Melanie Stern is Section Editor of Families in Business magazine.
Aukje and Jan Wouda combined their entrepreneurial spirit and experience to form one of Holland's leading businesses. They tell us why brand acquisition played an important role in the expansion of the company
Despite 'entrepreneurial' and 'family business' commonly coming under the same umbrella, family businesses are sadly not always known for their truly entrepreneurial traits such as risk-taking and progressive business development. For the Remark Group, however, these qualities are inherent in its philosophy as a competitive product and service provider.
Headquartered in De Wijk, the Netherlands, drug, cosmetics and toiletries wholesaler Remark is run by head of the Wouda family Jan, his wife Aukje, who heads up human resources and promotional expositions, son William who directs the logistics side, and son Jacques who manages information systems. The two sons own a large proportion of the Remark shares. Three business divisions house 16 different brands and products that Remark has been pro-active in seeking out and acquiring over the years: HECA, the healthcare/medical division; Double You Trading, the international toiletries trader; and Kramer Cosmetics, the original incarnation of the company. The company markets and promotes its own brands as well as selected brands from companies for which it distributes, and provides them with 'concepts' – point of sale storage and presentation products.
Last summer Remark extended its history by some 500 years with the purchase of shaving and hand cream brand De Vergulde Hand. As the name of the brand translates – 'the golden hand' – this family firm does indeed seem to turn everything it touches to gold. Indeed, De Vergulde Hand is one of their fastest growing brands since its purchase.
Risk and reward
Remark started as a small cosmetics outfit run by Aukje from her family garage in the Spring of 1989. Aukje grew up working in local drugstores and through this accrued a wealth of knowledge about the sale of cosmetics. Some 30 years on the married Aukje Wouda-Kramer used her knowledge to branch out on her own. Aukje's first contract was with leading German cosmetics firm Dr Scheller, to distribute one of the firm's brands, Manhattan Cosmetics. Ten years on, Manhattan is Germany's second most successful brand in the cosmetics sector with product sales for 2001 at 475 million units. "Colour cosmetics are the most complicated thing you can distribute," Jan notes, somewhat proudly of Aukje's gamble – a gamble that paid off richly.
While Aukje made a success of her business, her husband Jan was also successful (he was not involved in the running of Kramer Cosmetics at that time), gaining his own business acumen from a succession of high-level positions within leading European businesses. Jan began his career as a sales manager in 1974 with Albert Heijn, a leading supermarket chain in Holland and the founding company of foodservice giant Ahold; six years later he defected to become general manager of another leading supermarket chain, De Boer Winkelbedrijven NV, and founded Holland's third largest drugstore chain, Trekpleister, through the company. Jan progressed to director of business for supermarkets, drugstores and liquor stores, and joined the board of directors. He confesses that, in fact, he didn't take to the ivory towers too well. "At that time I was a very eager young man, and so I ended up on the board. Although I was not unhappy there, I felt I could do better on the floor," Jan concedes. "It's in my nature to want to know everything that's going on. I like the practical side of things more; to feel the shop, to smell the shop and not to attend meetings every day." This sentiment was compounded by Jan's foresight that De Boer was heading for big changes in the not-too-distant-future, and changes that were not to his liking. He was right; in 1998 the company was acquired by supermarket giant Laurus. In 1993, with Aukje's business going strong and Jan's realisation that he was best suited to a more hands-on role, the two married their shared entrepreneurial spirit, wealth of experience and mutual respect in a logical next step. Jan became head of the family business and changed its name to Remark – Kramer spelled backwards.
Jan's appointment saw the nascent Remark turn a corner almost instantly – with a life-changing impact on the Wouda family. "At the time I joined the business I set up a meeting with my wife and our two sons in the kitchen. I said, 'listen, if we are to be independent and work for ourselves, we have to forget our holidays for the next six years'," Jan recalls. "'We have to work very hard, not eight hours a day – we should work until we cannot. I think then in five years' time we'll have a company we can make a living from'. As we all own shares in the company, I think we are all focused on the same thing." Jan also took measures to ensure that no one could sell their shares without the permission and agreement of everyone else in the family, hopefully strengthening the ownership for the longer-term.
