“We have challenges with tariffs that are hurting us economically.”

The hosiery and clothing supplier Falke KGaA, based in Schmallenberg in the Sauerland region, celebrated its 130th anniversary last year. The family business now employs the fifth generation and combines traditional craft values ​​with continuous product development. In addition to tights, the range also includes sneaker socks and functional textiles as well as compression and shaping items.

FashionUnited spoke to Franz-Peter Falke, great-grandson of founder Franz Falke-Rohen, about current challenges, what makes a brand, logistics, sales development and more. As managing partner, he runs the company together with cousin Paul Falke Jr. and CEO Martin Winkler.

You lead a company with 131 years of history through a time of multiple crises (supply chains, energy prices, purchasing power). Which specific virtues of a family business prove to be your most important anchor?

Our company was founded in 1895. Over the decades we have repeatedly experienced ups and downs. We have mastered this, on the one hand through traditional but forward-looking work, and on the other hand because of our curiosity and openness to global developments, the knowledge of which allowed us to help shape the future. Our family business not only means tradition, but also, above all, a commitment to modern design towards our employees and the society in which we live.

As a family business, we don’t think and act in terms of short-term success, but rather in terms of generations. Against this background, we view crises not only as negative, but also as an opportunity to proactively adapt to new situations.

The supply chain problem is currently a big issue. Only by building long-standing, good relationships with our stakeholders and developing shared know-how and trust does it enable us to ensure a certain level of stability and therefore a certain degree of independence.

They produce very close to or in Europe or in Germany.

Our belief is to produce as close as possible to our sales markets. Due to the complexity of our offering and our high quality standards, it is difficult to outsource individual processes while maintaining our service promise.

They say perfection lies in the details. What seemingly insignificant detail about a Falke product is, for you personally, proof of the highest quality?

You have to look at the entire process and the networking within the chain: from yarn development with the spinners to development with the machine manufacturers and, above all, our internal know-how. Together we develop for the future. The diverse impulses are important for our innovation performance.

Picking out a single element doesn’t work because only the combination, the sum of all things, ultimately creates uniqueness. Every single person, every single link in the chain must be perfectly coordinated with one another in order to ensure long-term trust and appreciation in the brand. This is a big challenge.

Competition from the Far East is flooding the market with products that hardly fulfill any of the brand promises or do very little. How do you see the problem?

The brand is independent of the pure product and operates on a different level. Many companies can make good products, but don’t have what actually constitutes a ‘brand’. This takes place on the level of sympathy. Focusing exclusively on the product promise and the product is no longer the only decisive competitive factor. It is still a very important factor, the basis of the promise, but brand desirability, consumers’ trust in the brand, is increasingly taking place on the emotional and sympathy level.

At Falke there is a triad of values: In addition to the promise of quality, the topic of innovation is crucial. And this innovation requires creativity in all areas; Creativity not just from the designers, but in every single stage and every single area of ​​the company. We cannot create a brand, we are made into a brand by our consumers. This happens through the credibility, the trust we have built up over many years and the sympathy of our customers. The more consistently we do this, the more stable we are. Our mission is to make modern clothing for modern people.

You said that a company is made into a brand by consumers. Could you elaborate a bit more on this?

As a family business, we have our own mission, our own values, which we live by and which are supported by all employees over generations. Our mission – “to make modern clothing for modern people” – sounds very abstract and demanding, but if we deal with it in its deep meaning, modernity means a constantly changing goal for every period of time, i.e. the goal itself changes. The understanding of modernity was different in 1950 than it was in 1980, and is different again today. But the brand’s core values ​​are fixed in a constantly changing world.

If we are curious and have the openness and passion not only to want to be followers, but also to want to shape things independently as market leaders, then our mission, as a “perpetuum mobile” so to speak, results in a challenge and responsibility for shaping the company. The living of our values ​​and attitudes results in an offer that then becomes clear to people as a synonym for what the Falke brand stands for.

In an inflationary environment, consumer spending comes under pressure. How do you convey ‘value for money’ to customers when a pair of socks is priced well above the market average?

Our aim as a company is to offer “fair value” for our customers. This lies in product performance and the appreciation of our brand. This appreciation ultimately leads to value creation, which enables us to ensure the viability of our company.

Innovation and creativity requires good people who work longer at a company. Do you have problems in Schmallenberg because Schmallenberg is not Milan or Hamburg or Munich?

I see creativity as multidimensional. Creativity comes from the individual areas, as well as from the interaction of all departments and employees. We have employees who have been with us for generations and not only have the technical know-how, but also the passion to keep getting better. This identity learned from our employees makes us unique as a company, as a brand. “Brand” cannot only be understood rationally, but “brand” must be felt, regardless of location.

We need to delve deep into the brand and understand its culture. In addition, it is important to immerse ourselves in different cultures around the world in order to be able to fulfill our claim to modernity. In Germany we always talk about the strength of the middle class, about craftsmanship. If you look at it sociologically, we have always been the land of inventors. Their main motivation initially wasn’t to make money, but rather to prove to themselves how they could always do something better.

Keyword globalization. Falke operates as a global player in over 60 countries. How do you balance the need for global scale with the promise of ‘Made in Germany’ or ‘Made in Europe’ that forms the core of your brand identity?

In my opinion, our European culture is unique, a great asset in global competition.

I am against this ‘Made in Germany’ and ‘Made in Europe’. Other countries and nations are equally competitive. That’s why we focus on our brand core, our brand values ​​and our vision. Through brand appeal, there is a ‘like-minded’ customer base worldwide that we focus on.

Could you talk a little about the expansion of logistics in Schmallenberg? Does this mean hiring new workers or investing in technology and automation?

Schmallenberg continues to be a development center and creative center.

Consumer behavior and their purchasing habits have changed dramatically in recent years. We are experiencing serious structural weaknesses in retail, which continues to be of great importance to us. The e-commerce area is becoming increasingly important and now represents a significant portion of our business.

This means increasing complexity due to smaller shipments, precision and speed. This requires new solutions in the structure of logistics. In order to ensure this, great financial effort is required, not only in technology but also in people.

If I understood correctly, a large part is actually shipped from Schmallenberg.

That’s right. The overall control from the yarn to the finished product takes place in Schmallenberg. Here the quality of the yarn to be processed is checked before it is sent to the individual locations. The finished products come back to Schmallenberg and are shipped from there to customers worldwide.

That’s impressive. And will you continue to invest in logistics in Schmallenberg?

The increasing complexity mentioned above can only be managed efficiently by people to a limited extent. In particular, large investments in data collection and control enable us to manage this complexity.

But the human factor is still crucial. There are many things we cannot automate. The qualifications of our employees and their interaction are still a decisive factor for our quantitative and qualitative productivity. The “Craftsmanship Mindset” of all employees allows us to differentiate the performance of our offering and means that we can continually renew our brand promise.

How do you see sales developing in the next few years, especially after the slump in recent years?

As company history has shown, there are always ups and downs. But the more intensively we live out our core mission and are careful, I believe that we are on the right track with our ultimate goal of continually ensuring the viability of our company.

Sales aren’t everything. Our sustainable value creation is crucial in order to be able to continually invest in our future to ensure our viability as a company.

How do US tariffs and the EU’s new free trade agreement with India affect a company like Falke?

In and of themselves, any tariffs are negative. They do not help in the global networking of societies, and in globalization at all. Increasing protectionism worldwide is hindering business and prosperity. And yes, we have challenges with tariffs that are hurting us economically.

We see new free trade agreements as an opportunity. The more freely we can work as a company in the interests of society, the better we can become entrepreneurially active.