The world’s most unusual furniture store isn’t in Sweden, but in the Munich district of Obersendling. Furniture entrepreneurs Jürgen Reiter and Peter Schönhofen of Kare Design have molded the ruins of a former gas power plant into an architectural marvel. A playful touch adorns the many corners of the 10,000-square-meter building: flying carpets and opulent crystal chandeliers hang from the ceilings, and the rooms are filled with colorful furniture and exotic accessories. It’s a heady mix of grandeur laced with kitsch in an austere, industrial setting.
Apparently striking the right balance of industrial flair, the quirky location made it into the International Architecture Exhibition in Venice. In 2015, the Association of German Retailers named the plant “Shop of the Year.”
“In the home market a brand has to have a visible lighthouse,” said Mr. Reiter, 58, guiding the way through the store with almost childlike enthusiasm, his dog Toto on a lead by his side. The location is more than just a store – it’s a lifestyle destination. In addition to displaying furniture, the store hosts concerts, parties, exhibitions, cooking classes and barbecues with top chefs.
Mr. Reiter and Mr. Schönhofen now have more than 100 stores worldwide but they’re not resting on their laurels. On the contrary, the duo wants to expand their brand with the fashion label Stierblut, or “Bull’s Blood,” and with an interior design service for hotels, homes, and restaurants.
The firm has grown from humble beginnings. 35 years ago, it was just a student startup. While studying business administration in Munich, Mr. Reiter lived in tiny, high ceilinged room, where he couldn’t seem to find a fitting bookshelf. On a trip to Stuttgart, he finally discovered a manufacturer of custom-made shelves. Mr. Reiter then opened his own small shelving store in Munich, co-founded with his classmate and childhood friend Peter Schönhofen.
Mr. Reiter had always had an affinity for furniture, and came from a former furniture dynasty in Trier in western Germany. The students called their startup “Kare” simply because they were able to acquire the existing business name from Mr. Reiter’s uncle and father (KAurich and REiter) for the bargain price of 600 deutsche marks, or $344.
“The furniture appeals to individualists in Japan just as much as in the Emirates or Ecuador.”
Initially, the founders took turns: one went to lecture, the other manned the store. They completed their studies while the business continued to flourish, soon taking on its first employees and five store locations. They quickly expanded into chairs, sofas and beds. “We preferred to both design and manufacture furniture,” said Mr. Reiter, who heads purchasing and design. “For me the creative aspect is more meaningful than the commercial.” Still today, roughly 85 percent of Kare’s furniture is designed by its owners.
These creations were initially manufactured in the furniture heartland, Italy, but also partially in communist East Germany, at a furniture factory in Naumburg. To date, the brand hardly has any of its own stores in the domestic market, choosing instead to be displayed by the larger retailers. “We were the exotic ones in the industry – very young, and on top of that dealers and manufacturers all in one,” said Mr. Reiter. “But we’re still seen as exotic today.”
Strategically, the business administration students left nothing to chance. They targeted a niche in the market, which by the early 1980s was already highly saturated. “The furniture business is a brutal mass market, in which design takes a back seat. To attack IKEA on its home territory would have been pure arrogance,” said Mr. Reiter. Kare therefore concentrated itself on the 25 percent of buyers who are individualists and appreciate distinctive style, “but do not want to pay the prices of wacky designers.”
A few years ago, Kare launched a bold advertisement aimed at IKEA: “Still assembling?” displayed with the Kare logo, styled in IKEA’s blue and yellow. The Swedish giant was not amused. “The temporary injunction was the biggest favor IKEA could have done us,” said Mr. Reiter. “Perfect advertising.”
“Kare is always a crowd puller and important exhibitor at the trade fair.”
Kare is considered a pioneer of style in the furniture industry. He said the “frugality is cool” trend of low-priced goods was a “horrible time,” and that Kare tried to counter it at a trade show 10 years ago with a glitzy display of regal furniture and crystal-coated accessories. “That was the best show we ever had,” laughed Mr. Reiter. “Many have since imitated us.”
For Markus Majerus from the International Furniture Fair in Cologne, Kare’s designs serve as trendsetters time and time again. “Kare is always a crowd puller and important exhibitor at the trade fair.”
Mr. Reiter’s inspiration is fueled by travel – he’s on the road up to 200 days a year, from South America to China to India. In Rajasthan, northern India, Mr. Reiter was struck by the craftsmen and their usage of glass, bone, metal and stone inlays, and soon designed his own silver chest of drawers made from diverse materials. And thus, the Chalet Style was born. “It’s one of those things you can’t just come up with at the drawing board, you have to be out travelling the world,” he said.
On a quest to expand, Kare is also manufacturing globally. As the cost advantage in China shrinks, Kare is increasingly relying on manufacturers in Eastern Europe. The brand’s clientele is also as international as its production: today there are more than 100 locations in nearly 50 countries, from Dubai through to Panama and Yerevan, not to mention shop-in-shops. “We hardly need to advertise abroad,” says Schönhofer, 59, who heads up sales for the company. “Interested distributors approach us at trade shows.”
Jan Höttges, a partner at the management consultancy Böcker Ziemen, has helped shape Kare’s expansion abroad. He views it as a great achievement that Kare has been able to create a style that finds fans around the world. The furniture appeals to individualists in Japan just as much as in the Emirates or Ecuador.”
Although Germany is the biggest market for Kare, three-quarters of its sales come from what it exports. The group generated a “triple-digit million figure,” without the external revenues of the franchisees. “We have steadily grown for 35 years and have never made losses,” said Mr. Reiter. It financed every expansion without resorting to investors.
According to the German Federal Association of the Printing and Media Industry, total furniture sales in 2015 rose 4.2 percent to €32.6 billion. To outpace that growth, Kare wants to expand into lucrative side ventures. It’s started to produce the “Stierblut” range of casual womens- and menswear, which was introduced by Mr. Reiter and Schönhofer 25 years ago but which until now has only been distributed by Kare, not manufactured. “In times of e-commerce, producing things oneself pays off,” said Mr. Reiter. When it comes to online traffic, the duo has experience: Kare has half a million Facebook fans.
Another foothold with growth potential is that of interior design. The subsidiary “Kare Objekt” furnishes rooms for hotels, restaurants, student and senior housing, with the chain of ‘Pentahotels’ across Europe and China serving as one example. “We see great opportunity for growth here,” said Mr. Reiter. “This division could reach up to one third of our total turnover in the next few years.”
The company hopes to have opened its 200th store by 2021 at the latest – 40 years after its start as a student-run company. “The Kare founders are open to new things and have a high willingness to take risks – something that is missing in many entrepreneurs, ” says Böcker Ziemen consultant Mr. Höttges.
The duo, now in their late 50s, have no interest in selling the company, despite the frequent offers made by financial investors. Mr. Schönhofen’s daughters are studying economics and Mr. Reiter has two nieces who are already working for the company. “It’s too soon to say whether any of them could one day be ready to take the helm.” One thing is important to them: “We would like for our life’s work to be carried on.”