While the Wouda family has identified how being a family run business gives them the edge in certain situations, they realise that the days of such enterprises holding special allure for their customers is long gone, "we have to be honest about this these days. My wife and I were young when we started this, and people had sympathy for us, taking such a big step. Nowadays our customers are international retailers like Ahold, Kruidvat (the firm that owns the UK's pharmacy Superdrug) and Etos. They're only interested in your brand offerings – it doesn't matter to them that we are family run," says Jan. On the flipside, Jan believes that their family run status has led to a more intimate understanding of their markets and opportunities within them. "Being a family run company is not only an advantage; it is another position. We are closer to the floor – we feel and know what is going on better than other bigger firms who only rely on figures. We sleep and eat with our company, so to speak, and that makes us more open to new ideas, and more focused on management and the organisation," Jan says. "We're always thinking about the business we are in and that makes a big difference." The Woudas employ one non-executive director, economist and logistics professor Dr R de Breejen, who meets with Jan and the family every two months to discuss the strategy and figures – "he is so close to the family that he knows everything about us," according to Jan. He is also Jan's former boss. Though this seems unconventional – choosing one's former manager to join the inner sanctum of one's family and business affairs – it brought in the perfect mix of top-level professionalism, highly-regarded retail experience and an obviously much-trusted source of business advice.
Jan's vision for the evolution of Remark was undoubtedly shaped by his experience in large companies and his understanding of how such sizeable ventures are created and maintained. The new MD started with one key aim – to make Remark bigger, as quickly as possible. This required three things – increased risk-taking appetite, investment and more staff. "Until that point I had always worked in very large companies – in De Boer there were over 7,000 staff," Jan recalls. "When I started at Remark it was just a small cosmetics company. I had to expand it as quickly as possible… My dream at that point was to create a mid-sized wholesaler with enough staff to call itself an organisation," Jan explains.
He began working on the long-term strategy of the business and the definition of its core offerings – its brand. As with many other successful and large non-family businesses, he decided to embark on a spate of acquisitions, which would speed the growth of business activities and bring ready-made market share in-house. "At the beginning we sold a lot of things like novelty soaps. The problem there is that they have no brand or identity of their own; a novelty soap is a nice product and the customer will buy it, but after a while it will hold less appeal. Then they ask for something else," the director explains. "I didn't think this was the way forward for us, so we looked for brands needing investment that we could build up ourselves – brands that were already known. This way sales are achieved almost automatically if you invest money and effort."
Several of the firm's current brands started out being sold by Remark for their parent companies, but were later bought up by the Wouda family as part of their strategy. "Buying brands is an expensive sport, so you can't buy every brand you want, but you can create a healthy mix of owned and controlled brands," says Jan. How does the company identify suitable brands? "It is important to look at the life cycle of the brand – if it is at the end of the life cycle and is being sold on nothing more than pride, then it will take too much time and energy to revive it. We are looking for brands that are, say, three quarters of the way through their life cycle. Then we can restyle it and design a new marketing concept."
A new brand in the family
De Vergulde Hand, created in 1554 by the soap-factory owning Woltman family in Amsterdam, started out in the barbershops of Holland as a shaving cream, applied with a brush. 'The Golden Hand' is the hand of the barber, who was said to be expert at shaving beards using the Woltman's products. Sadly, much of the history of De Vergulde Hand has been lost over the years, but for the Wouda family the legacy is clear. "It is important to note that you can get [De Vergulde Hand products] everywhere; it is sold in every drugstore and supermarket in Holland."
The Wouda family is confident that with its plan for investment and remodelling, De Vergulde Hand will be Remark's most popular and interesting brand. Their plan has been carefully engineered to tweak subtleties like the packaging colour and its appeal, the roll-out of new products on the range, the new brand, the inclusion of a new widened audience and the retention of the current audience. "There will be a significant difference between the old brand and the new, and we are a little concerned that we don't lose our existing customers," Jan says. Pertinent to the Wouda's concerns for the future of the brand is the 50-plus age range of their customer base. They acknowledge that this market will shrink naturally. To quell this, Jan has widened the brand's scope to the more commercially viable 35-year old male audience, and to market this, has adopted a bold and equally commercial approach. "We recently arranged a contract to sponsor a football team that plays all over Europe and donates its winnings to charity – for me it is important that there is wide television coverage and that everyone sees the De Vergulde Hand branding on the shirts," Jan reveals. Perhaps if this strategy pays off, it might provide the family business sector with a benchmark for their own promotion and marketing measures.
