through overnight processing. This meant that if you write an e-mail on Monday, they'll get in on Tuesday, and their reply will arrive on Wednesday. Today, BI enables dynamic reporting which provides all information in real time. E-mails are barely used, it's all in the cloud and we communicate on social networks. The changes are so rapid it is difficult to keep track of them and our regular briefings, where we exchange information about technological developments, are vital. When choosing new technologies it is important to anticipate what it will bring and how long it will last. In a business environment it is not possible to change systems as you would change an application on your smart phone.
You were in charge of introducing many innovations in dm's operations. Which project would you single out and why?
It is not simple to single out one project, having in mind I have participated in and was in charge of multiple national and international projects. Alongside the use of the new ERP system, introducing SAP Retail to dm Croatia in 2007 was an organizationally challenging project. All departments took part in it and for the first time we have encompassed all processes within one system. Alongside introducing SAP, we have changed our internal organization. Expansion to the market of Bosnia and Herzegovina was another challenge. Despite the similarities, there are differences in mentality and consumers' habits which are crucial for dm, having in mind that our focus is on customers' needs and their lifestyle. We have successfully laid the foundation and supported dm BiH for two years. Today, dm is the leading drugstore on that market as well.
You were the head of Marketing at dm for a year. What would you single out as the greatest difference between IT and Marketing?
Everyone at dm cooperates very closely. Our teams are dynamic and comprised of members from various departments. This creates a synergy which enables maximum use of potential and knowledge. I was in charge of marketing for a year, alongside IT. I remember that I would hand out my calling cards on meetings which said "head of IT". I used to say that I was actually in charge of marketing and that IT was just my hobby. The greatest difference between IT and marketing are the people. People working in IT are specific - focused on technology and the virtual world (cloud) - they prefer "talking" to the machines. People working in marketing are their polar opposite; they are creative and they live on another type of "cloud". Communication with people is their passion, the basic tool for their job. While IT requires precision and checking everything until you are sure all the bugs have been removed - and you never are - marketing leaves room for creativity and improvisation.
Would you like to work in marketing again?
Yes, I like the differences and specifics of both fields. A focused, specialized field and a wide, creative field - experiences from both are an ideal combination, applicable in all aspects.
dm applies the principles of social responsibility in all business segments. How does that reflect on your department? How does you department contribute to dm's corporate social responsibility?
dm is a company which promotes sustainability through all aspects of our business, so the employees of the IT department actively participate in all environmental activities which dm organizes and in those aimed at promoting a healthier lifestyle. I already mentioned that dm teams are comprised of employees from various departments, which means that employees from the IT department always put their knowledge and expertise at the disposal in planning and implementing socially responsible campaigns. The integration of sustainability into dm's everyday business operations is best seen on the projects for which my department was in charge. We've built the distribution centre and headquarters at the same place and we wanted to lead by example when it comes to environmentally friendly energy sources. We have installed a 300kW solar power plant on the roof of our headquarters. We have also installed electronic damper "Krijesnica" (Firefly), a Croatian product which gives natural light and saves over 50% of energy in our distribution centre.
Your private interests and hobbies reflect dm's corporate values. Can you tell us more about that?
I have always been into sports. My father was a ski instructor and my love of skiing is practically innate. I love spending time in nature and living according to its laws. I have a small garden near Zagreb where I grow vegetables for my own needs. I implement a form of eco farming based on the principles of Rudolf Steiner's learning. Also, whenever I have time I support the association of parents of children with impaired sight and children with disabilities "Oko" (Eye) from Zagreb. The importance of taking care of the environment and community; the role of food and physical activity in healthier lifestyles are messages dm has been sending continuously to the community and to our employees. We believe that leading by example is the best way to encourage as many customers as we can to make decisions which will help improve the quality of their lives and of the life of the whole community.
Does it help you in establishing a work-life balance?
"To give, not to get" is the prerequisite for personal equilibrium. In order to give, you have to be aware of your own values, which is possible only through knowing yourself. Every day we are burdened with more and more information. In order to process them properly, you need a period in the day when you become the observer. Depending on how I feel, I use different methods and tools - meditation, autogenic training, sports, time spent with my family or weeding in my garden. All these situations help in observing the events and reactions which take place. When you're in balance, you can help others in the best way, and the gratitude you get in return is the greatest possible reward.
Is there a goal which you would like to achieve and which you set at the very beginning of your career?
Continuous education is the goal I have set at the beginning of my education; to share information with others and live in accordance with the laws of nature.
In your opinion, in which direction will the drugstore and retail trends develop in the context of rapid technological development and continuous innovation?
Digitalization and personalization are already here. Everyone checks all available information about the product, primarily online, before shopping. The consumer wants to be informed and then make a decision. The growth of online shopping is an unstoppable trend, but this does not mean that the brick and mortar stores will disappear. On the contrary, these two segments will be complementary. Some of our needs will be met through online shopping and some through "classical" shopping, with a special emphasis on personalization and convenience shopping.
Brand value will rely more on the advisory service. We can already see that, in the brick-and-mortar stores, employees take the role of advisors more frequently. This is why dm has started an educational project "dm academy" in which our employees learn about drugstore trends and products such as organic cosmetics and food. Our goal is to make sure our customers have access to expert advice in our stores, in order to help them choose the best product to meet their needs.