East Germany survives in retail form

Marketplace Staff Oct 7, 2009

East Germany survives in retail form

Marketplace Staff Oct 7, 2009


Kai Ryssdal: There will be no parades to mark the occasion today. Germans prefer to celebrate the day East Germany disappeared, not the day it was created. This is the 60th anniversary of the founding of the communist German Democratic Republic. The GDR collapsed in 1990. Reunification with the West was a painful experience — politically and economically. Companies in the East were closed and privatized. But some survived. From Berlin, Brett Neely reports on how they’re doing now.

BRETT NEELY: Zeha Shoes was East Germany’s only sneaker company. The Adidas of the East. Sports teams across the Eastern bloc wore Zehas. A few years ago, Zeha fanatic Torsten Heine was able to buy the trademarks of the East German sports empire fallen on hard times.

TORSTEN Heine: All the people out there were keen to wear Western brands, and they lost their sport market as well, and so all of a sudden they lost everything they had and needed to close down.

Over 14,000 companies in East Germany closed. Many of them had been household names. Some even made stuff worth buying, says retail expert Nils Busch-Petersen. But that made little difference.

NILS Busch-Petersen: The good items from quality East German brands sat on the shelves and didn’t sell. People’s consumer preferences changed literally overnight.

But those preferences have shifted back again.

This store in the center of what was East Berlin only sells products made in the former East Germany. But this is no nostalgic trip back to a time when the shelves were empty and the goods were clunky. Store owner Bianca Schaeler is proud of the range of goods she offers.

BIANCA Schaeler: Here’s our coffee, some of the well-known and well-loved makes. This is Rondo brand coffee, the classic Rondo Melange or also the Mocha Fix Gold.

All these East German brands have succeeded in wooing back their customers.

Retail expert Busch-Petersen says East Germans rediscovered their loyalty to local products when they realized there was a hidden cost to buying the Western goods.

Busch-Petersen: They’d go buy a different detergent and suddenly the detergent factory around the corner would be threatened with closure because no one was buying the old East German stuff anymore.

Some East German brands have even managed to cross the old Iron Curtain and build a following in what was West Germany. For example, Rotkaeppchen — Little Red Riding Hood — Germany’s most popular sparkling wine.

Founded in the 19th century, the winery was nationalized by the Communists.

After the wall fell, the new owners started to market the cheap bubbly to Westerners. Rotkaeppchen now sells a billion dollars a year worth of fizz and dominates the German market.

A few years ago, it even bought out its biggest rival, a West German firm. Now it’s moving upscale, just like Zeha Shoes.

Along with a partner, Zeha’s owner Torsten Heine has reinvented the brand and opened several stores in trendy Berlin neighborhoods.

Heine: On this side on the left hand side you can see our sneaker collection. This is our premium sneaker collection based on soccer shoes from the 50s and 60s.

Starting price: about a $150 bucks a pair. These days, Zeha’s target market is well-heeled hipsters, rather than proletarians.

Heine says business is booming. The company has even opened a new store. It’s on West Berlin’s most famous shopping street, the Ku’damm. And it’s not far from the flagship stores of Nike and Adidas, the brands that nearly wiped out the Zeha name just 20 years ago.

In Berlin, I’m Brett Neely for Marketplace.

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