Such boldness aside, a major characteristic of Remark is the adoption of the 'flat' organisation model, much favoured by businesses in the Netherlands. The reason for the model, says Jan, is to cut out middlemen and improve communications by making a far shorter and simpler cradle-to-grave operation. "Traditionally we would have a marketing department and account managers constantly talking to each other. At Remark, there are two people that take responsibility for a brand but also create the marketing strategy and sell the product as well," Jan explains. This backs onto what Remark considers its key edge over its many rivals – flexibility. "We try to do two things better [than our competition] – marketing and flexibility. Speed is very important today, and we do that by relying on our organisation. It isn't easy to be flexible if someone calls me right now and asks for something right away – we don't think about whether it can be done, but instead that it must be done."
While the plan for Remark's growth as a business seems sound, the Wouda family has some important family-centric issues which will appear on their horizon in the coming decade. Like many family business leaders, the issue of successors to the business after Jan has not been planned to detail. Jan's two sons are already installed in the business and are familiar with the plans for its development, but the risk lies in the fact that there are two similarly aged siblings, in similarly placed jobs, both similarly educated and experienced. "If you ask me which one of my sons will lead the company after me, we have agreed that we will have that discussion in five years. Meantime I am trying to encourage my sons – especially the one that shows more ambition – to move into positions within Remark that will prepare them for leadership," Jan reveals. "But right now that's not on our agenda."
Jan is also keen to highlight that, if neither son shows enough potential to take the reins or if neither chooses to, there will be no issue. "It is very important to look at a person's capacity for a job – my sons will not take over just because they are the son of the boss. They will not automatically be the next leader of Remark if they cannot do the job successfully," Jan forecasts, recalling a recent talk he had with the leader of another family business when the issue of handover to his sons was raised. "We discussed whether my sons would be happy if I gave them leadership of the company, or happier doing whatever they want to do by themselves if I gave them some money. It could be a controversial point for a father and his sons. If my sons are happy to stay here they can, but if they are happy selling used cars, they should do that."
Additionally, Jan believes strongly that outside work experience is key to learning how to create a successful venture. "One should try to gain experience at another company; look at the organisation, the human resources – try to base your company on a very good organisation, not just on a family," says the director. "You have to try and separate the family inside the company and the family at home, so that non-family members of staff have the space to be 100% committed to the business." The Woudas hold annual reviews of the company and their own progress in the family house. This means tabs can be kept on their progress as a business and as a family running the business.
The issue of loosening one's grip on the family business when responsible for its overall success is one Jan speaks with particular candour about. He warns: "In the beginning, you are a pioneer. Once you have staff, you become the manager and not the pioneer. This is an important point, otherwise the company won't grow, and this will preserve a negative perception of a typical family business."
What does it mean to Jan to be the pioneering force of Remark – the entrepreneur? "An entrepreneur is a person who copes well with stress in order to achieve their goals. It isn't always clear what that goal is, but an entrepreneur will go about it in their own way, without the big bosses looking over their shoulder; they believe they can do it better than anyone else," he explains. "'Me' and 'I' are important words when you work for yourself, because as soon as your organisation grows you have to hand some of your work to your staff, and it becomes 'we' and 'us'. If you don't move from 'I' to 'we' it is difficult to grow – perhaps this is why a lot of entrepreneurs keep their businesses small, because then they can do it all by themselves."
Despite these wise words, Jan cannot hide his true entrepreneurial mindset. "It is difficult [to let go and relax as the head of the family business], but the question for me is, do I want to? I am more or less involved in every activity of this firm but it isn't a heavy task to me – I do it because I like it. Making time for myself isn't the first thing I think about," Jan admits. "I try to be a father now and then, and not the head of Remark – there is more to life than Remark! – but I do have to force myself.
"On the other hand, you need to hand over the baton now and then." Hopefully, from one golden hand to another.