After a volatile year when many in the global cleaning industry struggled to adapt to an unprecedented and unpredictable market situation, Kärcher quickly analysed the scenario and rode out the rough patches to register record sales. With a turnover of 2.721 billion euros last year, Kärcher was once again able to grow significantly in 2020 compared to the previous record year: The growth of the cleaning specialist was 5.6%; adjusted for currency effects, this stands at an admirable 8.5%.
In a freewheeling chat, Hartmut Jenner, CEO of Alfred Kärcher SE & Co spoke with Mohana M, Editor, Clean India Journal about how he recalibrated his sales strategy during the pandemic, why supply chain management was integral to Kärcher’s success, Kärcher’s new products for the B2B and B2C segments and its future plans for the Indian market.
How has the pandemic been for you personally?
These are very challenging times for all of us. My last business trip was a year ago; I have only had video-conferences since then. I am missing my customers and my people worldwide. No doubt, it is a strange time for everyone.
Kärcher has had a record turnover in 2020. When the cleaning industry has been struggling worldwide, what has been Kärcher’s strategy?
At an early stage, we realised which products and which channels would be successful in 2020. Of course, our share in the industrial and B2B business in the past year was weak, but our company has 50-50 B2B-B2C sales, and therefore, we focused on opportunities in the B2C sector. The main issue was having a stable supply chain, which was the key to success last year.
“This pandemic showed that cleaning has now become the focus of people. Earlier, cleaning was more or less a necessary evil. A lot of people have realised that the underlying background of the pandemic is issues in cleaning-related safety.”
There were logistics issues in many countries. How did you cope with them?
No company can say they did not face any issues. We too had problems, but our strategy since 2014 has been to have our suppliers very close to our factories, and not have material from say, China or Eastern Europe for all our factories. Our factories have 90% material coming from suppliers within a 100-150 km radius of the factory, so our supply chain was very stable.
The key issue in the supply chain was not material, but the people on board. We had to arrange for some not to have shifts together; sometimes, we lost production time.
In February, you had announced that steam cleaners which have virucidal properties have been well received, and the demand for them is growing. Some say this demand is driven by panic about maintaining safety levels. Do you think this demand will continue in the future?
This pandemic showed that cleaning has now become the focus of people. Earlier, cleaning was more or less a necessary evil. A lot of people have realised that the
underlying background of the pandemic is issues in cleaning-related safety. SARS and bird flu too were outbreaks that were based on not having a hygienic environment.
People have realise that steam is a very useful technology that can be used without chemicals. I am sure steam products will stay at the top. I also think hygiene services will stay relevant. In general, the pandemic has been helpful for business models in the cleaning industry.
You had mentioned that B2C uptake has been good. Do you think it will remain so?
We are in a special situation which we call cocooning, in which people stay at home and have time and money to spend on cleaning. In most countries, you still cannot travel or spend money on other things. This will not stay the same forever, no doubt. But on the other hand, demand from the B2B sector will also not stay so low forever. So, we will soon have a normal situation again.
“We are planning to invest in production in India over the next two years. For us, India is a very important market; with over 1.3 billion people, its cleaning needs are immense.”
Do you think there will be a surge for any products in the B2B segment?
I think floor care products were under severe pressure last year, because airports, schools, hotels and restaurants were all closed for a long time. Public buildings, which were our main customers, were also closed, and weren’t being cleaned. But they will come back to normal for sure.
We have seen all over the world that demand in these target groups was lower than before. Also in the industry segment — especially bigger industries like automobile manufacturing, which had 40-50% lower production — the demand had dipped. This will change, demand will come back. The demand from the B2B segment will be very different next year.
What does Kärcher have in store for India?
India has been a focus country for Kärcher for close to ten years. We have a subsidiary there with 300 employees, and a joint venture for production. We are planning to invest in production in India over the next two years. For us, India is a very important market; with over 1.3 billion people, its cleaning needs are immense. The more the population of a country, the greater are its cleaning needs.
Of course, the speed at which we grow can be faster. But I am sure we will make our mark in India.
What is different about your business strategy in India?
We will have more local manufacturing in the future, because we need market specific products. We would call India an emerging market, which has different behaviours. Mature markets like Europe need different products; emerging markets need not-too-expensive, easy-to-use, easy-to-explain and-repair products.
Kärcher stands for innovation. What innovative products can we expect to see in the Indian market?
We are extending our battery-operated product line. We already have more than 60 products on our battery platform this year. For B2B, we have a liquid-to-pellet CO2 ice blaster, a very new product.
For ice blasting, you needed a separate machine for generating ice, which is a complex process from gas to ice, and was then transferred to the ice blaster. Now, we can make instant ice from gas directly in the same machine, which is a revolution in cleaning technology.